Over the past several decades, financial advisor Douglas Andrew has achieved a high rate of return personally, and for his clients, in maximum funded tax-advantaged life insurance policies. In the Missed Fortune series of workshops and educational materials, Douglas Andrew explains the liquidity, safety of principal, and rate of return that come with this type of funding. When it comes to this type of insurance contract, Douglas Andrew explains to individuals that there are two primary choices—fixed and indexed.
With an indexed life insurance contract, says Douglas Andrew, individuals have the option of earning a little more when bonds and inflation are low. According to Douglas Andrew, when an individual chooses an indexed contract, growth is determined by the activity of the stock market. A person can receive up to 100% of whatever that growth is, but there is a cap, set anywhere from 10% to 17%. And if an individual does not want to lose when the market goes down, he or she would receive a 0 to 2% return.
Another option, as outlined in Douglas Andrew’s Missed Fortune workshops, is to go with a higher participation level. This means that, instead of operating at a 100% participation rate, an individual would participate at 140% of what the stock market is doing at that time. In most years, where the market is doing its typical up-and-down, Douglas Andrew has found that 140% participation yields significantly better returns.
According to Douglas Andrew, with the help of an experienced wealth architect, an individual could use indexing with rebalancing, fluctuating between 100% participation and 140% participation and between various caps. This needs to be timed so as to bring the best returns. That’s not necessarily difficult to do, Douglas Andrew explains. A person needs to simply move to a fixed strategy when the market isn’t showing great growth until the market bottoms out. Once the market has bottomed out and appears to be recovering, the person simply moves it back to the indexed feature.
One major complication of putting money in the stock market, Douglas Andrew cautions, is Uncle Sam. No matter how much a person is able to make, a portion will always go to taxes, notes Douglas Andrew. However, a maximum funded tax-advantaged life insurance policy is not taxed, so every dollar made remains yours. Douglas Andrew says the key to that is pulling the money out the smart way, which he explains in his educational materials and workshops.
While Douglas Andrew puts his serious money into maximum funded tax-advantaged life insurance policies, he states the importance of structuring these policies in a particular way. The key, Douglas Andrew emphasizes, is to always ensure your funds have liquidity, safety of principle, and rate of return, in that order. Through maximum funded tax-advantaged life insurance policies structured correctly, an individual can have all three.
For more information, or to speak with a Missed Fortune wealth architect, visit www.missedfortune.com