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Okay, today we're going to be referencing a barbell analogy, but we're not doing any weightlifting. And so we're super excited to have Jason Richard, myself, also Jason. JW calls me JL. I call him JW. Everybody's happy. Jason, welcome to the show. It's nice to have you.

JLo likewise, and look forward to being on with you guys today.

So Jason, welcome to the show. We were just, we were having this really good discussion before hitting the record button. And why don't you give listeners just a, just a brief overview of what fascinates you and brings you energy, given that we're in the same, we're on the same track in terms of the people that we most love to serve. And as it relates to business owners, I really like your approach and how you handle the element of the equation of, you know, dividend paying whole life insurance as a function of when and the reason why it's being utilized. And you use this great sort of barbell analogy before we hopped onto the show. So dive right in, let our listeners know who they're listening to.

Yeah, no, I appreciate that, Jace. No, no, thank you very much. It's I'm an attorney by trade. Probably I'm on my 27th year now and working with business owners on a daily basis. It will represent them early on as an attorney. They talked about two things. They would always talk about cashflow today. How am I paying my employees? How am I paying bills? How am I scaling? How am I doing those sort of things? But we'd always talk about what's the end? Let's begin with the end in mind. And for a lot of them was selling their business. That was the ultimate goal. So it dawned on me early on, participating whole life insurance has a definite position in the marketplace, but it has kind of two positions. It has, to take the barbell analogy, it has weights at one side, It has the bar and it waits at the next side, which is how do I solve for today's cash flow problem but have an ear or an eye towards the liquidation event in the future? So I looked at it and said, would talk to my business owner and they say, well, you know, we're holding a hundred, $150,000 in operating account. Great. Why don't we take a look at that and look at a participating whole life insurance and see how we can better position that into some sort of participating whole life contract? okay. But then it would come up. Hey, when I sell my company and I've got that two million dollar, three million dollar, one million dollar, that liquidation event, Jason, how am I going to put that money into this participating whole life contract that I'm funding at a hundred thousand dollars a year? And it dawned on me. Then I'm going to focus on that part of it, which is that sum of money, these business owners, real estate, that capital event that's going to happen in the future. How do I get that amount of money into the whole life insurance contract?

That, what I really like about that from the business owner, and then you brought in, thank you for introducing the real estate investor element of it. The real estate investor, much like a business owner in that aspect, are they're investing or a deferred benefit, right? It's something down the road. The real estate investor wants the cash flow, right? You ideally want to invest in an asset that's going to produce positive cash flow. But the deferred benefit is that liquidation event where the equity turns into capital and understanding the truth that money must reside somewhere. Again, I like this approach and Rich, this would be sort of similar to if you think of along the lines of an IFA, but with a very clearly defined objective where the business owner is already positioned for that future event and then you can help them along the way to maximize the value of their business. The, the participating whole life contract is really something that's bolstering the balance sheet of, you know, their, ideally their holding company anyway. But this is, yeah, I like the approach, especially given that we deal with so many business owners and, and real estate investors.

Yeah.

How many times have you heard the comment, you know, parenthetical to that, you know, hey, guys, I can fund this contract for two, three years. But what if I have that down year? Yeah. How many times have we heard that? What if I can't pay it in the fourth year? And, and we know there's a lot of different things. The way we look at it is there is multiple ways to fund a contract. There is out of cash flow, as you know, maybe we dip into cash value if needed to. But I also like to have that funding mechanism of some sort of line of credit supported with the contract as well. So at any given year, I can say, you know what? I may not fund it. The cash value may not fund it. I might have a bank funded in that given year. But so I always like setting it up on the front end with the, with the optionality of who funds the contract. So when that client says, gosh, I don't know, four years from now, I can fund it. I've got an answer, which is, no problem. I can have a bank come in and fund that given year. We'll catch up those payments later, but we're not sacrificing performance. We're not sacrificing the systematic deposits of the contract, we always are giving optionality to our client. And that's through a properly structured premium finance kind of line of credit supported with the contract.

There you go.

And so you do a lot of work with the premium financing, but I'm curious, you know, Jason, just maybe even take us back a little bit further. What was it through your career as, you know, an attorney and so forth that led you to begin to even see and understand the power of par for the business owner endeavor? What was the first domino for you that tripped that allowed you to say, wow, this is a really powerful financial vehicle that could be utilized by business owners?

Correct. Yeah, and this goes back probably 18 years ago now. So think of the business owner. The business owner is always facing one thing, cash flow today, but scaling in the future. How do they pay the bills today? How do they cash flow today, but scale for the future? And so whatever the asset was, we're looking at a fleet of trucks, we're looking at a piece of machinery. We always ask ourselves, there's three ways to acquire this asset. We could rent or lease the fleet of truck. We could buy the trucks all cash, or we could finance that fleet of trucks. Now, and I've now said this to everybody, and I say this all the time, everybody listening, there are three ways to acquire any and every asset. Any and every asset. There's three ways to acquire. You can lease it. You can buy it all cash, you can finance it. I'll tell you a funny little story is, this goes back a couple of years when my kids were little and we got a bounce house for a birthday party. So I said, and my wife said, okay, well, I'm gonna go to Home Depot. I'm gonna rent the air pump for the bounce house. So I went to Home Depot, got the air pump, no big deal, took it back in three hours. It was fine. Then the next weekend, the kids are like, that was so much fun. Dad, go get that air pump. Let's do the bounce house again. So I went back to the Home Depot and got to the air pump. And the guy said, you know, if you're gonna use this a couple times, you're better off just buying it. I go, you,'re right. So then I took the air pump to the register and the person said, we now have a 0% credit card, 0% for 24 months if you put it on credit. If I can acquire an air pump three ways, I can rent it for a couple hours, buy it all cash or finance it. I can do that with any and every asset and life insurance is no different. It's a function of two things is on the front end, how long are you going to keep this asset? Hey guys, I am going to go move to your town and my wife and our three kids are, we're going to live there for two months. Should I buy a house for two months? It's two months. Should probably rent for two months.

Yeah.

Hey guys, I'm going to move to your town and I'm going to live there for 20 years. Should I buy a house? or rent for 20 straight years, probably should buy. Should I have a mortgage or buy all cash? Well, that's an analysis of what rate of return does your money do? Do you wanna socket in this thing? Do you want it liquid? Like what do you wanna do? My point is this, and just the level set is any and every asset needs to be looked at on a funding schedule of do I wanna rent the asset, buy the asset all cash, or finance the asset? And that's with every single asset in the marketplace. So Richard, that's kind of how I stumbled into lack of a better word, into looking at financing life insurance was just in that analogy.

It's the first time that we've had bouncy house to par hole life insurance, I think, in a podcast, Jason. So I love it. That's fantastic.

There's a first time for everything.

Yeah.

You know, Jason, I really thinking like a business owner, given that we all are business owners, that is one of the biggest, when they're dealing with a liquidity event, it can not only impact business owner, but it can have a significant impact on the family as well. Because the one element that the financial advisory community tends to focus on when you hear the words generational wealth is they've been conditioned to believe that cash is the biggest ingredient to that. And it just isn't. It can create a lot of problems when business owners go through all size liquidity events. And so when you have a perfect place to park that capital, and then the business owner can still control how they finance the things that they're going to need through the remainder of their lifetime, but now they have an asset that is going to continue growing no matter what, for as long as they're alive, and it's going to deliver proceeds of death benefit exactly when those proceeds are needed the most. Talk about having a key ingredient to set up a great platform for generational wealth in addition to teaching the kids and the grandkids and the great grandkids about how to be good stewards of everything. You want to keep the money in the family once the business has been liquidated. You don't want it liquidated from the family. You don't want that event to happen. Business liquidation event is fine, but the family's wealth liquidation should be off the table.

Stewarding is a word as you know, Jess, we use a lot in our firm. Are you stewarding well? You could have all the money in the world and you have the opportunity to waste as much as you want or overspend on a vacation. But are you stewarding well? You've been given these resources, allowed to have these resources and rented them for a period of time. Are you stewarding well? I'll follow up on that liquidation event 'cause I don't think I spelled it out exactly. And I'm just gonna give this at a very high level. is think of that client we all have. Think of that client that's participating 50 Grand, 100 Grand into participating whole life contract. They're using as working capital in their business. Great. And they love it. They understand the features. We all understand it. Great. I want you to ask that client. Or maybe the client will ask you, hey, when I get five million dollars for the sale of my business, how are we going to put all of that into the whole life insurance contract? Because right now I'm limited by 100 Grand, so. My best day, the biggest, most monumental day of my life when I sell my business for $5 million and I receive that check, the biggest day of my life, how am I going to put it into my favorite asset class? How am I going to do it? Most people then go, well, we'll get another contract at that point. No, the person's set to retire at that point. They don't want to do it again and we can get to insurability and everything else. But a little planning we can get there. and again, let's just use round numbers. Let's just say we assumed a $5 million sale 10 years from today. Let's just say that's gonna be our round numbers and it can be flexible. We look at getting a life insurance contract of $500,000 spread over 10 years. Think of it as a 10 pay. A bank's gonna fund that 500,000. Again, we're gonna finance it. So at the end of five years or is 10 years, excuse me, you have a $5 million loan secured by whatever amount of tax-free cash value it is. 5.5 million, 5.5, 6 million, whatever the performance is. We just know it's greater than the $5 million that's been put in over 10 years. Now, when I sell my business for $5 million, instead of going to Wells Fargo and putting it there, I wanna take that 5 million, come over and pay off this premium finance loan. Now, I've got nothing in Wells Fargo, but that's okay, 'cause they now have cash value of 5.5 or 6 million. It's a way to make a one-time distribution into a life insurance contract in the future? 100%.

Reminds me of what Bob Shields would say, Jason, what's the best way to save, repay policy loans?

Well, yeah, just pay your loans. Pay your loans.

Yeah.

It's, I think for business owners in particular who are listening to this, who are watching this, One question that you should be asking yourself today is, do I anticipate that my business will be same size or larger 10 years from now using that exact same timeframe? If you anticipate that your business is going to grow, which most business owners possess that ambition, otherwise they wouldn't have gone into business to begin with, and you sit down and evaluate Okay, there are a number of ways that you can exit the business. You can have a liquidation event like the three of us are talking about. You get sick, you die early, God forbid. You experience a critical illness, you experience matrimonial breakdown, financial insolvency event, or heaven forbid, you disappear. Like, do you have a plan in place to address all of those possible outcomes? the business owner would stack rank it and say, well, the liquidity event is right at the top of my list. That's what I'm hoping is going to occur. Okay, where are you going to warehouse the money when you achieve that liquidity event? Certainly don't hope it's going to be on the books of someone else's bank. Let's get it into your own system so that you can control it and you haven't interrupted any of that accumulation. That still doesn't change. cash value in the policy still rises daily, uninterrupted by the fact that we've got premium financing, we've got an immediate financing arrangement in place, some construct where some other system is funding the premiums required for the contract. Boy, what a great position to be in. You've got uninterrupted compounding for a decade. You experience the event, it lands. inside of the very warehouse that you have stack ranked as your best asset and you've never interrupted any of the daily growth. It's brilliant. You pay no tax on the daily build up. It's just brilliant.

Yeah.

No, thank you. For those of you hearing Premium Finance, maybe we've heard it and it's a murky space and I've heard some horror stories and heard about this. hear me clearly, you guys. Anytime you finance something, the underlying asset is required to be the performance or the security behind the collateral. You finance a boat, the boat goes down in value, you're upside down. You finance a piece of real estate, the real estate goes down, that kind of thing. Two things about premium financing life insurance. If properly structured, similar to properly structuring a policy parenthetically, but if properly structured, you financing a guaranteed appreciating asset. Let me say that again. Every other time you finance anything, a car, a boat, piece of real estate, a stock, a business, anything, that asset could go down in value. There's a chance you could go down in value. What if you financed a guaranteed appreciating asset? How would you look at it then? The second part of it is this, where premium financing gets kind of a, we'll call it the bad name with air quotes, is the policy didn't perform. The policy wasn't there to pay back the loan. Something along that narrative. Well, hear me clearly, everybody. What is paying back this loan we're talking about? I'll never say cash value. We are never robbing from a tax-free bucket of money. We're taking taxable dollars. So the thing that's predicated on this working is the business and the business owner. So if the business owner looks at himself in the mirror and goes, huh, this didn't work. It's not because of the policy. It's not because of financing. Is the person in the mirror didn't perform on the business they said they were performing. So fully on that.

Right.

Yeah, it's very true. Very true. And from a financing thought process.

If.

You know that you finance everything that you buy, when you pay cash for things, you're always working with borrowed money. You, the three of us, know that principle, it's called lost opportunity cost. Well, then logically, so the question that you asked is very logical. Like if you knew that you could finance an asset that was contractually guaranteed to accumulate value and it could not go backward unless the owner triggered something that would cause it to otherwise go backward, then would you ever object to financing that asset? if someone else was willing to lend you the capital to do it.

I say it this way as well. And most everyone understands real estate. And if you even if you bought your home, you'll understand what I'm about to say. Let's give you this analogy. And I always say this. Why do real estate developers use financing for their pieces of real estate? Why? And people go, other people's money. This, it's really for one reason. Anytime you play financing, to an investment or a strategy, you boost the returns. What do I mean? There's a million dollar piece of real estate that's sitting out there somewhere. Million dollar piece of real estate that's growing by 10% a year. So it's growing by 100 grand a year, the million dollar piece of real estate. Great. Let's say you buy that piece of real estate, all cash, take a million dollars, buy the piece of real estate, it grows by 100,000, you made your 10%. Great. Same piece of real estate, same rate of return it makes, same 100,000, but we financed it. So we put 20% down, we took $200,000, for the piece of real estate. It grew by 100,000. What are we making our money in that situation? 50% of our money. Financing boosts returns. That's what financing does. If you hear it boosts the returns. So great. What if we apply that same logic, that same fact pattern to a guaranteed appreciating asset? What would it do? The same thing it does on real estate, it boosts the returns. So the biggest thing I hear from people is life insurance is not a good what? Investment. What? Well, it goes up, it goes up at some point. So what if we then boosted that return? Would that look a little better? And so that's kind of the analogy we try to give to people is, Hey, listen, all we're doing here is taking a return that's already contractually guaranteed and boosting it.

Cool.

Well, more than that, you go back to the business owner who has 100,000, 150,000 of cash on hand sitting on the operating account. they want to deploy it. And so they're trying to figure out, well, how do I get this $500,000 policy, which is one I really want? And what you're doing is you're showing them the capacity to say, look, if they went ahead and got the $100,000 policy and they had that for 10 years and they had the liquidation event and the same scenario applied, great, they still had the liquidation vault, they still had the $5 million, they still have a policy, it's just not as big, they don't have as much to deploy, they don't have as much death benefit, they're probably uninsurable, they can't get any more. So still good, but not as good as the person who had a much larger policy and had a few more options. And realistically, to implement that financing strategy, there's some work involved in there. There's some qualifying and all that good stuff, some strategizing that's necessary. A lot of, as Jason would say, strategery in the environment that takes place between the advisor and the person implementing. But for the first couple of years, there might not be the full liquidity on that policy. for financing purposes. So you're, you're still going to use some of that operating income or you're going to pledge a secondary asset if you need to. And yeah, it can be, some of you might look at it and say it's a little daunting to see that big loan accumulate over time, you know, so if that kind of thing comes up, what does the conversation go to Jason when you're discussing that with someone who's had this in place for a while and they're saying, man, I've got this all this built up death benefit. The business is growing, but sometimes I look over and I see that loan.

Balance like, oh man, that's kind of scary.

What do you do with that?

Yeah, yeah.

It's the donk. No, you go ahead, Jason.

Yeah.

Yeah, yeah. I would say it this way. When we go to the grocery store, I guess back in the day, we went to the grocery store and we wrote a check for our groceries. We wrote a check for $100 for our groceries and we put that check to the grocer. Did we worry? Well, no, because we had $1,000 in the bank account. So we knew that the bank account would support that $100 check. But remember, that $100 check is a debt instrument. Just any check, you know, there's some relics out there, pull it up, it says it's a debt instrument. And so when you put that $100 check, you're okay because you know in the bank account you have enough for that. A loan will grow, but if I could show you how a guaranteed appreciating asset will at some point have more cash value than that loan guaranteed, then it becomes a check viS-A-Vis my checking account and not a daunting loan. Yeah.

And it's when you really understand what's going on inside of the contract, which why when you set something up for anybody, an individual business owner, you've got to affirm that they have clarity on the tool. If they don't have clarity on the tool, then that is going to come up. It's like, oh, especially if they, if you're looking at it where you're examining your numbers as a business, and you have maybe somebody within your professional network, whether it's your accountant or someone who may not have been acquainted with the solution, and they start going, can you do me a favor and pick up every red flag you have on your desk? Because I just need to ask you about why you're putting the bank's money into this thing. You're building up a loan balance. It's like, well, A, we've got ever increasing cash value inside of the contract that can't go backward. B, we have more than enough death benefit to extinguish it. and this is in place to tackle a future event and my business is growing. If the only thing growing on the balance sheet was the loan balance, then it's perfectly reasonable and probably pretty responsible to sit down and say, hey, whoa, hold on, what do we need to do to get the business moving in the right direction? has nothing to do with the contractually guaranteed asset.

No, exactly right. I mean, I guess the best analogy would simply be is how many people listening here have a mortgage on their house?

How many people have that?

Most do. What mortgages? A bank has loaned us money on an underlying asset can go real estate.

Go down in value.

Can't. I was speaking about two months ago and this 34 year old, 35 year old said, no, it cannot. And I realized in his lifetime it hasn't. So, but I'm here to tell you, real estate can go down in value. It's happened and yes, it will happen again. So anyway, back to mortgage on your house. Can the real, can the underlying asset go down? Yes. How liquid is real estate? It's the most illiquid asset we know. So if you're okay with the mortgage on a volatile illiquid asset, how would you prefer a mortgage on a guaranteed appreciating highly liquid asset? To your point, we look at this too. And I guess I'll say it this way. I want to push everyone listening, insurance professional, like, let's be total professionals. What do I mean by that? Think of it when you bought your car, you bought a car, you picked out the right car, you picked out the Ford, you wanted the pickup, you got the F-150, you did the whole thing. But what was the last step in the process? You walked to that office at the end of the hallway and you sat down and the little guy said, said credit officer. And that person said, Hey, you picked out the blue F-150 great choice. But let me give you three ways to look at this thing. We've got these lease specials. You could do that. No, no, no, no. I want to keep this for a long time. Okay, great. The MSRP is this, but I could get you a little bit off of it. Maybe. Well, I've got these financing specials. Listen, let's be as good as the used car salesman. Let's not just sell the perfect car. Let's give them the perfect funding options as well. Let's show them the options. There's a right option. Nobody buys something without thinking how I'm gonna pay for it. When you guys went home shopping, did you pick your home and your wife says to you, honey, how are we gonna pay for this? I don't know, but isn't it a beautiful home? No, we looked at funding and the asset class at the exact same time. And that's what I've been pushing on everyone listening, like, get the right participating whole life contract. You better get that, but don't have.

A blind eye to how we're gonna.

Pay for this thing.

Yeah, it's such a good point.

Very good point.

Makes a lot of sense. It's nice to play a devil's advocate on some of these things. I love that. I think the description you provided is fantastic and relating it to things that people are aware of because again, there's still a, I don't know if it's a stigma, a lack of education, some fear-based thinking, the word loan, you know, it's like the letters show up in somebody's brain and there's a flashlight that shines on them. and they're blinking all of a sudden in bright lead letters. And the brain sometimes doesn't comprehend the word loan. We, you know, we've been trained, a lot of consumers have been trained to work, look at the word loan as a negative thing in their life. And it brings up sometimes that now, obviously the business owner community, they tend to look at it a little bit differently because they're like, look, this is, this is tackling fuel to help grow my business. So they might look at that differently, but a lot of the general public, they still see the word loan as some kind of negative energy, but yet the loan is an asset on a bank's books. Every loan is an asset somewhere else. It might be a, it's a liability to someone, but it's an asset to somebody. Which side of the equation are you on?

Yeah, that's a good point. The insurance companies themselves, if you were to look at, well, pick any insurance company really, if you took a look at, you know, a reputable mutual life insurance company and you examine their balance sheet, loans are going to show up as an invested asset on their balance sheet. So why would that be? And if the commercial banks, the conventional banks, the regional banks, whatever lender is going to either A, collaterally assign a dividend paying whole life insurance contract, or provide a financing arrangement so that a business owner can acquire one of these contracts, if they're going to do that, and in the case of like Rich, think about a cash surrender value line of credit, completely different instrument, but the banks will finance 100% of the total cash value of the policy. But yet, if that very same business owner said, oh, while you're setting that up, I own my home free and clear, and coincidentally it's valued at the very same amount of cash value in the insurance contract, and the lender says, doesn't matter. We'll give you 65% loan to value, and we might go up to 80 with a principal and interest mortgage payment on top of that. If you get through underwriting and if you qualify for it.

Yeah.

Once we've gone through the appraisal, we send someone in to double check that the house is what you said it is.

Al: so what does that tell you about the strength of the asset? It should speak volumes. It should be a pretty crystal clear statement But yet, you know, there's.

I.

Guess this, like what you said, Rich, like this, this maybe this barrier that goes up when a consumer and business owners are consumers as well. And business owners get a lot of advice from their accountants around addressing tax related concerns. We're addressing capital related concerns. Big difference. Business owners think in terms of capital. and what better place to have it ultimately reside than here?

I think the best way to speak volumes day is just to get way closer to the microphone.

Yes, that might be a great idea. Thank you, Richard.

Guys, you know, it's not lost to me, by the way, I'm from Franklin, Tennessee, and over my window right out there, it's a big house somebody lives in. And his show is listened by a third of the people listen to this show.

And.

I'm fully aware of life insurance and debt in this town. I'll say that. And what I'll say is this, there is debt, loans, and there's leverage. What's the difference? A loan and a debt is when you finance an asset that could go down in value. You could be quote unquote upside down. That's a debt. You cannot pay the red debt because it went down. What's leverage? Leverage is like my check writing example. I'm giving a $100 check. I'm writing a check. I don't have the money. There's nothing to give you today. Here's $100 check. But I don't stay up at night because I know I have $1,000 in my bank account. So when that check is used and that instrument is used, I've got this $1,000. If you're have a finance, if you're financing a participating guaranteed whole life insurance contract, Yes, I know there's, it's, I get it's a loan. It's in that space of a loan. I understand that, but it's a difference when you have a guaranteed appreciating asset versus a volatile asset. That's the difference between loan and debt and leverage.

Yeah, and well, I'll add to what you just said. So when you think of, there are times, well, at times, there are many people who leverage to invest in speculative instruments like stocks. And Warren Buffett quite clearly communicates his stance around leveraging to invest in something that's very volatile, like the stock market. If all you're doing is purchasing based on what you believe a fair share value is and you don't understand the underlying business, he would often say that if you're leveraging to invest money in the stock market, you should understand that smart people don't do it and stupid people shouldn't do that.

Well said.

Well said. Financing is not a bad thing. You just gotta ask the underlying asset, can it go down in value? And if so, how much can it go down? Simply put, thanks to it all day long to your point, you guys, when you guys talk about mortgages, that's why they make you put, you know, 20% down. They're doing that analysis. But to your point, Jason, Why is it that banks will give 100% on cash value? They know the asset class.

And they- well, and they know that the insurance company itself is guaranteeing the collateral. So they've de-risked the lending to the greatest extent possible. There wouldn't be any other instrument. Even cash that's on deposit, they don't hang on to that stuff.

Even gold.

And most advisors, in the industry. So think about it from that perspective. When the banks receive money, let's even just call it real money. They don't hang on to that stuff. When they receive keyboard generated Capital, it's just digits. It's just binary.

It's just.

It's created where no money existed before. Most advisors have no idea cash value is not money. It's equity in a contract. It's. whatever could have otherwise been lent. That's all that cash value is. It's not money, not when you're dealing with a dividend paying whole life insurance contract. And so if the insurance companies keep very little cash on the books, they have capital deployed to grow, to multiply, and banks do the very same thing, except they can create money where no money existed before. Life insurance companies cannot inflate their money supply. Where do you want the guarantees to reside?

And that goes, and I couldn't agree with you more. That's why we stress at the front end. We stress three things. One is on the front end, on the very front end, and when somebody's looking at life insurance and they're going to have the operating capital when they have that, we always stress on the front end. Hey, you may not use it. You may never use it, but support the transaction with some sort of financing structure. You're not going to use it. It's something on the sidelines, but that allows you to say to your client, your business owner, hey, we're going to fund this at $100,000 a year. We're going to fund it. But if you have a down year, let's maybe not rob from that really good bucket of cash value. Let's maybe have a bank fund it for you, but let's create those options alongside of it. So that's number one. Again, we're trying to be better than the used car salesman in this approach. The second part is this, and this is kind of where I want to test people's, I want to push people a little bit in this 30 seconds here. I want you to think about your favorite life insurance contract, whatever it is. You're going to put $100,000 into it, you're going to apply whatever, whatever is necessary to get that cash value as high as possible. Let's say we get our cash value to 80 grand, whatever you guys think it would be, 80, 85,000, whatever it is. 100 grand goes in, 80, 85,000 is in the contract.

Okay.

Now let's just say we applied financing to that very same contract day one. So instead of you putting the 100 grand client, you put in 100 grand, you're gonna put the 100,000 in a bank's gonna put the 100 in. Now, a bank will charge you six, 7% today, say 7%. So your out of pocket cost is 7% of $100,000. Your out of pocket cost is $7,000. So level set this thing, everybody, you could put 100,000 in, have 85,000 there and in a sense lose 15,000. Or if a bank put the 100 in, you're out of pocket 7,000. Same contract, same everything. Now, we try to look at it as a year to year thing. Now come year four and five, when the premium going in is equal to the same amount of cash value increase, meaning it's caught up at that point, well then you can make the client can make the deposit themselves. but those early years have an eye towards possibly having a bank fund it because your out of pocket will be less. Again, 7% versus losing 15,000, it'll be less. And then come year three or four, you can jump into that contract immediately and have a dollar for dollar cash value increase with the premium dollars.

It's like adding, you know, we talk about seasoned policies and I think, well, you know, I like steak, but I prefer it when it's seasoned well. And most things that I eat in my plate, I prefer they're seasoned well. And I think my policies, I kind of like them that way, too. So that makes a lot of sense to me. Well, one thing I'm curious about, Jason, you know, with all the different relationships you have with lenders, we talked about, of course, the strength of the asset and that lenders are willing to lend on it. But there's also, it's not just like walking into the brick and mortar bank and saying, hey, I've got this contract here. You want to give me some money? Like, because the person there is not going to have any earthly idea what's going on. In fact, there's probably maybe two people who even set foot in that branch that would even know that it's possible. So talk a little bit about the difference between being able to finance premium finance, an insurance contract, and working with lenders that understand it, because there are those that do and those that don't.

I'm so well, Gertrude, thanks for bringing that up. And so our firm, we just solely focus on just that is helping advisors find the right funding relationships. You guys are the advisors listening to this. You know the right product, the right death benefit, the right cash flow. You know that you're, you know your client. We can merely come in and help you navigate the space of how we're gonna, how we're gonna fund it, how we're gonna buy it. So it's your point is like, think of when you got your mortgage. You didn't just pick the first mortgage officer and say, hey, whatever you want to give me, fine. You said, hey, what bank best fits my needs, my balance sheet, this house, this area, that kind of thing. And that's what we specialize in because it's not like all participating whole life carriers are the same. There's some that, there's some, there's some that do some things better and some things don't. Same thing with banks. And we have all, we have many of those banking relationships. So if you're listening to this and, and kind of, that sounds interesting. we know those relationships because to your point, you don't want to walk in the Wells Fargo and say, who wants to talk premium financing?

Yeah, that, you know, it's important. And we'll let folks know in, in our show notes on how they can, you know, get connected with you. And I think that'd be really important because we do have a lot of, in the advisor community that tune into our show. And so this could be a great resource, you know, for, for all of you to investigate when the opportunity comes up and there's a distinction in.

We.

Just had a great episode about this, I think recently, Richard, where we talked about that, where you place your business is so important. And so being able to work with an expert who says, hey, in your case, Jason, right? These are a pocket of lenders that they understand this model, they do it day in and day out, and the customer experience is going to be remarkable. versus you can deal with this lender who may be not be on the list. And they may understand this, but the experience is going to be terrible, but their rates are way better than everyone else on the list. Well, believe me, the last thing your client is going to remember is the rate. They're going to remember the experience all day long. And so you got to get with somebody who knows the right who's to deliver the best experience.

You make a great point. I remember years ago we lost the case to Goldman Sachs and Goldman Sachs. And I think our rate was, this is around four or 5%. This was a couple of years ago. And Goldman Sachs came with a 1.9% rate for this client, which is scratching her head. And Goldman Sachs required $8 million of investable assets to be moved to Goldman Sachs. And we looked at kind of how his position, we go, ah, I see how the client is paying 1.9%. They're getting, I won't go too in a deep, but the point is, yes, knowing the banking relationship is as critical as knowing the asset you're funding as well. So there's a little bit of both. You know, I was gonna say this one piece, 'cause it dawned on me in the analysis. And again, I'm always a big pusher, and let's be better than the used car sales, and let's be better. And it's a yearly conversation. What do I mean? It's a yearly conversation. Client, we're about to make a premium deposit. Great. Should you make it? Should the policy make it? Should a third party make it? That's a question every time. Okay, we don't want the policy to make it great. So is the client gonna make it or is the bank? Now think about it guys. Client has the 100,000. The premium is 100,000. But the client could make 12% doing something right now. Right now put it someplace else. And we say great. And the lending rate 6%. so think about that, guys. 100 grand goes in, the bank charges 6%, that's $6,000 out of pocket. But the client just made 12 because they just got a 12% return on something else. Whereas if they would have funded themselves, maybe they didn't get the cash value. It was early in the contract. A well seasoned contract. Richard, you would never do this. But those first five years, the laser focus on who's making the premium payment and can that money make a better Delta and a better spread someplace else?

Yeah, well, the business owner is responsible.

To.

Maximize the return on invested Capital. And so it's a little different in the business owner realm, especially when you have other shareholders. They have an expectation that you do that. And so, yeah, it's all, all got to be weighed in. Rich, any, anything else that's coming up for you and your thoughts around, around this? It's just a especially for business owners, they grasp this very quickly. At least that's what my experience is. Any other insights, Rich?

One of the big takeaways that I don't think we kind of glossed over, we alluded to but didn't really clarify. And here's kind of the, we talk about leverage, but there's a different lever that we didn't really highlight. The difference between the 100,000 premium policy and the 500,000 premium policy is several million dollars of death benefit. so the lever on death benefit and the tax-free outcome that that creates for the business, if the, if the owner goes early, for the family members from the owner and put whatever, if you have Partners, if there's a buy-sell Arrangement in place, the lever that allows continuity to take places is, is drastic. It's not a little, not a little deal. It's a big deal. I mean, we could be talking, adding an extra zero onto everything, really, fundamentally. and then we take that 10 years out. So just think about compounding of 500,000 a year or 100,000 a year. Put 10 years on it. Okay, well now put 10 additional years on it because you're still alive. We really start to see the expanse of the potential that Jason's walking us through what's powerful by saying, you know what? I'm gonna commit five years to having that premium financing option in place so we can go a little bit bigger. based on where we believe our trajectory of our business is going to go so we can reach all of these milestones. We're going to reach these milestones. The time is going to go by anyway. So are we going to double down on our business effort and say we can absolutely do this? Let's go big now so that we can create these outcomes because we can't rewind the clock. You can generate more revenue, you can generate more money, but you can't generate more time. The time is going to go by anyway.

Very good point.

I love the death benefit thing. I always tell people this. I've been in the business space almost, like I said, almost 27 years now. I want anybody, you can email me later, think about this in the marketplace, a product, a service, anything. I want anything somebody rents for 20 and 30 years. Pick anything besides life insurance. What do you rent for 20? You don't rent your boat, your house, your furniture, your laptop, your cell phone, you don't rent anything for 30 years. You know, great, I got a new phone here. Let's rent it for 30 years. No, no, no, never. Hey, I got a boat. We're going to rent it for 30. You don't do that with anything. But why do people do it? Because they go, it's term, it's cheap. I could do this. Great. What if we looked at the policy you wanted and financed it? And then if you look over a 30 year period, I got the policy I wanted and financed it. and here's the interest payments. I have this term over here. Here are the term payments. This is thrown away. This has value. What makes better sense? This myth and this misnomer that you should rent something for 20 or 30 years is just hogwash. Nothing we do this with. Nothing. When I was in college and I RTO'd my furniture, I was never gonna keep it for 30 years. It was a semester. And so like the same, and you know, and I always tell people, You've got this rental thing, this term insurance. You would think the alternative is this deplorable asset. No, it's a guaranteed appreciating tax-free bucket of money. No, no, no. I want to rent. Who would do that? Unless you could find out owning the asset with a better funding strategy than all cash. And that's kind of what we're trying to present to people.

Love it. What's that, Rich? Take us home, buddy.

Well, Jason, I don't think that they make them in the premium financing world, but perhaps you'll be the first one to get one made. Some kind of a cape, superhero cape says PF, like premium financing or something. So you may, you showed up here today and you may not realize what you're doing with your clients. You're showing up as a superhero because you're creating those levers of extra tax-free death benefit. You're removing capital that otherwise would get sucked away by Uncle Sam and the Uncle Trudeau's of the world who's going to take all our tax dollars. by creating much greater value than a person could conceive was possible before they met you. And that to me is something of a great value. So our question for you though is, who do you most want to be a hero to?

Advisors, I want to work with you guys. I want to work with you guys to help present and show you this opportunities available. So if you're out there and be doing that for five years or 25 years, and you've never presented this, Let's let's have a conversation.

Well, on that note, guys, this was fun. And Terry, anybody watching on the YouTubes, you just saw another video pop up courtesy of our editing team. They're phenomenal. This is to encourage you to continue your journey of learning. There's no such thing as having arrived in knowledge. Go ahead, click on that next video. Stay on the platform. Continue learning. And gentlemen, this is great. Have an outstanding rest of your week. Jason, thanks for joining us.

This was a lot of fun.

Thanks, guys.

Thank you so much.

Thanks.