We all know life insurance costs you money, and pays out AFTER you die.
But can you actually INCREASE your cash flow when you buy life insurance?
Cash Flow Expert and “Anti-Financial Advisor” Chris Miles teaches you how you can increase your cash flow while you’re ALIVE. Tune in now!
Chris Miles Bio:
Chris Miles, the “Cash Flow Expert,” is a leading authority on how to quickly free up and create cash flow for thousands of his clients, entrepreneurs, and others internationally! He’s an author, speaker, and radio host that has been featured in US News, CNN Money, Bankrate, Entrepreneur on Fire, and has spoken to thousands getting them fast financial results.
—
Listen to the podcast here
Can Buying Life Insurance Increase Your Cash Flow?
Thank you so much for following because this show is about you, about how you can create financial freedom and cashflow, and be able to work because you want to, not because you have to, be able to do that not 40 years or 50,000 years from now, but right now. It’s about taking control of your life to have the control and freedom that you desire. I’m appreciative of you guys sharing the show, spreading the word, and allowing me to serve you and others as well. It’s been awesome. I love those of you that reached out to me. Please, keep doing so, especially if you’ve got questions. Whether it be about your situation or if you want to show topic, shoot me an email, Chris@MoneyRipples.com.
Can I have a part two to go along with a conversation we did about life insurance a while back? We talked about how to create your own infinite banking type of situation and get your money working in two places at once. I was at a dental conference. While I was there, I got a lot of questions from dentists because there’s something that’s become popular, especially those that are starting to look into an alternative investing space. They’re starting to hear more and more, “This could be a better tool than my own 401(k) that I’ve been using.” Think about it. You don’t have to wait until you’re 59 and 1/2.
You can access the cash. At least the way I create it, you can access the cash the next week after you get the money in there. There are lots of cool things you can do. It’s tax-free. It’s legally protected. You earn better interest than your savings account. You can use it the same way. I got other questions for people too, about, “How else can you use it?” I’ve used different examples. I’ve talked about how people can leverage it to buy buildings, build to buy certain things, let the bank put a lien against it versus the insurance company, and get awesome terms on loans.
When we had Kevin Nichols on, we talked about life settlements where we could invest in other people’s life insurance. You can also sell your policy like it is life insurance, too. Even if you’re in your 80s or 90s or you’re like, “I’m out of money. I got this insurance policy, I’ll sell it.” We’re part of that death benefit. Sell it off. In a lot of cases with my clients, we try to get multiple policies so you can sell off one of them and leave the other ones to your family if you choose.
There’s another way, too. This applies even if you don’t have any family. I’m going to give you an example of a client that I had. She was 65 years old. She was a chiropractor. She ended up inheriting about $2 million from her father. She had all this money. This lady was awesome. She’s in great health for a 65-year-old. She had that long, flowing gray hair. She looked like the perfect hippie. She’s an amazingly sweet lady who is awesome at what she does.
People raved about her. She loved her work. She didn’t want to retire. She wanted to work as long as she felt like she was able to. We talked about different options because she’s like, “Chris, what do I do with this money? How do we make it work?” By the way, we didn’t talk about anything with an alternative investment with her. It was purely about preserving the cash that she had. I talked about, “There are different things we can do here.”
We talked about using life insurance. She’s like, “Chris, I don’t have any kids. I’m not married. I don’t need any life insurance.” I said, “Yes, but it gives you a permission slip to spend money while you’re alive. Because you know that money’s coming in, you can spend money differently. In fact, you can spend down all of your assets while you’re alive, not have to worry about living on the interest like every financial advisor teaches you to do, or live on less than the interest, depending on how much interest you’re earning.”
We did that. She ended up getting a policy. I’d referred it to one of my contacts to write the policy for her. She got the policy. It was a $1 million life insurance policy. About a month later after she got it, it was about $13,000 a year. It was a premium, basic policy. We weren’t even stuffing in cash or overfunding it. The whole strategy I taught didn’t even apply here. We were purely getting a death benefit. We knew that term would be too expensive within a matter of ten years.
We went for the whole life policy because it would be cheaper. She’s paying about $13,000 a year for the premium. After about a month, she’s like, “What did I just do?” Without even notifying me, she goes and cancels the policy. The next time we get on the phone together, she’s like, “I got rid of it, because I don’t need the life insurance. It’s $13,000 a year on paying for nothing.” I said, “We’re going to have to change your strategy. I’m going to have to show you the old traditional advisor route.”
I brought the numbers to her and I’m going to do the same with you, too.
I said, “Here are the numbers if we go off of the traditional financial planning.” Many financial planners even now are still saying, “Live on 4% of your money.” If you’re worried about inflation, that’s not a good number because most of our conservative funds aren’t returning that well. Plus, you have inflation involved. You’re probably going to need to live on more like 2% to 3%. You’ll hear some advisors that are more astute about that. We’ll talk about that. Think about that, $2 million, 2% to 3%. That’s between $40,000 and $60,000. Let’s go right in the middle, say 2.5%. That’s $50,000 a year that she can live on.
Here’s the cool thing. She only needed about $50,000 to $60,000 a year to live on anyways. She was working and making just that after all the expenses in our practice and everything. She was working just enough to make her ends meet. She didn’t need the cash, but if anything were to happen, she didn’t have disability insurance or anything else to be able to help her out. Plus, if she had disability insurance, it would only last for a couple of years anyways because she’s already 65.
We say, “If you live on $50,000 a year, that’s not bad until inflation kicks in. If you have to slow down what you’re doing with your practice, you have to stop or stop working altogether, you’re going to start eating into your cash here pretty soon because inflation alone is going to require you to do it.” Especially where she lives, knowing this flash forwarding six years, inflation’s definitely hit bigger than it was back then. I’m sure she probably lives on at least $70,000 a year now.
Anyways, $50,000 a year would not last her in that plan. She would have to find something to supplement her income. I said, “If you have life insurance, it will cost you $13,000 a year.” We’ll take that number out in a second. Here’s the difference. You can now spend down principal and interest with your IRAs. You have to worry about living on less than the interest only to try to hedge for inflation. You can start pulling it all out now. Using the same example, if she starts retiring right now, she can pull off principal interest.
I said, “Let’s do that over the next 25 years.” I basically use a mortgage calculator and ran it at making 4%. We’re not even talking about anything with life insurance. We’re talking about the IRA money. Let’s say the IRA money, doing conservatives leaves about 4%, which isn’t too far off probably what her IRA has been doing. She’s paying 4% a year, but she’s pulled out more than the interest. She could pull out almost $10,600 a month. That right there is over $127,000 a year she could pull out for the next 25 years, spend out all of our money.
Life insurance gives you a permission slip to spend money while you’re alive. In fact, you can spend down all of your assets without having to worry about living on interest. Click To TweetThe cool thing too is she also had her house, which was paid off. Because she’s got life insurance, if she doesn’t want to leave behind any debt, she could go and have her house refinanced for more cash to invest. She could do a reverse mortgage on the house. If you’re at least 62 years old, you can get a reverse mortgage from the bank where the bank pays you every month or a lump sum. You can do it a monthly type of cashflow where the bank will pay you every month for your house. We did the calculations. In her case, she would have received about $2,300 a month from that reverse mortgage. Right there, we’re already getting over $27,000 or so.
In total, before we take out the cost here, you start to add this all together. You’re like, “That’s pretty cool. You take out about the $13,000 a year or about a little over $1,000 a month, now she’s left with about $12,000 a month or a little under that. Even conservatively speaking, she’s living on over $140,000 a year.”
I asked her, “Here’s your choice. You can buy life insurance. Even after the insurance costs, you net $140,000 a year, or you can live on the $50,000 that you get normally that every financial planner would tell you to do. What would be better $50,000 or $140,000? She’s like, “$140,000 is better. You don’t even need the money yet.” I said, “That’s perfect.” By the way, she can live to at least 90 years old and have enough cash to live well!
Barring anything crazy that could happen, she’ll probably live that long anyways. She needs that money to stretch out. I told her, “This is why it makes sense.” This is not even including the fact that she’ll have hundreds of thousands of dollars saved up by that time in 25 years anyways. When she does hit 90, let’s say she used up all of her money and she’s still alive, which we expected could probably be the case, no problem. She’s got the cash value. She can start drawing from there. There’s several hundred thousand built up over the 25 years or she could end up saying, “I’m done.”
By the way, she can also do a paid-up policy. She can, at any point, say, “I’m going to stop paying that $13,000 a year to lower the death benefit anyways.” Still, regardless, she could sell off her death benefit. She can use all the cash value. She could do a combination of the two. There are many options for her. That’s the cool thing. That’s what’s awesome about this. She did put a niece and a nephew on as beneficiaries for a little bit of that death benefit. She said, “These are my favorite nieces and nephews because I only have two.” For the most part, she didn’t care about the death benefit. It’s what it got her to spend now. It’s what got her to access the cash now.
Even without the cash value, the death benefit alone going to be there. It allows you to spend money differently while you’re alive. That is one of the cool, powerful things about it. When I’m doing the whole step and cash in, and we might do a minimum death benefit. Some of you might say, “That’s cool.” Others might say, “I might want more death benefit.” Maybe we do both. Maybe we get a convertible term policy and then we also get a whole life policy you can start doing the whole banking policy from and create some awesome, super-charged savings from that.
That’s the thing. There are so many cool options with that. I want to give you that example because even when I thought this was cool, I heard about infinite banking and taking years to accumulate cash value. It was when I finally understood the power of the death benefit too, that that death benefit allows me to spend more money now.
Especially if you start building an estate, which I hope all of you are open to doing where you start becoming a multimillionaire. This is why I teach you guys. We want you to create millions of this. If you do, the likelihood is you’re probably going to have an estate tax problem. You’re going to need something to pay off the tax, the tax bills, a death. You got the life insurance to do that for you. All the rest of your assets can keep cashflowing and paying your family, your state, and the charities that you love. You name it. It gives you that power and control to do whatever. You get tax shelter and this liability shelter from creditors and lawsuits. How cool is that?
This is not for everybody. I’ve had a few people I’ve said, “You’re about 70 years old. You could do it, but you don’t have to do it. You’ve already got some insurance in place. That whole strategy of banking may not make as much sense, but what might make sense is having that death benefit that gives you that permission slip to spend down your assets while you’re alive. That’s where life insurance becomes life insurance and not death insurance.”
I want you to think about that and mull it over as you start to look at your own situation and consider that. By the way, the same thing is true. People keep asking, “Do you do this?” I do. This is the thing I was keeping secret from you guys. I was doing it on the side for specific small groups, but that’s something I’m extending to you guys as well. If that’s something you would say, “This is something that I or my family might need,” cool.
Whether we’re doing this on you, your spouse, your kids, grandkids, or whatever, let me know. Ask me whatever question you have. You can shoot me an email, Chris@MoneyRipples.com. The whole purpose of this is to educate and train you to know that you can expand beyond where you are. By the way, the worst time to buy this life insurance is when you are in your 70s and the state attorney says you need life insurance now because you got this big estate and you got to pay your taxes.
I would rather buy it when it’s cheaper. In any case, I hope you enjoyed this show. Thank you so much for sharing this with your friends, family, and whoever else that you guys have been sharing this with. I love serving you and I’m going to keep doing so. Email me with other topics you want to hear on this show. Everybody, you have a wonderful and prosperous week.