In my BLOG post a few weeks ago, I wrote about how the University of Michigan is loaning head football coach Jim Harbaugh $5 million this year and $2 million a year that he remains the head coach there in order to buy life insurance.
Most of us are never going to get an opportunity like that. That’s almost better than winning the e lottery. After you are finished with this video and information, you can read that full BLOG POST to learn how wonderful this special perk for him is by CLICKING this link:
https://www.smartfinancialplanning.com/michigan-football-head-coach-borrows-5-million-buy-life-insurance/
But now there is a program for those of us who are not rich. Watch this short video and you can get more details below.
Borrowing money to buy huge life insurance policies is something the rich (well over $10 million of net worth) have been doing for decades. Another one of my colleagues is now working with a business owner worth $500 million on this right now. That client rightly believes that it’s better to keep their own money fully invested in their businesses, real estate holdings and investment portfolio than to pay for premiums out-of-pocket with after-tax money.
But as the above video describes, there is a very little known program that leverages the TAX-FREE advantages of specially-designed life insurance policies to folks aged 30-64 earning as little as $125,000 a year or having a net worth of at least a $1 million. People that are more interested in having more TAX-FREE money in their retirement than having a huge death benefit.
One of the oldest organizations in the business of using asset-backed life insurance premium funding with over $4 BILLION in life insurance premium loans outstanding started this program about 3 years ago for the “rest of us” who don’t make millions of dollars a year or have a net worth of at least $7 to $10 million. They have now rolled the program out to only a few hundred financial advisors like myself.
This program is built to maximize “living benefits” of future TAX-FREE retirement cash-flow rather than the death benefit. Using these special policies is 100% of how I am personally planning for my own retirement income (although I would never suggest anyone else put 100% into ANY strategy). The 3 to 1 leveraging only makes your contributions work more efficiently and harder.
Not only is the future retirement cash-flow tax-free, but there is tax deferral along the way. The policy averages 80% of the stock market gains yet never suffers a loss due to market crashes. All past earnings get locked-in and can never be lost to bear market losses either. Unlike a ROTH IRA, there are no contribution limits.
As to the loan, the policy itself serves as 100% collateral and there is no personal guarantees, nor any loan application. And the loan rates are very attractive at LIBOR plus 1.75% with no pre-payment penalty.
This program also works very well as a non-qualified deferred comp benefit for businesses of all sizes and even for non-profits. Each situation is different but there is tremendous flexibility.
I have other programs that might be even more attractive than this for folks worth $6-7 million or more. Like everything else, it all depends upon your financial goals and personal situation.
Again, unfortunately this program is not available to most people. But successful small business owners and highly-paid professionals should definitely explore how having more TAX-FREE money in retirement can dramatically improve their future lifestyle at a fraction of the cost of any other retirement plans. If you’d like to learn more, please contact me.
All the best… Mark