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We teach our clients an alternative approach to managing a portion of your
equity, with emphasis on SAFETY, LIQUIDITY, and GROWTH.
In addition, the purpose of this plan is to give you options for your retirement,
reduce the tax burden on your income, as well as the tax burden to your heirs.

We utilize an Equity Indexed Universal Life Insurance Contract. Many people
do not understand the power of the contract’s ability to provide retirement
income. The main reason we choose it is clearly the tax advantages. The
cash accumulation in the contract grows tax-free, and by borrowing the interest
earned, you may access the income tax-free.

In selecting companies offering Equity Indexed Universal Life Insurance
Contracts, we, as planners, have some very specific guidelines imposed on
ourselves to find the very best contracts for our clients. Due to the contracts
unique feature of tax-free cash accumulation through borrowing, we insist all
contracts we use offer “Zero Spread Loans.”

Another key feature of Equity Indexed Universal Life Insurance is you have the
ability to have your returns “linked” to the market. Many of our clients have seen
much of their retirement reduced by a down market (recently in years 2000,
2001, 2002). Many financial planners confidently tell their clients to be patient
and wait. They insist “the market will come back.” While this is a true
statement, the client does not see is they have lost the power of compounding
growth. With an Equity Indexed Universal Life Insurance Contract, you never go
backwards. Depending on the specific contract you choose, there will be a
“cap” on the upside, and in addition, a “minimum return” contractually
guaranteed to prevent you from loosing your compounded growth.

The power of never going backwards is far reaching. For example, if you were
to look at the last 6 years of being in the market with no downside protection,
versus being in a product with safety, there is a major difference in the amount
of money you would still have.

Sometimes our clients will talk to another advisor who is not familiar with
these types of products. The clients will be told the fees are high. Most
advisors are referring to what is called Variable Universal Life Insurance not
Equity Indexed Universal Life. A couple differences between the two are
Variable Universal Life is a product in which your money is directly in the
market. Therefore, higher fees are involved. Although, the principal reason
why advisors think the fees are high in a Life insurance product is merely they
do not understand “max funding” a contract. As with any Life Insurance
contract, there are two guides to be used for funding. One is the “minimum”
amount of money the insurance company requires for the cost of insurance,
and the other guide is the IRS. The IRS dictates the “maximum” amount of
money you can “shelter” in a contract. The guidelines are under the tax acts
“TEFRA,” “DEFRA” and “TAMRA.” We use these tax acts in our calculation, so
whatever amount of money a client wants to use in their life insurance contract,
there will always be the smallest amount of death benefit. The contracts we
use, when “max funded,” will have an Internal Rate of Return, which will
illustrate a cost factor between 1 to 2% of the return. This simply means if you
average 9% total return, you would net between 7 to 8% after all costs
associated with the contract.

Furthermore, we teach our clients the difference between paying tax on “seed
money” versus”harvest money.” Most people have been taught to put as much
money as possible in programs that defer tax burden into the future. Many
individuals use vehicles like a 401(k), 403(b), SEP, or a traditional IRA. Most
people do not realize what is really happening when they implement these
types of plans. Would you rather pay tax on a “bag of seed” or would you rather
plant the seed and pay tax on the “harvest?” Most would answer, “Bag of
seed!” We agree! We teach our clients to limit the amount of money they fund
in to a 401(k) to only what the employer is matching (in most cases 6% of their
income). We then prove it is better to take any funds over and above, pay tax on
it, and position it in a place which grows tax-free and can be accessed tax-
free. A “Roth IRA” is somewhat similar to this in that you pay tax on the seed
and not on the harvest. However, the problem we have with the “Roth IRA,” is
all the strings attached. With a “max funded” Equity Index Universal Life
Insurance Contract, you benefit from all the privileges of the “Roth” without all
the strings attached (i.e. no limit on income, no penalty on withdraws prior to
59 ½, and no limit on contribution).