EP 45: Banks, Billionaires, and Life Insurance: What They’re Not Telling You (Part 1)

They act very different. They have different features and benefits and things that you can do with them. But the biggest advantage behind all of those is the ability to grow your money in a way that you can't always necessarily do outside of that insurance world. And that specifically is the tax advantage structures of those types of investment vehicles. And what that just simply means at the end of the day is these vehicles, these insurance vehicles allow for somebody whose money that's in there that hasn't paid for the insurance itself but is in more of the investment component side of the insurance policy is growing. And when as it grows, it is deferring the tax obligation of that. So now think about that for a second.

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Before we go ahead, just a little bit, 2 cents from my lawyer that this is information and education purpose only. If you want to engage with any of our guests, including Shauna, please do your own due diligence. And I am not particularly a financial, legal or tax advisor or investment advisor. So please seek your own team and maybe Tashana would be one of that team members. Right. And also we, you know, we'll have some examples for education and information purpose only. So keep that in mind. These are point in time. These are not representative of any real information. Hey, hey, hey. Welcome to Think Outside this Talks. Another very, very interesting episode and we have a very special guest here. But before that, I want to ask you a question. How many times have you heard that buy term and invest the rest? Well, if this is the advice that you have gotten, by the way, most of America has gotten this advice. I actually quite frequently challenge that. But this is actually preventing you from accessing a most powerful asset that's available. Well, today's guest, Matthew Payne, he has spent over two decades, two decades proving this conventional wisdom wrong. And not only that, he actually goes beyond and looks at this asset class little differently from the life perspective. So we will look into that. This is going to be a two part series. But really this conventional wisdom has created a dangerous blind spot that's costing investor millions. He's about to reveal in this first part why life insurance isn't just a protection. It's an asset class that institutions are quietly using to generate consistent tax advantage returns. While it is you have been programmed too well. Ignore it. So Matthew, welcome to think outside this talks. I'm so proud and happy to have you here.

Thank you very much. It's great to be here. Although you, you really hung on that two decades part that makes me feel sound a little old. So it's gone by fast though.

It's a wealth of experience. So that's interesting thing. So Matthew here is, is a managing director at LifeCap, a very interesting firm. We will talk about what he does but he frequently helps institutions and family offices providing the longitudity oriented investment structures and we'll talk about that. And I Matthew, I always like to start with three fun facts about my guests. So let me dive into it. You have a very, very fascinating profile here. So first of all, thank you for your service. You come from a military background to Wall Street. That's a very interesting fact because you know, after serving and after having that discipline of about the military discipline and now you're implementing that into the financial world and you started in the marketing and advertising world and you know, you mentioned that there was kind of the support that you were providing to this world and that's when you started looking into dwelling into. You just expanded and explored much more beyond anybody could thought about. So congratulations for that.

Thank you.

This discipline and the strategic thing is pretty complex. The second fun fact about Matthew, I quite often say that we have uncommonly common stories. My story is about being first generation immigrant. But Matthew here is a first generation American. What we have in common is, you know, whether it's first generation immigrant or American, we don't know the ways of wealthy in this country. We have, they have known it for seventh, eighth generation. They build their portfolio, they have the massive generational wealth. But you know, starting from scratch, Matthew has not only learned but helped millions others as well. So again, 24 years in the industry, I think you have helped with this life solution kind of investment about 40,000 plus investors to invest about 3 billion. That's a huge number. And Matthew, I know you're very modest about it. Whenever I talk about numbers, you always are pretty shy. About it. But that's the fun fact that I wanted to talk about you to my guest. And with that, you know, let's, let's jump into today's discussion. Again, very grateful to have you here. Thank you so much for joining.

Thank you.

Well, let's, let's dive into it. I always like to know about a person, about, you know, what, what you have done, what your journey has been. So do you want to share briefly your story, your journey into this industry?

Sure. Well, as you mentioned, you know, leaving the military, you're trying to, you know, find your path, as many people who leave the service do. And I was very drawn to the marketing and advertising side. And I think the reasons why is what really led to my journey into the financial and insurance world too, which was this desire to help people understand, better understand what it is that they are doing, buying, getting involved with. Because I think at the base of all of this is education. And that's something that is, that is absolutely something that I've grabbed from the military. You, you trained, you became educated, you became an expert in what you were doing. And that really translated over into my civilian career, first in marketing and then working with financial firms, understanding what they started to do and said, hey, I want to take that path and get into being a financial advisor and being an insurance agent. So that journey has been a one of discovery, of constant education. And to this day, you know, 24 years later in the business of financial and insurance, again before that in the marketing world, it still be, is still a journey of education and learning and being open to new ideas, not taking things for face value, but researching myself, questioning, understanding. There's no doubt, I know in my experiences and I think in most clients, you know, in my early days as a financial advisor and insurance agent, and later on as I started developing products and, and alternative assets, working with people that are have that aha moment, that education into whatever it is that their endeavor from an investment standpoint, insurance standpoint, makes it a much more pleasant relationship and we are better prepared for the ups and downs of the craziness of our world. And whether it's economic factors or political factors or whatever it is, it doesn't really matter. When our clients are educated, they tend to keep a little bit more of an even keel and go through this journey together. So it's been a wonderful journey of understanding the industry, educating myself on the industry, but also really focusing in on why people make decisions and why people do what they do and understand what people need at the core level. Of who they are, comfort and love and combining those to build very successful organizations and business ventures. So it's been a wonderful journey and looking to continue on. I'm not, I'm not that old, so I'm going to continue on for the long.

Absolutely. Mati, thank you so much for giving that background. It's so essential to listen. You know, there are some strategies, there are many strategies out there, but really listening to what investor want and what their appetite is, what their, you know, mind is centered towards, that's so essential. And not many people do that. You know, they have their agenda, they kind of, you know, put that agenda, show that what needs to be done. And this is, you know, one of the things that's common in philosophies with you and me, that that's how I want to treat my investors, right, that what really, that they want, what's their goal. And at the foundation, you know, when I met you first time, and it's not been a long time, Matthew, but when I met you for first time, what really compelled me towards you is your zeal to educate, you know, you. It's, it's a bottom line is to provide that thorough education. And that's what we are here today for, is just talking about, you know, this, this life insurance or the life insurance asset classes as, as, as a different tone to it because people look at life insurance as a death benefit. People look at life insurance at the money that I would never see. And, you know, that's what, know, people like you and me are trying to change, trying to educate and kind of bring that, going beyond that, you know, buy term and invest the rest. So, so let's talk about this controversial. Is it, is it safe to say that this is probably the worst advice that anybody could, could receive and could get is buy term and invest the rest. And why do you think that? What is the philosophy that American families, which are, you know, the wealthy are following, that is actually they have been implementing this silently while the common people just don't know about it?

Sure. So I think like most things in life, when you take a hard stance on something, when you absolutely say you should always buy term and invest the difference, or you should never buy term and invest, like, I'm just not a fan of these absolutes because again, I think that that does an injustice to our clients when we are really unpacking their needs and their wants and their desires. But the concept, I understand on the surface, the problem is, is that they don't dig deep enough into truly Understand the concept, so buy term and invest the difference. All that that person is probably trying to say is that look, insurance, and that is at the bottom line is a cost, right? So I'm paying per month, per quarter, per year, whatever my premium payments are due, I'm paying for insurance. And if I am paying for more insurance, if I'm getting more insurance, I'm paying more money for that insurance. And why not take the, why not pay for as minimal amount of insurance as possible and take the rest of that and put that into some investment vehicle, whatever that happens to be, where maybe you're not paying for the insurance. So on the surface I get it, I understand the concept or the thought process. But I think what they happen to forget is when you start unpacking what insurance is and actually the benefits that, you know, the IRS codes have provided for vehicles like insurance. And so when if someone, all they have is term insurance, well then yes, go out and invest. If that's all you have is term, yes, you need to go out there and invest. But I think that misses the point of the other types of investment or the insurance products, the whole life products, the universal life products and the variable universal life products, all of which are very different, they act very different, they have different features and benefits and things that you can do with them. But the biggest advantage behind all of those is the ability to grow your money in a way that you can't always necessarily do outside of that insurance world. And that specifically is the tax advantage structures of those types of investment vehicles. And what that just simply means at the end of the day is these vehicles, these insurance vehicles are allow for somebody whose money that's in there that hasn't paid for the, the insurance itself, but it's in more of the investment component side of the insurance policy is growing. And when as it grows, it is deferring the tax obligation of that. So now think about that for a second. You have long term capital gains, you have short term capital gains. Obviously those vary depending on your income and all of that. But let alone investment income and how that's taxed, I think a lot of times people forget about that whole tax component. And that to me, I have a hard time finding any investment out there that is consistently paying me, you know, 15, 20, 30, 40% year over year. But I sure know that I'm going to pay Uncle Sam that consistently year over year over year. So if I don't factor my tax obligations into an investment, then I'm really not getting the true return profile. Of an investment. Even if I'm paying for insurance, I still have this tax deferred growth that is happening inside these insurance vehicles that I'm not getting necessarily on all of the other investment vehicles that are available outside of the insurance realm. So on the surface, buy term and invest the difference, fine, if that's all you've got. But if there's options, then it behooves the individuals to start looking at more permanent insurance and seeing how they can have their investments grow inside those vehicles. Because first and foremost, saving yourself 10, 15, 20, 30% in taxes year over year right there alone has a very compelling story, let alone what the investment itself is going to do from a return standpoint.

What a great answer, Matthew, and what a great perspective. I really like that, you know, the, the tax benefit of a life insurance product when it stays inside. And not only it stays inside, but it stays protected too. I mean in terms of like asset protection in most states. That's the beauty. I like that, you know, if somebody sues you or some credit protection, you know, somebody comes through that you have that protection too. So I think, you know, there are several advantages to do it, but the primary that you just focused on the tax advantage of it. Right? That's really important. I quite often when I talk about the tax advantage, I hear back from people, but hey, the returns are terrible. So what, what do you say to that?

Well, I think just like anything, when someone says the returns aren't good, then my next question is going to be is, well, what are we focusing on? Right? Because you could say that a return of 6% isn't very good. But if you need that profile of that investment to be shorter term, less risky, and I need access to it, then there's not a lot of investment vehicles that offer 6% with all those benefits. So I think you've got to put things in context. And that's something that I learned 20 odd years ago or 30 years ago, which was, well, wait a minute, there's different types of investments designed for different types of outcomes in different times of our life, our life cycle. And so when I first, when someone says, well these returns aren't as good as this return, then I say, well, let's make sure we're comparing apples to apples first. Are we looking at longer term or intermediate or shorter term investments? Are we looking at less riskier type of investments or more risky? And we then need to compare apples to apples before we make a broad based statement of something. Is returning appropriate return profile is better than Another, because there's always something that's outperforming something else at any given moment in time. But over the longer picture, I think that there's. That requires a little bit more of unpacking and asking questions and diving deeper into their profile.

Yep, yep, absolutely. Matthew, I always think about it just on the same lines that you mentioned that it's about diversification and how you diversify not just the investments, but diversify your risk profile as well. So I talk about often kind of a fun foundational pyramid structure for the wealth, you know, the, the wealth strategy. And I talk about the insurance being your foundation, which is the risk free. You could build a risk free, which is guaranteed growth. And you know, for that, because you have the foundation now, you can take the risk on the top layers. So now as you go up, you can start taking some risk, start having some high returns. So there's a reward ratio that you have to consider. But foundation, if there is a guaranteed growth and there is, you know, for your emergencies, for your sleep well money, if that money is intact, just like your savings and bonds, it's an intact money and then you can build slowly on that. So that diversification of risk is really, really important. Thanks for, you know, pointing that out that based on your kind of profile and where do you want to put this? Different buckets. You need to identify life insurance as one of these buckets. So let's, let's talk about. It is safe to say that life insurance is an asset class itself.

I think that, so I go back and forth on that question because to me I always refer to it as a wrapper or a vehicle then more so than necessarily an asset class per se, because an asset class more as traditionally as you're talking about the feature of a specific asset and all those feature, all those firm or investments that have like features then become this asset class where this is more of a structure, a wrapper with many different asset class opportunities inside different ways that you can go depending on which type of investment or insurance program you get involved with. But to a certain extent, if you, for instance, if you're talking about whole life or universal life, those I think can very much be called its own asset class because those are kind of, they have a certain profile that doesn't change too much. So yeah, I think that that's a fair way to describe certain types of insurance as their own asset class.

Thank you, Matthew. And then, you know, I always get, it's amazing to see that, you know, the banks and the big corporations, they are using life insurance too. Do you want to elabor on how they are using life insurance? And we quite often say that hey, my financial advisor or you know, this professional, he's not recommending to, to get a whole life product. And I go back and then look at you know, big banks and they have this big policies that they do it on their top employees. So can we talk a little bit about that and what is, what is the, the reason behind them holding this, this, this strategy?

Sure. There's a number of names I think that we've heard over the years that those are called, you know, things of terms like golden handcuffs or parachute programs or Keith Gerson type of insurance and all these different names that you hear. But the bottom line is the corporations understand that their most valuable asset that they have in their company are their employees. Just like as an individual I always asked individuals when I was managing people's portfolios and their investments, I always asked them what is your most valuable asset? And 99% of the time it was their investment accounts or their home or whatever asset that they described. And I kept going back to them and saying, well, what about your earning potential, your ability to earn? What happens if that ability to earn money ends tomorrow? So we're probably, our earning potential is probably going to far exceed the current assets that we have. So from a company standpoint they started to understand that, that it is costly, it can be very costly if some member of their organization does not is no longer there. So at the very base of it's covering and protecting, you know, corporations, if there's something that happens to the individual, secondly it creates a benefit to that high valued employee because of the things that we started to hint on at the beginning of this, of this podcast, which was, you know, the growth factor, the you know, the ability to grow money, growing tax deferred and then being able to utilize that later on down the road and if done correctly on a tax free basis, having the benefits of that asset being outside of the assets of your other so protected. Well then businesses realized that they could add that as a form of compensation to entice more employees, higher caliber employees to come on board with their organization by still offering them similar comp packages that maybe their competitors are offering but then adding that next layer of compensation through creative structures utilizing insurance that protects the organization, that helps that employee and helps that employee earn more capital and also helps protect that employee and the employee's family if anything was to happen to that employee. So it's a wonderful tool when the corporations of the world. And then now more recently, even very large family offices are implementing this to pass along their, their family wealth. And that's a whole nother conversation is how our family offices using this to pass along their wealth. But that's specifically to your question about corporations has a multiple effects of why that they like to implement life insurance strategies for their employees.

Yeah, this, Boli and Kohli, they, they form the kind of an asset also in their, in their financials. So that's very interesting to see. They have billions of dollars in these assets. Right, right, right, it's, it's very interesting. So thank you for sharing that. And you kind of led to my next question. You know, the family offices and how do they use life insurance? Because it's very common for a person to think that hey, this is my life, these are my liabilities. If I, you know, for next 20, 30 years, if I have that term life insurance and my liabilities for kids education, my mortgage is paid off, my liabilities are ending and now I don't need life insurance. Right. So that's the common person's thinking. And you know, that was my thinking too. So how, how do, how do we change that thinking? By understanding how wealthy use this life insurance. So can we talk a little bit about how family offices, which formula office is typically 100 million plus net worth individuals creating like, almost like a business of this investment. Right, the family offices. So can you talk about how are they using life insurance?

Yeah, and, and I think I like to make note that by the way, how they're using it is how most people can use it. They just are and a lot aren't taking advantage of it. But so you already defined the family office. So of course, incredibly wealthy people, incredibly wealthy family. And one of the main desires of these family offices is the continuation of their wealth through generations. So generational transfer of their wealth. So you'll meet some families, I've met families that are in their seventh, eighth, ninth generation family members of where the money, the original money was, was made. And, and, and you come to find out that their actual net worth has continued to grow through the years. So even though it started off with a lot of money, it's even grown even greater or higher today than it ever has been in. One of the tools that I've been seeing a lot of family offices use to help continue to grow their assets is the usage of insurance, life insurance on the family members. Now normally we think oh my gosh, if I pass away, I don't have enough Money in my, you know, in my estate, to take care of my family. Right. So maybe that's the decision we faced. Right. Is I still want my children, if they're younger, to go to college. I want my spouse to be able to still live in the home and do the things. So I better get some insurance because I got to replace my income. Well, they have the income or they've got the net worth. Excuse me. Too. But they want to keep that net worth and actually continue to grow it. So by implementing life insurance. And what they're doing is very simple strategies such as as a individual, as a new member of the family is born and starts to be, you know, get older, what they'll do is they'll actually end up putting a life insurance policy on these individuals and feed it early. And so they feed these policies, meaning pay more than what is the requirement outlined in that policy, Whatever policy structure happens to be. So they feed it more. They feed it up to their guideline maximums. There's insurance terminology that you can use to talk about that, but there's maximums, and they really feed that. Now, the reason why they do that is because they are betting on time. This is a younger individual, and that person is now going to spend the next several decades getting older and getting into the world and working and doing the things that they do. And what they're doing is they're setting up so that that individual starts to receive the benefit of these policies later on down the road. So what does that do for them? Well, number one, that's a great distribution for them. Now they've got a vehicle that's going to start distributing money down the road when they're older. There's tax advantages for that, too, so that they're receiving that money without the tax liabilities. But what it really does is it protects the core wealth of the family so that they're not tapping into the lion's share of their money to pay these families. Especially as families are growing and more and more kids, the fifth generation, the sixth generation is now 100 people versus you started off with maybe a couple, you know, five generations ago. And so this allows for the distribution of wealth to the family, but maintaining the core assets of that family to continue to grow and expand so that family can continue to provide for their generation even more generations to come. So now, as an individual, we can do that too. Now, today we can do that. We don't have to be $100 million. We could be $100,000 income earner and still do this at a smaller, you know, level. But everyone has the ability to do that. They're just taking full advantage of it to continue on with their generation.

I love that, I love everything what you said. And it goes back to my, you know, my strategy that I'm very passionate about is the infinite banking. And you kind of eluded that in very simple terms, right? It's a, it's a product and it has some premiums, but now you can overfund it. And that overfunding is what makes it efficient. And that's what, you know, wealthy have been doing for generation after generation. And you know, in India we have a saying that, you know, the sixth generation earns, earned it expanded the generational wealth and the seventh generation kind of loses it. Sometimes that happens in, you know, the second and third generation too. But this is very important aspect of the, the entire estate planning or the generational wealth planning that instead of you dividing the wealth, you actually fund this and then hand that over that, okay? This is your portion of this wealth, right? And now inherently, now they have this responsibility now they own, own it and maybe a million dollar by the time they're, you know, 20 some now they can use it for their education, any kind of use it, leverage from it, or take a cash out and refund it and kind of keep on replenishing that and use it for, for their lifetime, whether it's for investments, whether it's for retirement or whatever, right? So that's the beauty of it. And you very rightfully said that, you know, you don't have to build this 100 million worth, but even if you are earning 100k, this is a flexibility that I always talk about that. It's your structure. You define what your minimum is going to be and what your maximum is going to be. And now you can fund it so that it runs that efficiency, that kind of a snowball of compounding which is growing, as you initially said, tax free, right? So that's the important aspect of it. And I love to see that when you create this path for your generational wealth now, it kind of creates a comfort for you that, okay, now whatever I have earned in this lifetime, even if I run that out and even if I, you know, spend that money for whatever I want to do, there is still a piece that's being passed to the next generation. So that's an interesting way of looking at it. We did talk about the infinite banking concept a little bit, but let's talk about that cash value and you know, beginning of the Episode I talked about the life insurance being the death benefit. People look at it as the death benefit money that I never see. How can they see that as money that they can actually access during their lifetime? And I do educate a lot on Infinite Banking, but I would love to see your perspective on it.

Well, look, I think it is probably the most underutilized and probably the most powerful tool that we have on our disposal, which is we have a vehicle. We have a vehicle in which we are first and foremost managing risk. Meaning if something happens to me earlier than I think or you know, that money comes to my family. So we've got that handled. That's your foundation, as you mentioned earlier in the podcast, now giving myself the ability to over fund that I'm going to start to grow that now there's different structures, different insurance programs, there's whole lifes and universals and variables and again they all have very different ways in which the money can grow. Which one of those is appropriate will depend on the individual. Not one is wrong or one is right. It really just depends on that individual and what their desired outcome is going to be. And what risk they're willing to take will kind of determine which path they want to go. But all of them offer this growth potential. So it's now growing inside because I'm paying more into that policy than the cost of that policy. What people don't necessarily realize is that there is a term in the insurance and you see this on your statements and it's called COI or cost of adjustments insurance. Well, cost of insurance actually goes up every year by incremental small amounts, but it goes up every year. And so more and more of as you start to put more money into there and get beyond your cost of insurance, you start going into these investment accounts. Again, depending on which product you have, depends on that will determine the account. Now that money is growing in there and I'm just like I'm a savings vehicle of anything. You know, you're putting money into it, it's growing. But here's the benefit of it. The benefit is I don't have to be 65 to take that money out. I don't have to use it specifically for an education based and or whatever the other programs that are available outside of the investments. That is my own personal investment account that I can put as much money into there as I want to upgrade to its guideline maximums that it allows. I choose based on what investment or insurance program I have, how it's going to grow and what it's going to do. I choose when to take that money out for the reasons that I choose. Whether it's to pay for college, maybe it's early on in their lives, maybe it's to help that young couple buy a home or at least a down payment on that home to start their family. Maybe it's a deciding to take some of that to take a great anniversary trip for a couple that decides, you know, we've hit that 25 year and we're gonna go take our anniversary trip. I bring that up as I'm going to Italy here in a couple of months with my wife for our 2020. It's 24, but well, congratulations maybe, or maybe it's because I want to use that for a business venture. I. Or maybe I want to use it for my retirement. And so that money is growing and then taking that money out on my terms the way I deem fit to use for the, for the any event in my life, which is very. And to do that on a tax, you know, benefit basis, there's just not a lot of vehicles that are out there that can match that flexibility of funding deferred growth if done correctly, taken out without a tax obligation and the terms that I see fit. And so when you start unpacking that you start to realize, man, this is actually a pretty good opportunity for me to grow. Now you brought up, I love the concept of working with grandparents that said when their grandchild was born and then they would set up an insurance policy on the grandchildren child and fed it right away so that by the time that grandchild hit 18, there was a good chunk of money in there. The parents didn't have to go into their investments to pay for their children's account because that fund was already, that investment was already set up through the insurance program or it was family members, parents that said, you know what? I like you mentioned, I want to pass something along to my family, but I don't want to inhibit or prevent my quality of life to be diminished. So I want to really still utilize my assets that I've saved for. So instead I'm choosing to transfer my wealth in the form of an insurance to my family members. It's going to be a little bit better from a tax advantage standpoint and it doesn't put so much burden on me as the parent and I still get to utilize that money for my own retirement. So what a powerful tool that you just can't when you start really unpacking it. I think it really takes people by surprise as the options.

Love it, love it. Like the last five minutes was the greatest summary of a life insurance that anybody has ever provided to me. Incredible. Thank you so much for doing that. And you know, I love every aspect of what you just mentioned that, you know, you don't have limits, you don't have limits on how much you put into it, how much you want to take out and when you want to take out and for what reason. And I love that generation wealth strategy that you just explained for the grand grandkids that you know, the grandparents can set up and probably, you know, when it comes to education or something that gets a little bit lighter for the, for the kids because the parents now have a little bit support to support their education. So that's, that's the beauty of it. Another thing that you just mentioned slightly is about, you know, by taking out the money, using the leverage, if you're done correctly. Right. That's an important aspect that's huge. When you have say like 401k or something and you take some loan or leverage out of it, that money actually comes out. So if you have like a 400k in your 401k and you take 100k loan, that money comes out and then you put into those investments. But in this case the money does not come out because you just like a home equity loan, you're paying somebody else that interest, a small simple interest probably while the money is still compounding tax free inside that vehicle. And now you can utilize it for investment purposes. And that's what I call as an, and asset that the same money at some cost, the same money is growing at two different places. And this is, this is mind blowing. And this is still just the saving and growing part of it on top of it, the death benefit. You know, when it comes to inferent banking that is also growing, which can be passed to the next generation, which people often ignore to kind of, you know, understand that. So we are coming at the, towards the end of the part one. But I do want to, you know, talk about some things, especially a question that when it comes to life insurance, what do you think is the biggest mistake that people are doing in this, you know, in this time that in, in us?

Well, first and foremost, not looking into it and not getting it. I'm still surprised of how many people I talk to that say that they don't have life insurance. It's something again, your most valuable asset is you, you yourself and your ability to earn income. And if you're not setting a strong foundation we can use any analogy we want. Building a home, building the pyramids, everything all started from a good strong foundation. And that is your securing your ability to earn money. So first and foremost, 100% is not enough. People are looking at insurance and getting insurance. Secondly, they're not taking advantage of people like you and others that are walking through the steps with them. I get it. There's online resources, I understand all of that go way the way the world goes, right as, as we're make, we're making our world easier to do business with AI technologies and Internet access and all that kind of stuff. But the reality is that if you're not setting that foundation up properly, having enough of it and the right structure and what they're doing, you know, what you're doing with it, you can get yourself, you know, in a, in, in a situation where it's not doing what you thought it was supposed to do, where I think utilizing financial and insurance professionals to determine the amount, the type of insurance, how much you're going to feed it, how to do the things you needed to do, how to pull the money out. If you're not using them, you're missing out. Because I think there's a higher degree of a chance of an issue or failure of these policies if you don't do that. And that leads itself into a whole other market where we're seeing people getting rid of their policies because they aren't performing the way they thought they were. And then that developed a whole nother market which I know that we're going to talk about here in the, in the next series. But so getting insurance, but more importantly utilizing professionals for which kind how much and how the mechanics work, I think is so, so important and not used enough in today's environment, especially with Internet and access that anybody can get.

Wow, what a, what a golden nugget there. You know, first of all, not having an insurance I come across and it actually saddens me to see that, you know, how they, they think about their life not being, you know, them not being the biggest asset, but protecting stuff like home very diligently, protecting a car very diligently and not dropping their insurance on home or car after 20, 30 years, but dropping their own life insur that the term is expired and most of the times just tied to the employer, right, it's just tied to the job, job that they have involved in. So that's one thing. And yeah, second rightfully said that, you know, not utilizing people like me, I'm very passionate about it. It's a complex product, but I like to simplify, educate before we actually implement it. And this doesn't cost them a thing. It's, it's just a part of the commission's structure, built in, in the policies. But it's not, you know, it's not an hourly cost to them, it's not a cost to them. And we try to break even this cost, even when it comes to the insurance, when I build the infinite banking in six to seven years so that the more money that they're putting it in there becomes more efficient. So that's a very important aspect to look at that utilize the expertise that's out there because it's not costing you a thing. It's just going to help you systematically to build it, to understand it and to utilize it. And that's very important aspect of it.

I've had the fortune, well call it a fortunate. But also sometimes the way to look at it as unfortunate is that in that I have sat across the table of clients and for verbally delivered that check. You don't physically deliver it, it gets wired in their accounts. But I've sat there and assured that family because a family member passed away, which is a horrible, you know, event and nobody, you know, likes it. But it's part of our life, it's part of human, our existence. And I've watched people get that money and I see the impact it is on their lives and how they're able to in a time that they're, they're grieving and mourning and wishing their family member was still there, knowing that at least there's a certain part of their life, financial part, then it is okay, and that they can focus then on the, the healing process and the grieving process and not worry about that financial aspects. So I've seen it from that side of it and I've seen it many times. And that's a, you know, while you don't want to see that because that means somebody has passed away, that's just what's going to happen in our lives. But how that impacted that family, those sit with me to this day and I think about that all the time, about how that has impacted a family. And so that has meaning. And when you have somebody in your family, whether it's a distant family member or close family member, if they've passed and you've seen that distribution of a benefit go to their beneficiaries, that kind of changes people's thought processes and says, okay, I get it. You know, this is, this has real impact and real meaning to people's lives, let alone all the strategies we've talked about and deferred growth and all of that stuff, which is hugely important, but just the core foundation of financial security. Even if life doesn't go the way we thought it was going to go.

That's profound. That's profound. It actually gave me goosebumps when you're talking about that because, you know, it's so essential. It's, you're going through that grief. But this is, you know, one last thing that this person, my father or my mother did for me just to take care of me, you know, even after they're gone, that just has a profound, profound, you know, emotion attached to it. So thanks for sharing that. So with that, I typically have, you know, a couple of other questions about how you think outside the stocks and some rapid fire. But because this is going to be a second two part series, I'm going to have that at the end of the second part. So we will talk about those questions there. But yeah, just kind of a segue to our, you know, next episode. Just, you know, this leads to an interesting question that what happens with, when someone in their lifetime doesn't want or doesn't need or can't just continue with the life insurance? Does that asset just disappear? It's just like stop paying into it and just disappear. What happens to that? And this is kind of a teaser into the, the second part. And this is, I can see you're kind of lighting up because this is your, your thing, right. So how does this like hold secondaries or you know, for insurance that work? Let's elude a little bit of that. And what's coming up give us give our listeners a little bit glimpse into what we are heading into the next episode.

Sure. Well, I think, you know, just like our financial accounts, having sitting down with a financial and insurance professional and reviewing your insurance as much as, as your financial accounts, your investment accounts is critically important because the things that we set up many years ago may not be the same outcomes that we desire today. Life changes, things change. So that's no different in insurance. And in reality, most people don't pass away early. They live to older age, they live to their retirement years. That's just the reality, you know, that's, which is a great thing and I hope we all get there. But and it comes to the point where in many cases people no longer want or need or can afford their insurance anymore. And what has traditionally happened for people that have, that is they've had One of two options that they could do with their policy if they no longer wanted it or needed it or could afford it. One was to let that policy lapse. And that just simply means I've stopped paying for my insurance. I stopped paying my premiums. And if there was any cash that was still left in there, the insurance company goes and grabs that cash and uses that to pay for that cost of insurance that I talked about earlier that coi. And until that all runs out, then the policy simply lapses, simply just goes away. We're done. The insurance company says, our contract is complete with you. You stopped paying, and you have no more money in your account. Therefore we have no obligation to pay you a death benefit. So that's letting the policy be lapsed. Or the other option that an individual had was to surrender their policy, which means that they're saying, hey, I want to, in essence, sell back my insurance policy to the carrier, you know, the John Hancocks and Trans Americas of the world, whoever they were. And in turn, you're going to pay me what my cash was in there, whatever cash I had built up. So not for term purposes, but for permanent policies. Whatever cash I had there, I want that back. You're going to pay me that. So those have been, historically, the two ways in which you were able to get rid of your policy. But about 25 years ago, there's an industry that got developed called the secondary market for life insurance. That developed. And what that meant was that instead of letting that policy lapse or surrender to the insurance company, the individual went to the market and sold their policy to a value that is greater than the amount that would be paid for from the insurance company. So the analogy that makes a lot of sense to me, which is if you owned a car and you bought a car brand new from the Ford Motor Company, and now you're done with that car. And if your only option when you're done with that car is to sell it back to Ford, well, that doesn't make any sense to me. You would bring it to the market. You would say, I want to sell my car and I'm going to get the highest value. So that's really what the secondary market of life insurance is all about, is bringing that policy to market and get the best value, because I no longer want it needed or can afford it anymore, and now I get that value that I can do with it as I choose. So in our second series, we'll kind of unpack that a little bit more. But that's the general gist of it is there's a secondary market for individuals that want to sell their policy for a value typically significantly greater than what they would get from the insurance company for that asset, that insurance policy that they no longer wish to have.

Very, very interesting and love that analogy about the Ford car as well. We will unpack the secondary market and you know, this whole kind of a segment of investment options for investors too in the second part. But if what Matthew shared today has you questioning everything you thought about and knew about life insurance, well you're, you're having a right reaction because this is what, you know, people react to. The buy term and invest the difference philosophy has created one of the biggest, biggest blind spot in American investing. And I hope that you are challenging for yourself today. So here's your homework before we go to the part two that first of all, if you currently own a term life, you know, ask yourself question is it tied to the employer that you work with and what happens to that after you leave that, leave that job, call your agent and ask about, you know, how can you convert if there is was an option to it? You could be just sitting on a opportunity that you don't even know that. Second of all, if you have permanent life insurance and you have been told that oh, it's just performing poorly, don't just surrender it yet. I mean I'll be happy to take a look at it and provide you some kind of an honest opinion about it. There might be some options that you may not know. And if that's not serving you, there's something that's called 1035 that you can, you know, surrender that into something else and build something bigger and better for yourself. So that's your homework and then make sure that you are subscribed for the next week episode because Matthew is going to blow your mind on how life insurance policy can become a tradable asset worth hundreds of billions of dollars. And this is about what, $230 billion market or a little bit more maybe we are talking about the secondary market that people don't even know that it's going to exist. And share this episode with anyone that was told that buy term and invest the difference. They need to hear this. So until the next part, thank you so much for listening in and Matthew, thank you so much for being with with us. And let's start thinking about life insurance as little bit differently as an asset, not just an insurance, not just a death benefit that you'll never see, but something that you can grow protect when you are alive and utilize it for your purposes and pass it as a generational value. Thank you so much, Matthew for joining us.

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