People keep asking me the same question these days—Buck, what are you investing in given the relative instability of asset prices and the economy?
Now I won’t give you financial advice—that is my disclaimer. But I will tell you what I tell everyone else. In times like these, I stick mostly to multifamily real estate and life insurance related products. Why?
Well, in the case of multifamily real estate, people have got to live somewhere. Paying you rent is required so they don’t go homeless. What good is your apple stock if you’ve got no place to live?
What if asset prices go down you ask? Well, as long as you are moderate with leverage and continue to deleverage by creating value, you should be just fine. Again, that’s my opinion and those of you in my investor club know that I am doubling down on this.
What about this whole life insurance product thing? Well, if you don’t know what I’m talking about, take a look at WealthFormulaBanking.com and get a sense for yourself.
You know, it drives me crazy when know-it-all doctors tell me that life insurance is not a good investment. Well, if you look at the way their policies were structured, they are absolutely right. They just aren’t seeing the way the wealthy get these things structured. The wealthiest people in this country, the Romneys, the Rothschilds all use these products to create wealth.
Do you think they might know more than an ER doctor with a blog about this stuff? Well, I’ll leave that up to you.
The good news is that the structure used by the ultra-wealthy for these policies is not just for the rich. It’s about structure. You don’t have to be a millionaire or a billionaire to make these things work for you. And, in unstable financial times like these, dealing with investments that have consistently paid out since before the Civil War might not be a bad idea.
We talk about this stuff a lot and will continue to do so but if you have not checked out WealthFormulaBanking.com do so to get detail. I can honestly say that if you took no other action from Wealth Formula content other than to get familiar with these products, I would feel like I have done a service to you and your financial future.
Today, we are going to talk about the not-so-obvious benefits of these kinds of products that guys like me don’t often think about because all we care about is creating wealth. In fact, there are many strategies that we these policies can be used for other than maximizing leverage and velocity.
To talk about this, I’ve got the best in the business back on the show this week, Christian Allen and Rod Zabriskie.
- 30 seconds summary of Wealth Formula Banking
- 30 seconds of Velocity Plus
- Wealth Formula Banking: Don’t I have to pay back interest?
- Long-term insurance market
- Why would life insurance make more sense than term insurance
- Convertible-type policy
- Insurance as part of a comp package
- Getting a policy for your kid
- Common questions and misconceptions
- Not only to protect but to grow your wealth
Buck: Welcome back to the show everyone. My guest today on Wealth Formula Podcast are well-known to many of you. They are the insurance partners of Wealth Formula in the Wealth Formula Banking and Velocity Plus world. Their names of course are Christian Allen and Rod Zabriskie.
We’ve done webinars on this before and if you’re curious and we’ll come back to this again but it’s WealthFormulaBanking.com and we’ve got some new educational stuff coming up on these products this year as well that you’re gonna want to pay attention to. But anyway with the larger personal finance strategies that we hammer all the time you know with these products, sometimes we forget about some of the other benefits of these accounts and also some of the unique strategies that people are using them for outside of velocity and leverage, which is the things that we like about them the best generally speaking as investors. So I wanted to get Rod and Christian back on and talk about some of these perhaps maybe they’re a little bit less sexy to talk about than leverage and velocity and all these things but they’re equally useful elements of utilizing permanent life insurance products in your own portfolio. So with that said, Rod and Christian, welcome back to the show! Actually Rod I don’t think maybe we haven’t had you, we’ve only had Christian in the past I think.
Rod: Yeah I’m a first-timer.
Buck: Yeah so guys first, before we kind of get into some of the nuances, I thought it might be a good idea, even though we’ve kind of you know we have webinars on these things, just so anybody who’s relatively new to the show, can you summarize these two products? I mean let’s start with this whole concept that we’re calling Wealth Formula Banking, can you give us sort of this 30-second summary of kind of what that is? I know it’s not easy…
Christian: Yeah no that’s great. So first off thanks for having us back Buck. It’s good to be on the podcast. Yeah so as we talk about Wealth Formula Banking, it actually is pretty simple. The whole strategy is designed around enhancing the investing that we’re already doing so more or less well we’re suggesting is that people can create more value than they would be able to otherwise by just simply utilizing the policy in conjunction with their investing and it ultimately becomes the Opportunity Fund, right? So as people use this, as they invest, then they can just cash flow in and out of it there’s some significant tax benefits there’s some security that we just can’t get any other place. And then of course there’s all these kind of other benefits that we’re gonna hit on today but really when we’re focusing on Wealth Formula Banking it’s all about enhancing the investing and generating a higher overall return with the investing that we’re doing.
Buck: The idea in this again just to give you my two cents because when I first heard about people talking about banking I was like what are you talking about? Bank on yourself all this stuff and no idea what people are talking about. But really, you tell me if I’m explaining this right, but basically it is a whole life insurance policy that is structured in such a way that it doesn’t look like what everybody thinks of when they think of whole life, it’s not Dave Ramsey type policy, but you’re it’s a tool that lets you accumulate cash that grows at a compounding rate, a compounding rate that’s typically five, five and a half percent and it is tax-free, but the value of that is that you can borrow it at a simple rate and enjoy the arbitrage of having money that still grows at a compounding rate even though you borrowed it. It’s coming from a separate insurance account, a general insurance account that you’re borrowing, so almost more like a collateralized loan and that loan comes out it as a simple rate loan and so you can invest that into something and effectively we’re investing in the same money, two places at the same time. And that’s kind of how we’ve been talking about Wealth Formula Banking. Anything else to add to that?
Christian: I think that’s a really good overview when we get into the kind of the technical components of it, so I think you nailed it.
Buck: And I’m bringing that part up because that’s the part that we keep reiterating from the investor side. This is what got in got me interested as an investor because quite honestly I’m like a lot of people, I’m like life insurance, I’m immortal so I don’t need that actually. But no this is this is something that’s allowing you to take your current investments and to supercharge them with the additional leverage and velocity. Now Velocity Plus, let me just try to summarize it real quick because you guys you’re too smart for me and I do it, it’s better if you just add to it. Velocity Plus, I think it’s really interesting because usually when we have insurance people like Christian and Rod on, they’re either in the camp of this whole life insurance or they’re in the camp of what we call an index universal life policy. It is rare that you find somebody or group that does both and primarily what we’re finding is the reason is that they either sell one or the other and that they may actually even believe the things that they are hearing, but the reality is they’re hearing a very biased view. But here is the difference: so Velocity Plus is a product that effectively allows you to again, take money into a permanent life insurance account, so it’s not just life insurance it’s actually an investment, but the way that grows is different. Whereas with Wealth Formula Banking it was like you know five and a half percent fixed with dividends, it’s basically kind of just a fixed amount of interest per year that’s growing, with Velocity Plus you’re now getting exposure, you’re gonna base that growth based on how well the stock market does. Say for example an S&P 500 index with one catch, and the catch is that there’s gonna be a cap and there’s gonna be a floor. So typically the way it works is twelve or thirteen percent of the upside of the S&P 500, and then if in zeros the floor, so in other words every year you can either make up to twelve or thirteen percent or if the market goes down and goes below zero you can’t lose any money. And then so that’s the Index Universal part. The part that makes it Velocity Plus is that you can add leverage to this, so typically let’s say the market does seven percent S&P 500 does seven percent you get that seven percent but then you get a three to one leverage component from the banks so that effectively becomes close to twenty percent, I think it’s nineteen point something percent internal rate of return. So it becomes very attractive in that regard because the downside still remains the downside, the floor is still the floor at zero you you don’t participate on the losses anymore. And so that’s why I love that product and it’s usually only available to that kind of product who used to be only available to high you know ultra high-net-worth people but Christian and Rod have found a way to do that for pretty much anybody who makes at least $100,000 a year. Did I miss anything worth mentioning as a summary on that?
Rod: I think maybe the one thing I would add is just that it’s using those same principles of leverage and velocity, it’s just that it’s more a passive way to do it. So whereas on the Wealth Formula Banking side we were talking about it’s for active investors we’re using that in conjunction with these other and cashflow investments that we’re doing, whereas on Velocity Plus, it stands alone. WWe set the money aside and it’s going to do its thing. We use it as kind of an alternative to retirement fund type of thing where we know we’re going to get this benefit down the road, but we still get the benefit of all those same economic principles that you have.
Buck: I think it’s that’s actually a really good point and sometimes I’ve thought about it this way too because you know like everybody else I tried to get my arms around this thing. And I usually do that by by drawing sort of parallels and to me, Wealth Formula Banking is sort of a hyper-charged self-directed IRA, Roth IRA. And then Velocity Plus is sort of like leveraged investing in the stock market with guardrails, but it’s also it would equate more to your traditional stock market portfolio that you’re gonna just set it for getting in an IRA.
Rod: And again equivalent to the Roth side, right? Because down the road it’s gonna be tax-free.
Buck: Okay so I think that’s a good summary if anybody wants to jump into a lot more detail on that again go to Wealth Formula Banking.com and you will see full webinars on either one of those. But it’s important that you get a little bit of background on kind of what these things are if we if we’re gonna get into some of these nuances like we are today. Of course so let’s talk about this in a little bit more depth. I mean of course I never liked the idea retirement per se in general because to me retirement is sort of the same thing as death so I’m retired from medicine but I’m always gonna be doing something no matter how much money I have or make or whatever. But you know there are some people out there who think of banking strategy particularly for the purpose of having what we call a tax-free retirement income, right? And that’s actually something that we don’t tend to emphasize as much but a lot of people think of it almost purely for that purpose. Can you talk a little bit how that would work?
Christian: Yeah for sure. So this has been a this has been one of those things that has received a lot of attention over the last probably decade, especially as we’ve seen the kind of volatility in the market, I say that and yet we’ve had a lot of good years in a row, but as we go back through the 2000s, that’s when they started to grow more because of the fact that people were oftentimes nervous about the volatility of the market and wanted to be able to create something unique. So the benefit here is that even though we’re actively using the policy to invest our money, we’re using it for real estate or cash flow investments, once we get to that time, once we get to the point where we want to start drawing on the policy itself, we now have the opportunity to take it out as a tax-free retirement income flow. And so what we’re doing then is we’re using it for the exact same purposes that we would have otherwise, but like you said oftentimes we don’t emphasize the fact that on the back end if we want to use it as a really powerful fixed income, tax free fixed income part of our retirement income, we can certainly do it. And so that’s really the power of it and again like there’s been a myriad of books written on the subject and it’s just an another really simple but powerful use that we get from doing Wealth Formula Banking in general.
Buck: And to be clear let’s talk about the mechanics of that. Because I know people are thinking to themselves, well wait a second I’m borrowing this money, okay well that explains why I don’t get taxed on it, right? Because you don’t get taxed on borrowed money. In fact I’m trying to get Ed McCaffrey on the show, he’s a tax professor, law professor in USC and he has this mantra: that is buy, borrow, die. And he doesn’t talk about it in the context of just life insurance, he talks about in terms of any asset, but this is kind of what we’re talking about. I mean that is effectively you’re buying you have an asset, you’re borrowing against it, so you’re not taxed there. Now explain the concept, because some people are thinking yeah but I still have to pay that interest back, right?
Christian: Yeah I think it’s a good point and especially as we start talking about borrowing, when we traditionally think of borrowing, obviously we’re thinking of paying it back at some point, which does happen here. So let me just get through the mechanics when we put money into a life insurance policy it’s after-tax dollars so when it goes into the policy itself they’ve already paid the taxes on it, the money that gets in there is going to continue to grow on a tax-advantaged basis regardless of how somebody brings money out of the policy and then in that stage it’s tax deferred. Now what ends up happening is on the retirement side or once we want to start drawing income from this vehicle, what we’re gonna do is we’re gonna adjust the way that we bring money out of it. So what we do is we start by taking out the money that’s already been in. Well that money’s already been taxed anyway, right? So I don’t have to pay taxes on my basis and then in addition to that then we’re gonna start utilizing loans. Now the reason that this can be a little bit confusing again is because when we think of loans we think we have to pay that back. Well we do have to pay that back but we’re not going to be the ones actively paying that back at any point in our lifetime, what happens is the policy is designed so that the death benefit will come into play, pay off whatever loan balance is there and needed to make the policy whole, and then whatever is left will then go to whoever the beneficiaries of the policy are. So again it’s just a it’s just important to kind of understand the mechanics of how we get there, but the biggest thing I think is just when we think of loans as it pertains to retirement income and life insurance, the death benefit’s gonna pay that off rather than us during our lifetime. That making sense?
Buck: Yeah that makes a lot of sense. One of the questions may arise again, I’m just I like to kind of you know figure out some of these things that I’m sure other people are thinking about so you know the answer I’m gonna ask you. But you may you you may have a situation where you’ve got interest that you have every year, now how does that, I mean you say you don’t have to pay it off but if you don’t pay it off doesn’t that compound?
Rod: Yeah so the I mean it works the loan is gonna work the same way here is what it was when we were using for the investments, right? So there’s this loan balance out there but the loan would the money we received on that was came from the general insurance company so the cash value is all still there continuing to grow and compound. Now the difference is we emphasized when we’re doing the investing that our loan rate is as simple right because we’re paying on that loan while the cash value is growing on a compounding rate. Now both sides are going to grow and they’re going to compound but they’re doing it in parallel. And then ultimately again because this death bet is tax-free, death benefit is what’s going to come and pay it off that’s how from from beginning to end it all it’s happening on tax-free basis.
Christian: Maybe one other point that would be helpful, well actually a couple other points as it applies to retirement income. The first one is that there’s some kind of unique features that we build into it and and this is one of the things I just wanted to mention, most of the time when we’re building this out, the primary concern that would come to somebody is well what if I take too much money out of the policy, what happens? We have to maintain the integrity of the tax benefits. So to that to make sure that we’re planning and preparing for that, we’ll usually use a company that provides an overload protection rider which just guarantees that we don’t ever have to worry about not being able to pay off the loan with the death benefit and it guarantees that we never have to pay taxes on it. So there’s a couple of key things there that I think are really critical in understanding the dynamics of how we get this thing to come out tax-free and stay that way forever, I think puts a lot of people’s mind at ease.
Buck: Just for just for compare and contrast, the usual thing that people do here is and of course not Wealth Formula people because they’re too smart to do this, some people they’d have a lot of money in these 401ks or IRAs etc and again I think that personally I don’t have those kinds of retirement accounts because you have this kind of product available, Unless somebody was matching or or you know it was a contribution from your employer wouldn’t make a lot of sense in my view, but say you do have a 401k or an IRA, the difference is ultimately that you know you’re counting on those are more sort of like okay you paid your taxes and the differences on the Roth side is that you have some restrictions and you don’t have them on the banking side. Is that probably a fair…
Christian: Yeah we’re gonna get into this as we talk about some of the other benefits and as we go further into this but flexibility is really critical and you know with the 401 K most often you can maybe get $50,000 on a loan, but even then the loan doesn’t work at all like the loan from the life insurance company so they’re totally different in the way that they work and of course if I don’t pay it back then I’m gonna get a tax bill for that I could get a penalty for it so there’s a lot of dynamics that make it a little bit tougher. I think the reason that people do that is just because it’s just what they know, right? So it’s just a normal thing it feels comfortable and we’re just happy that we can come in and bring another idea to the table that people can consider.
Buck: Right so let’s move on with some of the other things that I think that are less talked about which frankly again I don’t pay that much attention to but I think they’re important for people to think about. So after retirement and before death there’s often this period of decline and some people need a lot more help than others as they age and one of the benefits of these kinds of insurance products that we tend not to think about is the idea of long-term care. So for healthy young strapping lads out there, what exactly is this whole long term care thing all about? Why is it important, you know this ends up being one of those things that people maybe didn’t even realize they got out of their policy and then one day they need it and it’s there, will you talk a little bit about that?
Christian: Yes absolutely. So let me just start by saying there’s a couple of really major flaws in the long-term care market the in long-term insurance market. First one is that hasn’t been around long enough for them to price it accurately, so what’s happening is as you’re seeing older people who have bought it and their price just continues to go up and oftentimes they just eventually can’t pay the premium anymore. So that’s one of the issues. The other issue is that there’s a 50% chance I’ll use it there’s a 50% chance I won’t. So I could be somebody that’s paying a significant premium and potentially not any get anything back from it. Well so what happened is the life insurance industry came into the equation and said all right let’s see if we can do something that’s more effective and so what they’ve done is they created writers that can get attached to life insurance policies and there’s various different types but the one that we normally use is just called an accelerated death benefit for chronic illness and what it is simply put it’s the ability to not just utilize our cash value while we’re alive, but actually access the death benefit value while we’re living to cover long term care type expenses and all of the research and study that we’ve done, the consensus really among the experts is that it’s a far more efficient way to do it. Now it’s not quite as robust as getting a traditional plan but again there’s just so much more I can do with it and of course I have the flexibility of utilizing in a variety of different ways, I can of course use it for Wealth Formula Banking which is the primary reason or Velocity Plus either one of those would fit, so yeah that’s the main thing is just understanding that they have a rider that, let me back up actually. Most of the time unless somebody wants something more robust then we’ll just have a rider that costs nothing. And so the what you mentioned there Buck is is literally how it works, if you need it I can get the value out of it but if I don’t it’s never costed me anything to have it. And I think that’s another important point.
Buck: Let’s just going a little bit of detail on this because again most people, myself included, don’t really know what typical long-term insurance looks like and what does it cover. I mean listen at the end of the day what we’re trying to do here with insurance in general and we’re obviously creating wealth but we’re trying to protect our families. And so people think about protecting their families when they die but sometimes the drain on them as you’re dying and sucking away all of these dollars is huge. So typically in the form of long term care insurance that’s basically what you’re buying, it’s like a okay I need long-term care at some point this is I’ve got insurance to cover this I’m going to pay for a bunch of years and like you said there’s a 50/50 chance you’ll need it so the insurance companies gonna win either way. But in a banking setting or in any of these permanent life settings, the difference is what does that rider look like? I mean does it mean like you can start digging into the death benefit early is that kind of what it is?
Rod: Yeah and you know like Christian said there’s no cost to that rider on the front end. What happens is they’re gonna discount those death dollar the death benefit dollars to today because I’m using them now while I’m still alive. And so if I’m 75 when I use it the map might be a greater discount than if I’m 90 when I use it. But the point is it is that death benefit that’s being accelerated toward that and it could be used for a monthly type of benefit like the traditional long term care world where I’m having someone come into my home to take care of me or I’m in a facility and it’s covering those costs or it could even be taken in as some lump sum so for example if I had to do some kind of modification to my home or my car so I can get around then I could use it for that so it’s pretty flexible in the way that it actually can be used on the back end.
Christian: One other thing maybe just to add is that we should probably define is just what qualifies as long term care. So just like in a traditional setting what they what they’ll do is they’ll look at the six major functions of daily living and if you’re unable, if a person is unable to perform two of the six then they can then qualify after they’ve gotten a signature from a doctor. So the exact same parameters that apply in a traditional long-term care setting apply here. Once we do that then they now have access to the the death benefit portion that we’re talking about. So yeah it can be really valuable and again it’s we don’t emphasize it but once once we get there and needed it could be hugely valuable.
Buck: Let’s go to death. So we bought this life insurance policy and beyond all the uses in life that really personally that’s what \I think about when I might buy these is that I think they’re good ways of creating wealth then and leveraging the money I have into other investments etc. But there is this ultimate function in death and for a death benefit alone, why would permanent life insurance make more sense than term insurance? Because the thing that I heard and I’m sure people hear this all the time when they you know first get advice somebody comes along and I got the same advice they say buy term and invest the difference because permanent life insurance is too expensive, right? So if you’re just getting life insurance just in general, is there an advantage to getting permanent over term at least in the way that you’re structuring? Because I know for a fact it isn’t the way that most brokers structure these things.
Rod: Yeah so there are several directions we could go with this and I think the first one is just to to recognize that obviously term is what it is, right? If I buy a 10 year term or a 20 or 30 year term and I don’t die in that time the insurance goes away or the very least the premium goes up so dramatically I’m not willing to continue to pay it, right? So it is a temporary solution.
Buck: You’re renting.
Rod: Right. And that’s a sunk cost. It’s gone either way and and I’m not planning on dying, the insurance wasn’t in a plan let me dying right we’re in agreement on that and if everything goes the way we we think it will then and you’re right it’s just sunk cost.
Buck: Well let me be specific about that cost, because that’s something that I’ve heard people talk about. But in reality after a couple years your insurance the insurance component of this is effectively free.
Rod: Well so yeah I mean when we look at the Wealth Formula Banking for example and yes there are upfront costs and so we may not have as much cash value right off the bat as what we’ve put in, but really you know by year five year six I have as much in my cash value as what I’ve put in and from that point on it’s gonna grow and compound and ultimately like you said give me to this point where I’m getting five, five and a half percent of a net growth.And all of that is happening after paying the costs of the policy. So it’s not that it’s free but because of the interest and dividend that I that I don’t have an equivalent IRR to what that was, but when we talk about this kind of return it is after all those costs are accounted for so in a sense, it’s not a sunk cost, right?
Christian: It’s just a program right so when that happens but because of our emphasis and designing the policy perfect every time we’re always going to design it so that it’s minimum cost maximum cash. So again going back to your point, even though I have some in the first year, by the time I get past that maybe that’s the second year I’m starting to gain money every single year regardless of what’s happening outside of that. So actually one other thing I wanted to back up and just say just to kind of create some context. Term insurance isn’t a bad thing, right? Like it just kept coming into my mind, it’s one of those things that can be really critical and really important and really helpful for people and so we don’t want to suggest that it never makes sense and it’s never right, in fact oftentimes what we’ll do is we’ll use a combination of Wealth Formula Banking because we want to focus on the cash building components of that, over time that’ll actually do better from a death benefit perspective as well, but sometimes what we’ll do is we’ll just utilize inexpensive term insurance to go along with that to make sure that we’re not just planning for the investment side of things but we’re also planning for the the possibility that someone could die prematurely, right? So anyway I know I’m kind of all over on that but I just that was a point I thought that we ought to hit on at least briefly.
Buck: Yeah no I think that’s right I mean I guess my point here is not that it’s not that there’s that there’s not value in term in fact I would say that one of the major values in my view is that you can make sure you’re insured properly, that you get as much term as you can because you may not want to spend that you know an enormous amount of money in terms of just the policy itself so you may end up with half this and a half of that and you know we’ve certainly talked about some of that in terms of my planning as well as you know. In fact for me and I was talking to Rod I don’t know if I’d talked to you about this yet Christian because I know we’re in the middle of working on some new stuff for me, one of the things I was telling the guys was hey we’re gonna do one of these policies, I know that’s gonna have a hefty premium that I think of as an investment, but on the other side for me because this the other part with that I’m we’re planning for as my wife, for me I was thinking about doing something that was potentially the additional insurance that I have on me would be what I would call convertible. Well in other words we’re already investing a lot in insurance products which I’m happy about because I think there’s probably very few things that I would say come near to the risk-benefit ratio there but I also I’m thinking in a couple years I may have a lot more money than I even have right now and if that’s the case I want to make sure that I lock in some rates with the convertible type policy. Can you talk a little bit about what that is so people know?
Rod: Yeah so from its basic standpoint it’s term insurance just like we would think of in any other context for term insurance. But what happens is the insurance company is already committed to to that death benefit and so they’re not necessarily picky on whether it’s term or whether it’s something else and so they give us this opportunity to, like if we wanted down the road do something with Wealth Formula Banking or with Velocity Plus then we can take all or a portion of that term policy and convert it into a whole life or an index universal life policy and so we’re just repurposing it toward the kind of the other side of the equation. And like you said you’ve already qualified for there’s no underwriting process that we have to go to at that point it’s just a matter of putting in the paperwork to do that conversion over to the other types of insurance.
Christian: so in other words the age changes but the health rating locks in permanently. So that’s the benefit of getting something that’s convertible, you’re covering the need for your family right but at the same time you’re giving yourself the opportunity to move into the Wealth Formula Banking or Velocity Plus world either for the first time or in addition to what’s already there so it really just provides some additional options that a lot of people don’t think about because they’re thinking I just want the least expensive term policy I can possibly get and sometimes that’s just a mist or just kind of an oversight that can come back to haunt us.
Buck: Yeah and I think that’s really important because I think one of the things being in my mid-40s now, every five to ten years, knock on wood, I make a lot more money than I do the five years previous, so the concept I mean even just going through calculations we’re not just talking about five six you know seven years ago when I got some of these other policies that we’re trying to replace now, you know Rod and I were talking I need like literally twice as much insurance now than I used to based on my annualized income. And so it would have been a lot better had I known you guys and had done something convertible when I was a little younger and a little bit more spry and lock that in rather than starting to sweat it when they come at me to get my blood.
Christian: Yeah for sure, really that’s it I mean it’s one of those things that takes a little bit of foresight and if we can do it then it’s really valuable and what’s interesting is, to get it convertible policy from a good company that‘s gonna be convertible is not gonna be a significant difference in actual cost it might be the difference of five or ten percent but that could you know again when we’re talking about let’s say it’s a couple hundred bucks a month that we’re talking about it’s absolutely worth it when I can then go and just just look back five ten years and say all right I’m just gonna start this up I don’t have to think twice about it. A couple other things just in terms of the death part of this right there’s an estate planning benefit which is obviously if you have an estate, if you have a large enough estate where you could be paying estate taxes you can structure these with an irrevocable insurance trusts that’s one thing so that it would take you completely out of your state and also this money is going to ultimately then even if you don’t have an estate tax problem that gets you out of probate
Rod: Yeah it’s a huge thing on liquidity because you know especially for a lot of the people who are your listeners you’re investing in real estate and some of these other cash flow types of investments, when those pass to the kids, it can be a huge benefit for them to also have some liquidity go with it right? Especially if there’s this tax burden but really across the board a need for liquidity can be huge and and so this provides for that.
Christian: So my take on this Buck is that life insurance and real estate are in my opinion the very best assets from a moving from one generation to the next standpoint, obviously real estate we get a step-up in basis on which is significant, right? On the life insurance side we get basically the equivalent, right? We get a tax-free death benefit which ultimately means I’ve now may I’ve gotten the whole value of the policy even if I’ve only put there you know I could have put very little money into it. So the reason I mention that is just because right now obviously the estate tax limits are pretty high right we just got to 11 million, just 11 million and some change per person, but we don’t know where that’s going to be in the future. It’s one of those things it’s almost impossible to plan for because it’s a moving target we just don’t know where it is but the reality is is that a lot of the things we’re doing we can do a purpose right? So we don’t have to use Wealth Formula Banking exclusively for that we can create this value in these other places and again because of the way that we design it this is really what’s interesting is that if I live if I go and live to average lifespan and I buy a policy that was focused on death benefit when I was young versus buying one the way that we do it with low-cost high cash, we’re actually going to have more death benefit over time as well. So all we have to do going back to this whole idea of planning for death benefit in a state is just make sure that we plug that gap in between, but again if we can if we can have a place where we have liquid money then we don’t have to fire sell real estate or other assets, now we have the ability to make choices that we want rather than doing something because we’re forced to.
Buck: I don’t have any significant business partners in other words you know the businesses that I have I’m the sole owner. But I had heard a number of situations in which people with businesses with partners that insurance has played a role in that. Can you talk a little bit about that it’s something I don’t know much about but I heard about it being used.
Rod: Yeah I think there are two primary things to focus on the first one would be what they call a buy-sell and really whenever a corporation is created with with partners usually that what the attorneys are building into that some sort of buy sell agreement. Where if Chris and I are partners and we are then if I pass away then he’s gonna take care of my family that he’s gonna buy out my portion of it otherwise he has to go into business with my wife and I don’t know if that’s in the plan but anyway the thing that happens is these often aren’t set up that the funding for that isn’t set up so if he’s got to come up with a lot of money when I unexpectedly pass away then that can be a problem so death life insurance is a great way to fund that so that’s the first one to buy sell.
Christian: And again maybe just to emphasize this as we’re talking about these different points we’re not exclusively even having to use it for of the buy sell. We could be using it to do everything that we do with Wealth Formula Banking and have a dual purpose to create or to fund the buy sell that’s already existed in our Articles of Incorporation, now we have something to back it up and they can actually fund it if that situation comes up.
Rod: Right absolutely. And the second way which can fit into the same same conversation but it’s called key men. So if I have an employee who is so important to my business that if he’s gone then my ability to continue on is changed, it’s going to take something very material for me to replace that person, then having a life insurance policy in place that can can do something on that and again we can do a purpose it right it could become some kind of a an executive benefit or something for that employee where now he or she can be doing the banking using that policy and it also has the backup for me as the business owner.
Buck: You know this maybe a little off topic but maybe you know about this but I heard that Jim Harbaugh the the Michigan coach put out, I heard that insurance was a big part of his comp package, you know anything about that I’m sort of curious you know like how that worked.
Rod: Yeah it was set up as part of his package where they would fund the policy and that would become part of, basically it’s kind of like we’re funding his retirement plan but without all of the strings and the stuff attached right the limits.
Buck: So kind of like a banking?
Rod: Yeah so they were able to put millions of dollars a year into this policy for him that will become a huge piece of his tax-free retirement income for him when when he retires.
Buck: Would he have been, again this is a little bit off topic, I’m just curious about that so one date when they paid that when they funded that what do you get tax on that?
Rod: Yeah so it’s it’s a between he and the business there it is gonna be taxed it is compensation right
Buck: Yeah I just curious why they would structure that that particular way
Christian: You know and to be honest with you Buck it’s been a while since I read about that so we may be a little bit fuzzy on some of the details but he definitely did use it as a hugely significant part of his package, it seems like it was the tune of ten million dollars or something like that so obviously was significant but there was some interesting things that they did that we you know we do with people all the time it’s just a matter of understanding the dynamics of how to make that fit.
Buck: Yeah I always think it’s kind of funny you know when you hear all these doctors in particular when I when I was out of training telling me to stay away from these types of permanent policies then you hear about these really, really ultra wealthy people using insurance products left and right and it’s like oh gosh it’s because they were looking at a completely different product that’s why
Christian: Yeah so it’s one of those things from my perspective like you almost can’t blame somebody for feeling that way if all they’ve seen is something that doesn’t create wealth the way that they could. It just makes sense to me that people end up feeling that way so our job is to try to educate and help people understand the situations where it can be really valuable and again I know I’ve emphasized this several times but the design low cost high cash is everything and just very few people know how to do it.
Buck: Just to that point I want to point out something that that is so critically important because even the idea of low cost over funding etc, even that can be done differently and I know and I can share that I initially had a policy, a big one and you guys looked at it and you said okay this is not bad but over the course of a decade, we’re talking about hundreds of thousands of dollars difference if you just structured it slightly differently. And so that’s why it’s so important to make sure that you you know I mean of course I’m biased because I’m totally with these guys but I mean even if you have illustrations and you’re thinking about doing something or you already have illustrations, you still might want to send it to Rod and Christian because literally I took a loss on on that policy because I was like okay well I’m not gonna stay in it if you know if over the long-term I could do so much better.
Christian: And that’s a hard decision for sure but it really is surprising even inside of the world where people are you know professing to do banking, most people just don’t have just they just don’t do it enough they don’t have the expertise to know exactly how to do it, either that or they do know how to do it and they’re not willing to. So our kind of guarantee to people as we talk to them is that we’re totally confident that we’ll make it perfect each time one and to verify that we’ll just tell anybody that we’ll run it up against any design that’s out there and we just know we’re gonna come back with 100% of the time and I think that’s why we’ve had so much success and working together is because if you deliver for people what they’re looking for that just makes a huge difference and it’s surprising how many people don’t.
Buck: The only time I think I believe the only time I brought you guys something where you said you couldn’t beat it was because it was done illegally. It was over funded too much legally to even be considered an insurance it was a modified endowment.
Christian: And even that can have value at times right but again not in the banking world.
Buck: Okay so here’s another going onto another interesting use so this one’s relatively new and I’m curious on your thoughts. I’ve heard about a number of people opening these policies on their children in lieu of using 529s, if you would maybe you could talk about kind of the way at 529 works in general, I don’t use one again, my theory was if I had enough assets I just used those assets to fund I don’t need a separate account, but in reality it is something that is an option. Can you talk about how that would work you know what the relative benefit or you know would be for that?
Rod: Yeah so a 529 plan is is basically set up by the state and it’s a place where where you could set aside money like you said it’s for your kid for their future education it has to be specifically used for education, so it’s earmarked for that but you know if you know your kid’s gonna go to college then you know why not do set the money aside and do it in a way that they can be text tax beneficial for you, right? So you take some money that you pay tax on and you’re setting aside in this account, it grows and ultimately when it comes time to use it you get to take it out tax-free. Any growth anything you’ve seen on that you’re just all going to take it out it’s going to come out tax-free. And so you know the the the account that the state is setting up for you or the options that they’re making available for you are going to be the equivalent of mutual funds that you get to invest in. I kind of think of as similar to a 401k, my business sets it up for me, they make the the options available to me to invest in these certain funds, and that’s a similar thing that’s happening with the state, they set up the opportunity to invest in this 529 plan, they give me the options that are available, and I can choose to invest in those.
Buck: So what are the restrictions on those? I mean if a kid decides not to go to college or they get a full ride what happens?
Rod: Yeah so then it just it way it becomes a retirement plan. The backup is that we just leave it there it continues to do its thing and then ultimately we can take it out as as a retirement account.
Christian: So there’s, from my perspective there’s two major challenges that come with a 529. The first one is just investment options like we talked about right. So the even though Rod mentioned it like a 401k there’s not nearly the kind of investment options that the state’s not giving nearly the kind of investment options that generally a 401k does. It’s really pretty limited right so that’s the first thing. If you’re not a market investor then that’s probably not a place you want to go. And then the next thing is it’s really unflexible right. So the benefit of using using a life insurance policy just like we’re doing with Wealth Formula Banking and setting it up the exact same way is that I can use it for college if I want, but I don’t have to. And I can use it all along the way for investing in other things as well, so it becomes one of these things where from a tax standpoint they’re identical, from an underlying investment perspective the life insurance we usually will use whole life but if someone wanted to take a little bit of additional risk for reward then we could go at the IUL but either way the tax benefits are gonna be exactly the same, the investment options are gonna be different, the flexibility is going to be hugely different and that’s really what the benefit of using, that’s why the life insurance world has become really popular inside of college education planning.
Rod: And one one thing on that too as kind of a side benefit is cash value life insurance is not included in your assets on the FAFSA. So when I’m going and want to apply for grants or support or things like that then that does not count.
Buck: So just to be clear what you’re saying there is when you’re filling out that information and they’re deciding how much financial aid to give you, the money that’s in your 529 is gonna go plop right on that line item, they’re gonna know about it, but money that’s in insurance cash value and insurance is not going to go on there?
Christian: Correct so yeah that’s a big deal obviously if you’ve got kids who are going to school and they want to get financial aid like it really does make a big difference.
Buck: So that’s huge. Okay so let’s see I have some other questions here for you. Okay let’s let’s talk about the high net worth people again because first of all you know the whole reason that I discovered these kinds of products in the first place is because like I said when I first finished resident see training and all these doctors giving me this advice about insurance and it was always so negative about permanent life and then I and then I started meeting and knowing people with a lot of money, people who had like net worth of you know twenty thirty forty million dollars and they were using insurance products left and right I’m like these guys can’t be dumb, right? So that’s when I did it sort of a deep dive into this. And the products that they use sometimes are enhanced a little bit even more than some of the things that your typical investor can get, specifically when we talk about premium finance products or you know other things, first of all if you would define who we’re talking about like when we say high net worth is that like you know somebody who’s you know net worth is five million, ten million.
Christian: Yeah that’s a great question and it seems to be kind of a moving truck but the reality is that utilizing premium finance at some level we’ve been able to do with more people than we previously were.
Buck: Well Velocity Plus is a premium finance product but the less limited to three to one.
Christian: Yeah that’s great yeah you’re exactly right. So when we move past that we’re usually talking about a five million dollar number before will go from using our traditional Velocity Plus model to going to a this kind of next level where maybe we’re not going to use a three to one leverage we’re gonna use maybe just collateral and not have any premium coming out of our pocket. So yeah once we get to that five million dollar mark that’s where we’re comfortable and most insurance companies are comfortable at that point as well.
Buck: Okay so let’s talk specifics maybe just some examples of some of the things that are available and in that world if you know because we do have a few I mentioned I am you know we’re working on one with like there’s a few others in our Investor group who are currently in the middle of this, just so there are others out there who may have an interest in this, explain why it works why it may be of benefit and you know basically because we’ve talked about Velocity Plus a little bit, but give us a two or three-minute rundown on the features of something like that what’s available right now.
Christian: Sure so the first thing I’ll say is that the value may be the greatest value to using print this premium finance strategy is that we’re getting an asset without having to put money out of it right. So our experience is that as people grow in their net worth as they grow in confidence and investing most people are able to generate better returns and and maybe you can validate this Buck but but based on my experience that’s true. Have you been have you been able to generate higher returns as you had more money? I guess is the question.
Buck: Because you have more money to invest right?
Christian: Yeah and you end up being an accredited investor, you can participate in different things that you maybe you couldn’t previously. So all of those things come into play and create a situation where where we don’t have to put that money out of pocket right because, and the value for that is that we can then keep that money in our possession and then utilize it to create a better return than what we’d get in this inside the insurance policy. If we were just using a standard policy that had no leverage. Okay so now we’re in a situation where we’ve decided that I can create value here. What we’re doing then is rather than us putting the money in we’re going to have a bank contribute those dollars rather than us well again we’re not using money ourselves we’re just gonna hold collateral which we can also invest.
Buck: Ok so just before you move on I just wanted a sort of a real scenario to this I mean not necessarily you know we’re still kind of working with numbers. But say for example what we’re really saying here is you know where normally you know maybe you put in for typical Velocity Plus you’re putting maybe you know $20,000 a year and it’s three-two-one leverage, here we’re saying you know what we’re not you you have a couple options I guess one would be you’re gonna do, you’re gonna put in a portion maybe maybe you’ve decided that you can afford a hundred thousand or you’re interested in doing a hundred thousand dollars a year and the bank may put in nine hundred thousand dollars and all of a sudden you have a million dollars per year working in accumulating cash value that’s one of the options, right? Or you may say you know what I have this account that’s sitting here it’s an Ameritrade account and I’ve got stocks and bonds and I’ve got a couple million dollars sitting there I could just collateralize this and not put a penny in this thing and have the bank loan me a million dollars a year, now I’m basically creating a second source of investment without putting any money in.
Rod: Right yeah and that’s really it comes becomes kind of a sliding scale so to the extent that I do put money into it then I don’t have to cover the loan with the outside collateral or like you’re saying if ultimately I just say hey I have this money over here it’s gonna do its thing over these next whatever number of years either way, why don’t I just post it as collateral and now create a new an asset out of really no skin in the game right I’m financing a hundred percent of the the money going in there and either of those scenarios are great, they they may just work differently for different people and you know there are other factors involved here as well so for example we’re getting a loan from the bank we have to pay that back eventually we’re gonna do that using the cash value from the policy that we’re creating, well if that normally would take twenty years to do I could speed that up by putting money into it into the the plan as we go. Maybe I paid off in 15 or 12 or something sooner right because I’ve I’ve added money to the pot just to speed it up.
Christian: You’ve ultimately lessened your leverage component right so every time we reduce leverage weekend we were really doing two things we reduced leverage we’re reducing the risk profile of the strategy and creating some of those other things that Rod mentioned and maybe one thing to just emphasize is that I didn’t really hit on in my overview is that there’s there’s a couple of key benefits here one is that we can use this to create massive amounts of tax-free income. This is where it is really really powerful it also is going to be really applicable again as we talked about high net worth people for estate planning right like if I let’s say that I’ve got a let’s say that I’ve got an estate that’s worth 20 or 30 million or even ten million today that could grow to twenty or thirty million, do I really want to buy a twenty or thirty million dollar life insurance policy out of my pocket, the answer is that this provides a significantly more efficient way to do it and again the thing that makes us unique and different here is the design, it has to be done the right way this is a specialized area a niche area that just most people in our industry do very little with. Most people have an idea of what it is but they just don’t work in it consistently. So those are kind of the key benefits and I really and I always tell people whether it’s us or somebody else make sure that you’re working with somebody that has a specialized knowledge of this because it is unique and niche like.
Buck: Yeah and we do have you know we do have a number of people in our group in this area so Rod and Christian certainly have probably as much activity and experience as anyone else around. Let me let me ask you this in terms of the premium finance and just so anybody, if anybody’s confused about the premium finance all it means is that you’re getting the premium that you pay every year you’re getting it financed right and the bank is lending the premium out so you’re not paying it that’s I know that seems like basic but sometimes it’s.
Christian: I think it’s an important point to mention. Sometimes we talk about this stuff so much though we we neglect to hit on the very basic stuff. So the other thing that we have to do here which might seem obvious but we’re gonna we need to generate more money in the policy than what we’re paying an interest right. Ultimately it’s a or that’s what the basis of the concept is about which is again why we normally will use an index universal life policy sometimes depending on age, we can go with whole life and still accomplish that feat but anyway I think your point there but is really important sometimes we just gloss over it and assume people are gonna know and so anyway thanks for doing that.
Buck: You know but in the other point that leads into my question though, if you’re doing premium financing does it make sense to do with the banking type policies are almost always going to be with the index.
Christian: Yeah it’s a great question. So when we go inside of the whole life policy, we tell people that they should expect somewhere between and most people are gonna expect somewhere between five and six percent depending on age and health right. Well the IUL gives us a little bit more upside potential. Now interest rates are really good so if interest rates stayed the same as they are today then working with the whole life policy would work great I get I’d get a really good arbitrage between the two which, I don’t want to overplay this arbitrage because even if we’re equal on both sides we’re still gonna win in a really significant way, but ultimately we’re trying to get we’re trying to create an arbitrage and we usually plan for about a two percent arbitrage early in the in the accumulation part and one percent arbitrage as we go through retirement I’m kind of get. I think I got off topic there a little bit but anyway the the long and short of it is that it’s the ability to create something out of nothing
Buck: In terms of a whole life version though premium finance in other words what I think I hear you’re saying is that as interest rates rise, you may not be quite as is safe to do something that’s a fixed interest product.
Christian: Yes that’s exactly it. Thanks for bringing me back to point
Buck: That’s why I’m here. I am here to dumb down because the only way I understand them as if they’re really dumbed down. And so that’s a good point too because like you know people say wow what if interest rates are going up but then the market’s not performing usually what you find is interest rates are correlating with markets going up right I mean yeah idea is that the interest rates are going up because there is asset inflation, right? So the things that typically are gonna go in tandem so in some respects so I think what you’re telling me is that doing a product that is that’s that is actually correlated with the equity markets helps you to hedge inflation and therefore keep that arbitrage.
Christian: Yeah you got it. That’s exactly right. And we have some options to do different you know different things on the loan side right we can even do fixed loans and if we can lock into a fixed loan today at four and a half percent and get five and a half percent on our whole life policy that’s great and we’ll totally do that, however there’s gonna be situations where we want to try to create a larger arbitrage and like you said the equity markets work in tandem generally with interest rates. Here’s the cool thing but we’ve stressed tested these things like crazy. So regardless of whether it’s horrible market conditions from just a return standpoint or whether it’s hyperinflation, we’ve looked at the worst case scenarios over the last hundred years to be able to determine how our design is going to work even in the worst case situations.
Buck: So that brings up a good point because you know like I’ve talked about this before and sometimes I get people sending me articles about universal life and how there’s these bad articles about we’re not talking about universal life here that’s not what this is this is a completely different product this is an index product right. So could you want to clarify that up so I don’t get another person sending me an article?
Rod: Yeah so there is a big difference between what we call traditional universal life versus index universal life and long story short the the traditional universal life is built off of prevailing interest rates or more specifically the kind of growth that the insurance company is getting inside of their general account. So there has been a kind of a bad time frame there where you know if someone was building a product like this in the 90s and they said hey you need X amount premium to going going into this policy to support you know a million dollars of insurance based on this interest rate well we know rates are really high in 1990s much higher than they are today and so as that’s falling off then that premium was not enough to support the million dollars of insurance because you didn’t get the growth you were expecting on the cash value.
Christian: Now so one thing is really important here is that the design had the original universal life policies that Rod’s talking about been designed the way that we do it they still would run fine, right? However most people don’t design that way so they can potentially run into trouble and that’s where we get these articles about the potential challenges that exist with Universal Life we’re getting older people who might be coming close to the time where they might actually need to use it either from death or for retirement cash flow and suddenly instead of getting the benefits that they thought they’re learning that the policy didn’t perform the way they thought it would. And at the end of the day it has everything to do with the design not the product itself that’s the important thing.
Rod: Yeah because our conversation is a completely different conversation. We’re not saying hey we want an X amount of insurance and what’s it going to cost to get that we’re saying hey we want to create this this awesome benefit down the road and building a policy in a way to maximize the growth of the cash and that happens to support whatever death benefit results from that makes all the difference in the world.
Buck: In other words in other words we’re doing this to make money. We’re not doing this for life insurance and I think that’s an important point because I think although I think the index part of this does make a big difference too because it’s basically it’s an options play right but I do think that it’s important to remember that what we’re doing here is really unique in that what Rod and Christian do is they build these things as an investment not as an insurance product. And I think that’s one of the reasons that it got a bad name back in the days because you know people would sell people insurance and they were you know they would tack on you know their Commission structured so ridiculous and they’d be over funded they wouldn’t do anything right and it was victimization and I think you could do that with really any product you could even do that with you know real estate and you I see it sometimes even today with some syndicators. But the the other thing though I wanted to just say is the index product, when we say indexed what is what exactly does that mean because that’s relatively new right I mean people are searched up they’re not talking about index Universal Life.
Rod: Yeah so the whole idea here is that we’re using a market index you use the S&P 500 as an example the money isn’t actually invested in the S&P, we’re just using that as our measuring stick to determine how much interest gets credited each year. So like you said it becomes kind of an option play that the insurance company is taking the interest that they otherwise would have credited if we had just a regular traditional universal life policy but instead of giving just putting that into the policy, they’re taking that and using it to invest in options and then as the option return gives us the return, well that goes back into the policy or if the S&P were down that year and we end up out of the money as far as the option goes we just don’t get an interest credit that year right. So that’s how we’re protecting ourselves but also how we’re able to capture generally it’s about 70-80% of the upside.
Buck: Whereas Universal the cash was literally going into an investment account.
Christian: Yeah just a fixed-income, fixed account where they’ll define maybe it’s four percent that year whatever so yeah that’s exactly right
Buck: Let me ask you this I think it would be helpful didn’t know you guys obviously you know you’re busy we have a lot of people even within the Wealth Formula community use policies, what are some of the most common questions or misconceptions or anything else out there that you get all the time that might be helpful to clear up?
Christian: Yeah I think that’s great so I think the biggest thing goes back to this whole idea of cost of insurance right. So I got an email over the last few days where one of the people we’re working with had just talked to you know a former adviser and they’d given some thoughts to him and the email was really focused on cost of insurance as it as it related to this premium finance structures and what ends up happening is that well let’s put it this way anyone that works in the space knows that one of the greatest benefits to what we do is that it’s really really low cost and I’m talking like half a percent low cost so if I went to somebody and said hey I can get you a fixed five percent tax for your turn that’s going to be completely liquid you can use your money and have a death benefit and it’s only gonna cost you a half a percent like that’s really pretty good right and then I’m the premium finance side it’s just all the benefits that come with premium finance for only a really small percentage cost, at least for me that’s maybe the biggest misconception that’s out there and I know we’ve hit on it but if we just keep focusing on this idea that we’re building it to create wealth rather than just to protect it I think that’s the biggest one that I usually hear.
Buck: Yeah I think I’II agree definitely because that was a big thing for me too and personally understanding that overall what we’re trying to look at is we have a permanent asset that we’re paying a little bit upfront for and if you look at the long if you look at it in entirety over the course of 10 20 30 years the the cost of that in terms of the money that’s coming out that would be equivalent to fees is really low less than a half percent as you said which is really show me show me any account that’s gonna do better than that it’s unusual. So how about you Rod?
Rod: Yeah I’d say when it comes down to just this concept that’s apparent with the Wealth Formula Banking side now about just the idea of using an opportunity fund and that we’re people who are putting their money in the bank, well put it this way sometimes we’ll have people will come and they’ll say well the opportunity cost of those the cost that I’m absorbing upfront and the policy it’s too much I can’t. I’m if I’m out here creating you know 15-20 percent returns in my in my investments how am I ever gonna overcome that and the point the fact is you actually wouldn’t do anything with banking if you were always able to get 15 20 percent on every dollar every minute of the day right. Point is is that you aren’t and so there because there’s downtime on your money because as money cash flows off of that investment you need somewhere to put it before there’s enough of it or two before you find that next opportunity where you can go and invest it and so that’s what this is. This is the opportunity fund where we’re we’re funneling money into it then we’re using that money to go invest and as the cash flows are coming off of that investment we’re putting it back into the policy rejuvenate for the next opportunity and repeat.
Buck: Yeah and you could probably break even, even quicker I mean just by starting to borrow and investing in the very things that you’re getting 15% on because question that’s the whole idea it’s not, for me it’s not either/or it’s both. The idea that if I can get 15% somewhere and I use a banking policy that 15% all in on the same capital the return on equity you’ll be higher it’ll be probably somewhere in the 20s and that’s really what is the confusing part for people. I think sometimes when you look at this thing in a bubble and you say yeah you know five and a half percent hey listen I don’t get excited by anything less than really getting twenty percent annualised myself and so I’m looking at this as a tool to take something from 15 to 20. I’m not looking at it as something just to get 5.
Christian: Yeah I think it’s a great point yeah.
Buck: Well guys listen I know we’ve been at it a while here but we talk about these things a lot I’m especially when I look at the market kind of being a little shaky right now people do have a lot of equities and this is just one of those things that depending on your situation one of these products may be of real benefit. I’m definitely a big fan of both. I think they’re very different and so that’s why kind of my redesign, like I said before I you know took a loss on a banking policy and I’m having Christian and Rod restructure one and at the same time I’m doing a premium finance IUL and we’ll do a webinar on that too so you guys can and see that. I haven’t kind of gotten through that one yet. But anyway yeah talk soon.
Christian: That’s great thanks buck we appreciate it.
Buck: We’ll be right back.