My Client Just Made A $310,000 Mistake

Hello and welcome. In today's video is going to be an olive branch, a reaching out to two specific people. One being another life insurance agent by the name of Rick. Shout out to you, Rich— Rick. And another person, my very own client, Lovey. We have a mutual client, Mr. Rick. Her name is Lovey, and I made a video recently about this particular case. So this is another video, another olive branch reaching out to see if there's anything that can be done to potentially reverse this major mistake that our client is making, and an opportunity for us to come together in faith, in the utmost respect, accountability, in, in hopes of doing the right thing for the client over our potential commission, the money that we could make from this transaction. With that being said, to give you all some context, taking it to the whiteboard, I have a client since early 2020. And initially, this person was a financial coaching client, helping them with their personal finances. I helped them pay off debt, get their finances in order, increase cash flow, improve credit, do all those wonderful things. I then introduced them to the power of life insurance, the infinite banking concept, how they can use a properly structured whole life insurance contract to either self-finance different opportunities, whether that be investments, whether that be maybe accelerating some debt, and just good old saving money in a tax-free, guaranteed, liquid location that's safe from creditors and bankruptcy that comes with a whole host of other benefits that this person can use. Now with that education, with that knowledge, this client has successfully funded a whole life insurance contract with Guardian at the issue age of 62. They were contributing $15,000 per year with a starting death benefit that was level for the first 10 years at $310,000. When the person turns 71 years old assuming they kept funding this asset, that death benefit would actually begin to increase. Their minimum base premium is $1,500. To date, they have contributed cost basis principal dollars in $71,687.21. They have loans outstanding of $65,411.86. This current person is now 68 years old. As of 2026, the declared dividend rate is now 6.25%. When I originally wrote this policy, dividends were like 5.6% or 5.8% back in 2021, if I'm not mistaken. And the guaranteed floor rate is 4% on this policy. This person is retired, has been retired, but has a tax business. They still generate income. They became a caregiver. And now I've been able to get some more details from the first video I made. I made a couple assumptions, right? I was able to get a hold of this person, have a conversation, and was able to pull some more information. So those additional key details that I got from this client was that they were initially recently recruited into a multi-level marketing insurance agency. You have traditional life insurance agencies, and then there are multi-level marketing or network marketing style agencies. Where there's two ways to generate income, build a business, is when you join an MLM, you get your license for life insurance, you can be a financial advisor, wealth manager, you get a bunch of different licenses and you can hold that under the agency of that MLM. You can either produce your own business or go out and recruit agents onto your team and then collect overrides and commissions building a whole organization. You can do that in a traditional agency as well. The difference is the long-term play, meaning under a traditional insurance agency, if for whatever reason you decide to leave that agency all of the production and your agents that you recruited under that agency, you can actually take all of them out of that agency and start your own and keep all your business, keep your book of business to yourself. Under an MLM agency, should you decide to leave that organization, your entire book of business can only be sold within that MLM. So another agency under that MLM would have to buy you out, and all of your agents would still remain under that agency. You would not be able to take that book of business with you somewhere else. You would not be able to take those commission rates, those, those rankings that you achieved. All that gets reset. Under a traditional agency, typically the starting commissions are higher. Than when you are in a multi-level marketing style agency. The commissions— starting commissions for a new agent is typically lower. So with that context, this person was introduced to this MLM and then was introduced to the Indexed Universal Life Insurance product. And my assumption is that they were convinced that their current product did not meet what it is the client was looking for. When I spoke to the client, one of the things that was a key importance was living benefits. She was not under the, uh, current knowledge that her current whole life policy has living benefits inside of it. But let's say you wanted more insurance. You could very well do that. And the cool part is, at 68 years old, she went through underwriting and was approved for $250,000 of new death benefit. Now, one scenario is you could retain your $310,000 and obtain this $250,000, and you can do it under an IUL, you can do it under a new agency as this person is licensed, doesn't have to do it through me, that's perfectly fine if she doesn't want to. But one thing that was odd, out of the ordinary, from her very own words is that she wanted to move her current policy, now that she's licensed, under her control. Now, those of you who are licensed, you have a life license and you're seasoned, you know that's a red flag already when, when someone new says something like that. I just want to take this policy and put it under my control. That is a level of encouragement and influence by another agent to even produce that idea, because a new agent wouldn't even know that's possible to even do. Now, number 2 is, is that a bad thing? To, like, let's say you have life insurance prior to getting your life license, you get licensed, and now you're wondering, hey, I bought this policy 5, 10 years ago from this other agent. Could I own that myself, manage it myself? The answer is yes, but why would you? There's no financial incentive to do that. But let's say you want to get appointed with that same carrier and just have the policy under your own management. So basically you're your own client, you're your own agent in that scenario. And honestly, like, you can do that. I had this client reached out to me and was like, can we switch the, you know, agent to my name? What you're doing for myself and my team is relinquishing our obligation to you, basically. And you literally just reduced our workload in a sense, so that you're kind of doing us a favor in that scenario, but there's no support afterwards. You are your own agent, your own customer. So you're basically having a meeting with yourself about the performance of your policy. And as a new agent, if you don't know, you're not going to know everything out the gate. It took me years. I'm 8 years into my insurance practice and there's still a ton of things that I'm learning. This right here is a prime example of what are some things that I can do to improve to articulate the value of these products with new clients. And hopefully this video is a learning lesson for you new agents out there, seasoned agents, and just customers looking at IUL, looking at whole life, seeing how these things could fit into your finance. But that was a red flag. And another key detail is there's a massive commission opportunity. On the table here. So when it comes to indexed universal life, there's 3 different numbers that you want to be aware of. There is a base premium, there's a minimum premium, and then there's a target premium. On the agent side Target premium is how the agent will get paid off of the insurance contract. So in this case, this index universal life insurance contract that's about to go in force in the next few days here— I'm recording this in March of 2026— their target premium for this IUL is $14,106, which basically means this is the This is the amount of money you want to fund this policy every single year to have the $250,000 death benefit and to have your policy perform optimally preferred. This number right here is the MEC limit. This is the overfunded amount of money that you can pour into this policy without creating a taxable event. And the more money you plow into the cash value, obviously the more this policy will, will grow. What's odd is originally we have a policy here where we can fund $15,000 per year. I believe the MEC limit is $21,000 and some change, and she's done that religiously for from '62 to '68, pretty much up until 2026, hasn't funded it yet because she's doing this 1035 exchange. But now going to a smaller illustrated funding schedule of $12,000 per year, and then the 1035 exchange is taking the remaining cash value that's in here putting it into the IUL. So in year 1, you combine these two numbers, it's like $22,000 or so is going into this policy, or $23,000 and some change. We have an Option A level death benefit. We have a 0% to 1% floor depending on the participation and the indexes that her cash value will be operating at. According to the guarantees, this policy will lapse at 85. In order to not have a lapse, this policy needs to produce above 3.5% every year net growth, preferably. Every single year to avoid a lapse, or pay more into the policy. So that's your two options: hope and pray that you get a rate of return above 3.5% every single year, or be faced with the realization that you're going to have to pay more into this policy if you fund it according to how it's being illustrated. So the illustration was presented as funding $12,000 per year, or $1,000 per month is the layout, but the target premium is $14,106. What can happen is if the insurance agent doesn't truly know how to design IULs and they set too high of a target premium for the sake of commission, is really the, the only thing I see here That's a major— just, I'm not understanding the design for what the client is looking for. One of the key things the client mentioned to me was living benefits. It took them many times of me clarifying before they even went into IBC, before they even went into leverage. Okay, living benefits. I don't see how this is a properly designed living benefit policy for a 68-year-old on a pretty steady income, knowing that they're funding this amount. You show funding smaller like that's supposed to be better at an older age, same health rating, older, more expensive. But you're not really designing it for living benefits because of how high you set this target premium, how high you set the base. And let's just be real, let's say their, their contract is 100% with National Life Group. So off the target premium, they're looking at a commission of $14,106. Like I said, the client did get licensed, so at best, their starting commission out the gate, out best with these MLMs, are probably gonna be between 30% and 40%. It would be a long shot if it's 50%. So the client is potentially looking at a commission for themselves around, say, $4,231.80 to, say, $7,000 if they're actually at that higher commission split, which is most likely not the case. All right, it's unfortunate to see this happen in real time. And as I said in the first video, I'm just that guy who just takes accountability even when there's no wrongdoing on, say, my part. That I just roll this way when it comes to how I serve my audience, how I serve my clients on a one-to-one basis. I just let them know, look, when you make a mistake, we make a mistake. When you make an error, we make an error, and we figure out the patterns, we figure out the accountability to avoid that from ever happening again in your personal finances, that we can continue to move forward towards your financial goals, toward financial freedom and independence, so that you can fulfill your purpose here on Earth and expand the Kingdom of Heaven here on Earth. So where, where this started was pretty much not communicating. That's, that's, that's where this starts. And what I've noticed when I work with different people is, especially adults, grown men and women, when you, when you have an idea in your brain, you believe you're right, there is often no room to be open-minded, to be corrected in a healthy, loving way so that you can make the right decision that's according to your goals. What I'm doing here is sharing the facts so that others listening, if you may be in this situation right now, maybe you're being encouraged to do something or go in a different direction, it helps to get a second set of eyes. And so that's what I'm doing in this video here is I'm speaking to two people directly, my client, Lovie, and the insurance agent Rick, whom I haven't gotten a hold of yet. I've reached out in a very healthy way, in a very loving way. This is the second video now. My hope is that we can have a conversation. I want to see where your head is. I want to see what drove you to design this policy for a 68-year-old who's taking care of her father, caregiver. Why not look at these 3 other options I put at play. And guess what? I don't need to make a dime on any of this. I just want to make sure this client does the right thing. So the 3 opportunities I shared in the first video was that the client could do a premium offset where she can relieve herself of the obligation of premium payments on this current policy because of how much equity she has built in the policy. This policy has been fully capitalized, which means the amount of money she's contributed, she has more than that in cash value. Also, the amount of money she contributes or continues to contribute per year, more than that will show up in cash value every single year on a guaranteed basis, no matter what. And I have more death benefit for cheaper cost. This was written at 62, so the mortality expenses on this are nearly gone. We're about maybe 3 years from surrender charges. So when she does this 1035 exchange, there's going to be some surrender fees that are involved. This policy is like 6, almost 7 years old. We are so close to being out of the surrender period. And because this policy has performed so well over the years that you have these 3 options: we can do a premium offset, remove the contributions altogether and the policy will fund itself and take care of itself. Then she can take her existing cash flow and start this new IUL, get her first commission, get excited. You know, maybe she wants to actually build a business helping other people get insurance, and you can continue to coach her, Rick, and build her up. The other option is she can do a reduced paid-up. Where she can remove the obligation of payments altogether forever. The death benefit would shrink, but the policy stays in place. And then she can just either replenish the loans, begin to just pay back the loans, and then the additional funding, she can start the IUL. So that's another option. Or she can just reduce the funding per year in this policy. So there's, there's this flexibility that exists where I don't have to do $15,000 per year. We can drop all the way down to $1,750. $1,500 of that $1,750 covers the base premium, the other $250 is your PUA charge, your PUA rider, which gives her the ability to go up in funding if she so chooses in the future, if her income grows because she built the second stream of income helping people get life insurance. So for my client watching, you still have time to make a change even if you do complete this 1035 exchange and surrender that policy. You have a— I want to say depending on what state and the carrier, I believe we have about 14 to 30 days of free look period is what it's called. So when you first establish the IUL, when you do that 1035 exchange, you still have time with your guardian to reinstate that, which is pretty insane of a value there. So That would be my hope, is that, Rick, you realize the errors that you made here. Because when I speak to her, her biggest value is living benefits. She's a caregiver now. She's seeing firsthand, taking care of her father personally, the side effects, the consequences of not having living benefits as coverage as you get older. So she's seeing that happen in real time with her father. So now she's saying, I need more coverage, but this is reducing her coverage from $310,000 to $250,000. Yes, there's a loan on here which reduces that $310,000 death benefit, but there's still a $310,000 death benefit that she qualified for according to her mortality charges back at 62 years old. And now that policy is only getting better and better the longer she has it. It's only going to get better and better. And then when she's 71 years old, that death benefit begins to increase because the PUAs and the cash value have been growing better than what was initially illustrated back in 2021. So there's like, there's a massive opportunity here for you, Rick, to make your commission, do the right thing. She gets a portion of the commission, you write this IUL for $250,000. Now she has $560,000 of coverage Her IUL will produce even more living benefits if you tweak the design. You could get $250,000 of death benefit without having to have such a high base premium. That's kind of the whole thing with IULs is you can bring that premium further down, you can bring her obligation down, but still have the ability to overfund it if you're not focused on what you can make on this individual. Here's another thing I'll say, and I'll close with this. If this was my own mother, I would not put this policy on my own mother. For IUL agents out there watching this case study in real time, just looking at these key elements, these key details here, with National Life Group, like, you know that you don't need to have that high of a MEC limit with that high of a base. You could have the same MEC limit and a far less base. Comment below for you IUL agents, correct me if I'm wrong. I know I'm right. You could have a lower base, same MEC You could have a lower base, lower target, still have $250,000, focusing purely on the living benefits and not so much on cash accumulation. Because here's what also happens: when she gets rid of this guardian, she resets the surrender charges. So she's going to have to go another 10 years just to get out of the surrender period. Which, what does that do, ladies and gentlemen, to the cash value? Your cash value is lowered because of the early expense charges in any permanent life insurance contract, whether it be IUL or whole life. The early years are the hardest years. So you mean to tell me that you're gonna take this 68-year-old and commit her to a premium that's 4x what I have, right? Like, what are we talking about? That's— I think this is unethical. I think there's an opportunity to do the right thing. This is a case of churning or twisting where the insurance agent is encouraging this person to do this, do this 1035 exchange. She would not have thought to do this on her own. She would not have thought to do this on her own. Most customers would say, I no longer want to fund this because I don't value this product and I want to go invest my money instead. That's not what this client said. This client said, I want living benefits. And I'm interested in getting licensed, and I could be my first client. You know, like, I sell my own policy, I can be my own client, make a commission. That'll kind of jumpstart this, this business. Most insurance agents who get in the business, including myself, think that way. When I first got into the life insurance business, I said, okay, if I'm going to be a product of the product, if I'm going to sell something, if I'm going to provide something to people, I need to believe in this product. I need to own it myself. So I went and got myself a whole life product because I needed to know what it felt like to have insurance coverage, to have a portal login, to see my asset, to see it grow in real time before I could ever sell a policy to anybody else. And that's how I got my start. So again, Rick, this is another olive branch. I have no hate towards you. There's no negativity towards you. I believe I'm giving you the pure benefit of the doubt that you truly want to do the right thing for Lovey here, our mutual client. And there's an opportunity here for everybody to win. Where she does not have to give up a perfectly well-funded asset just to fund your IUL that you designed for her. There's a world where she can have both. She can start funding $1,000 a month into this IUL, keep her Guardian in place, make a premium offset move or reduce paid-up move, have that just continue to grow in the background. That could be her line of credit. If you were really, really wise with this opportunity here, you would get her the max amount of coverage for living benefit purposes, not focus on cash accumulation at all. And whatever that premium was, it's going to be way less than $15,000. Let's say it's $4,000 or $5,000 per year, then you would have her take the extra $10,000 that she was already planning and say, go pay down the loans of your whole life so that you can recapitalize that money. You pay down the loans, you reduce your interest rate over there, and you can redeploy that money into an investment that you know and understand, increase your rate of return that way, and now you have over $560,000+ of coverage for the cheapest cost, and you have peace of mind. Peace of mind. And, you know, peace of mind is super undervalued. Most people prefer peace of mind over any rate of return that they can get when you talk to any retiree. So again, love you both. My hope is that we can have a conversation, and my hope for you all watching is that you learn from this and avoid making a $300,000+ mistake. My name is Denzel Rodriguez, your personal finance geek of the 21st century. Have a wonderful day, God bless, and be talking soon.