How to get 140% Return Using A Whole Life Policy Loan

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How to get 140% Return Using A Whole Life Policy Loan
In today's Better Wealth, I am joined today by Dominic Rufran one of the BetterWealth wealth coaches and our AND Asset Specialist. Today we are discussing the power of leverage, using someone else’s money to build wealth. In life insurance, we are not using our money but borrowing against our policy using the life insurance company’s money to build wealth because our dollars are staying intact. We break down for you the math behind how you can get a 140% return using a whole life policy loan. Join us on RU-vid for the visual math breakdown.
#BetterWealth #Policyloans #lifeinsurance
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Caleb Guilliams
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Опубликовано:

31 мар 2021

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Комментарии : 17

@kimbrough2046 3 года назад

Great video. Only I think you missed the comparison of compound interest over simple interest. We show the example of depositing $25k at 4% over 5 years and borrowing a loan at 6% over 5 years to show how it’s possible to make money when borrowing at a higher interest rate. While it still doesn’t make sense the timing does make a difference when talking simple and compound interest. I hope that makes sense and that I didn’t misinterpret what you guys were trying to say.

@dominicrufran 3 года назад

Courtney, life Insurnace is only simple interest as long as you pay your interest in full every year. If we don’t pay the interest it becomes compounded interest. Borrowing at 6 percent when you are only getting 4 percent doesn’t makes sense unless you take the borrowed 6 percent to go get something greater than that 6 percent such as 12 percent. I hope this helps!

@kimbrough2046 3 года назад

That’s exactly what I stated. I was saying, because we are faced with the question of borrowing money to pay off debt at a higher interest rate. We use a car buying scenario. Deposit: $25k at 4% over 5 years=$30,624 Car loan: $25k at 6% over 5 years=$28,999 Effectively showing people the difference in compound versus simple interest. Also not saying this is the highest and best use for this money. My point being it is not a -20% return if you factor in time. Even if only done for 1 year you still come out ahead. We then explain that the loans are actually 5% and there is an additional dividend.

@BetterWealth 3 года назад

@@kimbrough2046 Thanks for these comments! Will make more videos around this :)

@danielfarrell9161 2 года назад

@Caleb ... I borrowed from my Policy to pay down my mortgage in order to get rid of PMI. I spent the year paying myself back, but ended up saving around 3500 in PMI payments. There could also be an argument to be made to use your Whole Life to pay down chunks of your mortgage. You have to pay yourself back, and when you do, you put it back into the principle of the mortgage. The reason is how you are charged interest on the WL vs the amortized mortgage. But I generally don't think its worth paying down a mortgage with around 3%/4% interest. - Definitely not a high priority. PMI is different though. Also, I took out a loan of 12K during the 2020 crash, and doubled it in the market. Rare, and very risky, but having Cash in your WL allows you to seize on opportunities while keeping your family protected. *** I do not suggest people should buy Whole Life unless they Max their retirement (401K etc etc) AND their Roth or Traditional IRA first... But WL, the way you describe it, can be amazing - but certainly not on the top of the list - FOR MOST. ***

@waynebaker5720 2 года назад

Good advice

@dominicrufran 3 года назад

Always a blast getting in the studio!

@BetterWealth 3 года назад

Good Stuff bro!

@dariusjessup1085 3 года назад

@@BetterWealth Good stuff fellas! Always enjoy seeing the illustrations of & asset vs "other investments" and how the 5% cost of capital for the life insurance loan weighs into the equation. Keep pushing out the content!! !! Keep up the good work.

@matthewkloskowski6991 3 года назад

Excellent video. How do you determine what to invest in?

@jorgevelasquez9955 3 года назад

Caleb....Does it make sense to take equity out of investment at a 4% cost to open up open a policy AND THEN borrow from the policy to invest that money if you can get 8% return on that said investment?

@BetterWealth 3 года назад

This is a great question! I have to be really careful on youtube when I respond to specific questions like this because the insurance policy may be more or less of a good useful asset to your financial life. It really comes down to the value of permanent life insurance in your financial life. I can tell you I choose and a lot of our clients would choose to use a life insurance policy as the middle asset in this scenario. if you want to talk more specifically I would invite you to go to our website Betterwealth.com and schedule a 15 minute clarity call :) Thanks so much for watching and commenting!

@ballhogjon 3 года назад

When you take out a loan, you have to pay the interest up front for the year. If I pay back the loan in six months do I get a refund for the difference in interest?

@BetterWealth 3 года назад

The answer is yes. Either companies charge daily interest or you get a "refund" of the interest that wasn't needed to pay.