EP 34 – Should Insurance Be Used For Retirement?

Retirement Insurance Plans: Are they a practical option? Mark and Mat weigh in on this controversial topic in this episode of the Directed IRA Podcast. They cover the key differences between a retirement insurance plan and an IRA and the practicalities of both options. 

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Mark Kohler: You know, I was telling my partner here, Mat Sorensen, that I’m not getting enough hate mail in my life and so we are going to talk about insurance and should you use it for retirement at all? Bring it on.

Mat Sorensen: Wow. Podcasts and video on life insurance and retirement accounts. I know what you’re thinking. Guys are like guys. Could you make anything more nerdy and boring? Yeah, we could. But this is important. It’s your life. It’s your retirement. You need to take it seriously. Welcome, everyone, to the Directed IRA podcast. This is Mat Sorensen. I am joined, as always, with my illustrious heck of a good guy co-host Mark J Kohler.

Mark Kohler: Wow, thanks. I don’t know whether to take illustrious or heck of a good guy. I guess it depends on what circle you’re in.

Mat Sorensen: Either one. I mean, one of them sounds kind of smart and, you know, it’s kind of like a word of the day. Illustrious. I don’t even know entirely what that means. A heck of a good guy just, you know.

Mark Kohler: Yeah, I. That’s self-explanatory. Well, welcome, everybody. We’re excited about today’s topic, and that is, should insurance be used for retirement? Buyer beware. Bring on the hate mail.

Mat Sorensen: Oh, yeah.

Mark Kohler: It’s it’s going to that’s going to be a brutal conversation. Insurance agents, you’re going to want to take us to task. I know you’re going to start taking notes of everything we said. You know, everything we say that’s wrong. We’re going to talk policies. Yeah. Localities more so than technicalities.

Mat Sorensen: Yeah. So any time you wade into a topic where someone makes money at it and a lot of money in particular, some of these life insurance policies, there’s going to be some there’s going be a strong defense out there and we get it bad. But that is frankly part of the problem. A lot of these whole life policies, which we’re going to talk about, are very highly commissioned. If someone sells you one hundred thousand our whole life policy or a million-dollar whole life policy, they’re going to make 10% commission in many instances may be one hundred thousand dollars to sell you that policy, a million dollar policy in some instances.

Mark Kohler: Now, the agent may not see all of that. And I already know we got some agents feathers ruffled. I don’t get that much. And it’s overtime. And there’s this on all these facts, we get it. But in the words of Matt Damon, great benefits is a monster and benefits. Do you like that? I pulled that out.

Mat Sorensen: Rainmaker, right?

Mark Kohler: Yeah. Rainmaker. Matt Damon. What was his name? The character’s name, I can’t remember, but Matt Damon. Yeah, yeah, that good show, Rainmaker, and it’s tough. I made my kids watch Rainmaker and they were like, wow. And then we watched black, not Blackwater. Yeah, it’s Blackwater, the new one.

Mat Sorensen: Mark Ruffalo.

Mark Kohler: Yeah. So good. Well, anyway, everybody, thank you for being here. We are going to talk about insurance. We’re going to break down a few definitions for some other not purchased insurance. Maybe you’ve been pitched an insurance policy recently. Maybe you own an insurance policy and don’t know what you have. We’re going to try to explain. Not going to try. We are going to explain the basics and tell you some of the good you know, insurance is there for a reason. You know, it’s been around for how many years, hundreds of years in. But it can be oversold and we’re going to explain the pros and cons.

Mat Sorensen: Yeah, so and I think everybody should have some life insurance in your life, particularly if you’ve got kids or family, you know, like people that rely on you to support them. Yeah. A business partner, Mark, and I have life insurance policies against each other, you know, to help us carry on the businesses of one of us was able to pass and pay off the estate of the deceased person. We get it like there’s lots of great places for life insurance. But do you do it instead of a retirement account? Some people pitch that. Some people sell that. Some people say it’s better than a retirement account. Let’s talk about that.

Mark Kohler: Yeah, I’ve got a rant here in a moment on that. But I was a little concerned recently. I got a phone call from our insurance agent and said Mat was doubling the death benefit on your policy, Mark. And I said he is? I want you to know Mat. I got that call.

Mat Sorensen: Yeah, dang it. I told him not to call it. Yeah, you better watch out. You know, you never know what you might want. Check the brakes before you roll out of your driveway. Pelican Brief. I mean, the car starting a little slow you might want to walk away.

Mark Kohler: Either I got a crappy car or there’s a bomb, one of the two. So, yeah, it’s really a lot of pressure because if I don’t perform at work, Mat’s just one phone call away from Brunos

Mat Sorensen: I’m not messing around.

Mark Kohler: Yeah, it’s like Bruno pull the trigger, you know. Yeah. We’re ready to go. OK, now here, one last fun note for those sort of just maybe found this podcast. Maybe you were looking at the topic of insurance and you’re like, who are these bozos? We are both tax lawyers. I’m also a CPA. Mat is the CEO of the trust company, Directed IRA Trust Company, directedira.com. We were both senior partners in the law firm KQ, US Lawyers, Dotcom, and we both have best-selling books in a variety of these topics that we’re going to be covering today. We’ve got a very active YouTube following podcast following and we stand behind what we say. We’re not just out there hawking some sort of. Investment or policy, where we get a commission, we are held to the fiduciary duty rules of a lawyer to give our clients the best advice when they call. And that’s where sometimes we have to give hard answers like today’s topic. So we’re glad you’re here. Buckle up. We call this hot podcasting.

Mat Sorensen: Hot podcasting.

Mark Kohler: Yeah, it’s hot because we can’t turn on the AC in here. Oh, it is brutal because there’s a

Mat Sorensen: Little of the tone. Yeah. Yeah. Mark’s not sweating because of the topic. He’s sweating because he can’t have the AC on. I’m in Phoenix and AC is a must. That’s just you know, we’re just going to have it so. All right.

Mark Kohler: Well, lets say I’m wearing my Lululemon leggings, so I want to let you know.

Mat Sorensen: Thanks for sharing.

Mark Kohler: Ok, yeah. It’s, it’s below the below the screen here, but just don’t go. No, I’m, I’m ready to do some stretching. I can do several yoga poses if necessary to get the most out of this hot podcasting session. OK, ok. All right. So do you want to explain the two types of main insurance out there? What do we got?

Mat Sorensen: Ok, now, so you kind of got two channels of insurance you could buy on your life. Then you’ve got term insurance, which is probably more common for people. And this is more just planning for your death. All right. I’ve got I’m going to buy it. It’s usually cheaper. There’s not a cash value to it. If there is, it’s very, very minimal. And I’m basically paying a company that an insurance company. And the deal is when I die, there’s going to be a benefit paid to my beneficiaries on the policy. Maybe your spouse, your kids, a business partner, if you got one, because you’re buying that policy to protect the business and succession planning. And so that’s term policy. There’s no cash benefit to it. That might be minimal, you know, but you’re not it’s not invested in anything. Like the only thing that the insurance company is giving back to you is when you die, as long as you’ve kept paying all the premiums, so many people don’t. That’s how the insurance company wins. As long as you keep paying your premiums, you will get the death benefit or your heirs, I should say, upon your death.

Mark Kohler: And it’s called a term policy because there’s an ending point now to be a five-year term, a ten-year term, fifteen or twenty-year. And you get to choose the term based on your health and your age. You can go to a calculator on Google, write down. Thirty-five insurance companies are paying ten dollars a click to get you to fill out some form. You want your lead, so be careful what you type in. But yeah, you can go and just do the math really, really quickly. And whether you want to say,

Mat Sorensen: Yeah, if you want to find your worst enemy, get their email and their name and phone number and go to an insurance quote form for them online.

Mark Kohler: Rockstar, coming up through the nose is not fun.

Mat Sorensen: So I’m going to get blown up their phone. They’re going to get call for insurance policies, but that’s important on term. And and if you’re in your 30s or 40s, you know, your 20s, it’s pretty cheap. It’s not expensive. Once you hit, let’s say, your 60s or 70s, you’re trying to buy term. It’s a lot more pricey because there’s more risk for the insurance company. You will die soon and this thing will pay out.

Mark Kohler: Now, also, if you’re older and you have a younger wife, term is more risky, too. You just never know. Got to watch Dateline if you don’t watch Dateline.

Mat Sorensen: That’s true. It’s always it’s always the spouse or girlfriend.

Mark Kohler: It’s always the spouse. And I’m sick and tired of it Dateline can we find a few where maybe a few more wives are killing their husband. I’m sick and tired of the husband killing their wives. It’s really I think it’s a little jaded, but. Well anyway, OK, now a a concept that is often talked about, and I to be honest, I’m a firm believer in, so spoiler alert, so I’m going to tell you where I’m coming from, but a concept that’s used out there is called term and invest. Go and buy some term insurance, get a half a million a mil, get a couple mil something on you, your partner, your spouse, and get a low premium and invest what you might spend otherwise on whole life insurance, which Mat. We’ll explain here in two seconds. But Term invest is quite common. I like that. I like to control my investment. I think I can get a better rate of return and I have the benefit of term insurance during this term that I get to choose and what I’m worth more and have more wealth in the future. Maybe I don’t need that term insurance as well so I can kind of work my way out of needing it by building up a bigger net worth where my spouse or partner, whoever’s taken care of so long term and invest, is a concept that makes practical sense to me. And insurance agents don’t like to talk about it because. Tell us about whole life.

Mat Sorensen: Yeah. And Mark on your thing, too. That’s why term is a good option for a lot of people is like, let’s say you’re in your 30s or 40s, you’ve got kids or something. And then if you passed away, your surviving spouse was on their own trying to figure it out. It’s going to be tricky. And but, you know, when you get in your 60s, 70s and older and you’re trying to buy a term, you should have assets by then. You may not need insurance. And it’s going be really expensive anyways if you have to. So we want you to build your assets in an otherwise like I love that term and invest and see it makes total sense.

Mark Kohler: Yeah. And now some of you may want to, when you die, create what’s called a trust baby. They’re really exciting you get this big insurance policy, you do not tie it to your revokable living trust, which is stupid. I hate to say that I will. If any of you are buying insurance, heaven forbid someone told you to put your kids as the contingent beneficiary because when they turn 18, they get that million dollar policy. And of course, they’re going to use it wisely to go to graduate school and buy a 1982 Honda Accord. And they’re going to just be really, really careful with that money, not.

Mat Sorensen: And so we’ve seen that we write in the family that the car accident I mean, unfortunately, you know, we’ve done some estate planning obviously over the years. We’ve seen these and the and some people who come to us that didn’t have an estate plan and topic for another day. Yeah. Kid shows up and anyways that they they go buy an Escalade,

Mark Kohler: Get over to our Main Street business podcast. Folks, if you if you found this podcast, like, who are these guys? You know, this isn’t too bad. They’re kind of humorous a little bit. Even though our humor is a little dry and we’re trying to teach some great concepts. Get over to MainStreetBusiness.com. We have a podcast that has ten times the downloads as the directed Ioway podcast because it’s been around 10 more years. But get over there and we have some great podcast episodes on the estate planning topic, which needs to be talked about when you get into insurance. But different podcast. OK, so we go from term insurance whole life.

Mat Sorensen: Ok, here’s the other one. Whole life now, whole life has what term has essentially you’re paying in to the insurance company and there’s a death benefit that will pay out when you die. But in addition to that whole life insurance, it also has an investment mechanism built into it where the money I’m putting in, some of it’s going just towards the insurance company to pay a death benefit in the future. When you pass. Another piece is getting invested, though. All right. This is building up something called the cash value part of your insurance policy. So when some people are like, yeah, what’s the cash value of your insurance policy? This is this value that’s building up that you you may have access to. And there’s ways you get the money out and there’s some tax rules to it. But there’s the first fundamental thing and Mark can explain the other pieces here on the tax and getting the money out. But we have a death benefit, but we also have this cash value in this money that the insurance company is investing and trying to grow for you.

Mark Kohler: And most estimates show that whole life is about 15 times more expensive than term. So if you have a 200 dollar a month premium or one hundred dollars a month, probably a little more realistic, one hundred dollars a month term life insurance policy premium, that might be fifteen hundred a month in a whole life scenario, I’d say most term policies are going to be for the average individual, about five hundred dollars a year, and that’s going to get you a million. And again, the older you are, the more health problems you have, the more it’s going to go up, the younger you are. It could be less than I was in my 30s and had a two hundred twenty dollar a year premium on a million dollars. It was sweet. Now I’m. Yeah. A walking heartattack so it’s not as beneficial. OK, now on this whole LifePoint, where’s all that extra money going to. Now this is about the point. We start getting into a rant so I’m going to be careful and I’m going to rant, I’m going to give you some scary things that I hear all the time. But the insurance premium portion of the term is buried in the whole life premium and everything else is supposed to now for those watching on YouTube, you’re seeing my little over dramatic quotes in my hands. Talk about this supposed to and be going towards this investment portion or this cash value. And you’re building that up over time. And there’s different types of whole life that make this sound even sexier. There’s ordinary life, universal life, variable universal life, adjustable life, and all these variations under code section 7200 of the code start to give you what the insurance companies have lobbied for over the years. These flexible ways for them to control those premiums give you an investment rate of return and that cash value that makes it sound sexy. And you’re like, oh my gosh, this whole life policy is the best thing next to sliced bread. And it’s like new to you. No one’s ever heard of it. People it’s been around for 50 years or more and I’m probably even 100 years. I don’t know. But it’s always funny when a cleint calls me. Have you heard of VUL? Well, I’m like, yeah, if you get a butter and jelly, you know.

Mat Sorensen: Yeah, yeah, yeah. So what sparked a lot of this is there’s a lot of people promoting whole life insurance, essentially, but they don’t call it that. They won’t tell you that’s what it is. They call it some fancy acronym of something that’s that’s better than a retirement account. And they start taunting all these tax benefits to it. And this is where the strategy people are using some truth, but they’re stretching it and they’re misapplying it and they’re over selling it. All right. In the whole life policy world, that cash value, the investment piece of the policy is growing tax deferred.

Mark Kohler: All right, our tax plan really tax-free, in a sense, you’ll never pay tax. Mm hmm. And you can borrow against it. Wow, tax-free. Sounds pretty good.

Mat Sorensen: You can borrow against it tax free. Sure. So I’m throwing the money in. I don’t get a tax deduction, though. OK, now we can add a traditional retirement account. Yeah. And is that balance is growing I can loan money out to myself.

Mark Kohler: Sounds like a Roth Mat, sounds like a Roth IRA. It’s growing. I didn’t get a tax deduction, but why don’t we both give kind of a difference between a Roth and a whole life? What would you say? The first big differences?

Mat Sorensen: Well, the Roth I can invest in what the heck I want.

Mark Kohler: I like that soup de jour.

Mat Sorensen: Yeah, that’s pretty. That’s do we need to say anything more. All right. All right. The insurance company is going to put it into something, and some of these companies will guarantee you a rate of one to two percent. Some will do well here.

Mark Kohler: And give me my phone. I heard one to two percent, Jeff. I say turn off the phone. One or two percent I’m in. Holy crap that’s an awesome rate of return.

Mat Sorensen: Where do I send my money?

Mark Kohler: Oh, my gosh, that is amazing.

Mat Sorensen: Now you think you can self-direct. And of course, that’s what we’re all about at Directed IRA clients using their IRAs to buy real estate or private companies or crypto or you know, you can use your retirement account to buy all these alternative assets even if you’re boring and just want to buy the S&P 500 was like an eight percent annual return of the last 20 to 30 years. So why am I giving the insurance company all this money to give me back one to two percent guaranteed when they don’t even try give up, just buy the S&P 500 fund is going to get me eight percent. Mm hmm, and does and and how much do these this little difference of a six percent spread, by the way, just add up over the years, just six percent of and want a lot and that Roth IRA comes out tax free. Totally tax free.

Mark Kohler: Ok, so that’s the first difference. So when someone says, I’ve got this insurance policy that grows tax-free and there’s no risk. Now, here’s one of the first rants that really got this podcast going today. Some Yahoo is now calling it. There’s so many every year an insurance agent or company comes up with a new way to brand this same damn thing. And it’s either bank on yourself or bank this or you have your own private banking and you know, you’re going you created your own bank that you can borrow against tax free. And now the new one today was a TFRP, a tax free retirement plan guy went on for eight freaking pages, explaining why the TFRP was better than a 401K, because it comes out tax free and it’s no risk and guaranteed rates of return and blah, blah, blah. Didn’t even say the word insurance once, but said, oh, but this is based on IRS code section 7200 and right there I was like. Life insurance website buried with it, they just but this little post of theirs on social media, the TFRP is again smoke and mirrors for an insurance policy. So the guaranteed rate of return and the no risk aspect of the life insurance truth. No, see, this is the half-truth. There’s no risk. It is guaranteed. Just let’s talk about the two percent.

Mat Sorensen: Yeah.

Mark Kohler: So hurts the economy helps out one insurance agent.

Mat Sorensen: Yeah, that’s right. So we got one for you. Yeah. That’s the first is just like what you can invest in having greater return options and possibility and likelihood, by the way, of just what you can get in an IRA or just in a frickin’ brokerage account, even if you’re like because here’s the other thing you’ll hear people will say, yeah, but you can only put six thousand dollars in an IRA. You know,

Mark Kohler: That’s second difference. I love it. I love it. I was going to tee it up for you because I’ve been color commentary today just ranting. So I was going to let you explain it, but no one was. The rate of return sucks. OK, can we just say it? Number two, they’re going to say, well, you can put a lot more in insurance. Let’s over fund this baby and it’ll take care of itself. And and so you could put massive premiums in an insurance policy. You can only do six grand in a Roth or seven. Is that true? Mat Sorensen.

Mat Sorensen: Ok, yeah. I get what you’re saying again. This is where there’s some half truth and it’s not reality. You can put over fifty grand a year in a Solok for any of you people self-employed. We do that all day long, even SEP IRAs. Some of you that want to do a lot of income and assets where you may really highly over fund whole life insurance policy. You can do these DB plans and cash balance plans and other things get way more dollars into retirement accounts. Then you’re going to get into a whole life policy.

Mark Kohler: Mega Roth, Mega Roth. Yeah, yeah, yeah, yeah. You can either make a Roth people, we can get you fifty grand on Roth whether you work at a large company or us yourself or whatever. We got the backdoor Roth, we got conversions.

Mat Sorensen: You have so many more options. And here’s the thing though. On the money in. Let me just this is pitched again for retirement, this is what people are trying to sell hold for, for retirement, OK? Let’s say you’re someone that had five hundred thousand dollars and this is people getting pitched this go my whole life, they’re like, just throw it all in. Let’s see how much we can get in there. Let’s just do that all in the whole life, you’re going to get one or two percent rate of return. You can loan that yourself back that money out. OK. Why don’t we loan myself money back? I have five hundred thousand dollars already, so I get a tax deduction to put that in? No. OK, so why did I put that in? Because you can go back out to yourself. It’s my money already I already have it. And why don’t I just go buy a rental property or a few rental properties? Those are going to be assets that appreciate over time that have income that are going to have cash flow. And by the way, I can take a loan out against those, too, and strip out equity on those assets. Why do we need to give a life insurance company? I don’t like what?

Mark Kohler: Yeah. Now, what Mat saying is number three on our list here that you’re seeing on the screen of your YouTube, these are the three problems with insurance when you compare it to a Roth. Number three is it’s a loan you’ve got to pay it back to. So you’re going to borrow from your own insurance company and have to pay it back if you don’t. The insurance. That’s right. The interest rate and the interest that you’re supposed to be paying for that loan starts to exponentially grow and become a liability and a debt and reduces your cash value. And when I die, my death benefit will pay it off. Sure, but it’s your money. It’s still your money. Maybe that’s death benefit you wanted to go to your partner, your spouse, your kids. But I’m going to go pay off the loan that I had the loan to myself and pay interest.

Mat Sorensen: Yeah. And, you know, let’s say that the let’s say that you don’t pay back the loan. All right. And it now it’s exceeded the cash value of your policy. The insurance company can make a policy lapse. They can cancel your policy if you had any gains in there. By the way, those are all taxable now.

Mark Kohler: And it’s just so frustrating. So here’s. A big, important takeaway, we are not against whole life insurance, there are times when it makes sense. Let’s now talk about a few times where I think Whole Life is a good idea, universal variable, universal life, whatever you want to do a lot of times in a charitable remainder trust strategy or a life insurance strategy, we have what’s called an ILIT. It’s an insurance trust where the cash value is used to pay the premiums to keep the insurance in place for the rest of your life. You’re not going to borrow against it. It’s not for retirement. But let’s use that cash value to pay the premium. So now you’re not having to come out of pocket. So an insurance agent says let’s overfund this insurance policy and it’s got a two million dollar death benefit. When they start to explain the cash value, say, no, no, no, no. I just need the cash value to pay the premium. So I never, ever, ever have to pay a premium again. And I’m not going to borrow against this thing. That can be a great place to use an ILIT. I mean, a whole life is in an ILIT. And Mat you’ve said to before, I think like if I’ve exhausted all my other investment strategies and I’ve got money coming out of my ears, I’m not saying insurance isn’t bad, but you’ve got to be able to maintain this thing.

Mat Sorensen: Yeah. Oh yeah. Just yeah, absolutely. And so, you know, and I think a lot of people think, well, there’s a death benefit here. OK, OK. But remember, you could go back to term and have this at a much cheaper rate and all that money you’ve been paying, you know, some of the estimates I’m looking at are like six times like, you know, your whole life policy is about six times that. What it would be for term, you could have saved a lot of money and otherwise invested in other assets that have a better rate of return. But I, I, I just don’t like the idea that the life insurance is what is a retirement plan. No, that’s a plan when you die. That’s for supporting people when you die, you aren’t going to retire on a life insurance policy. When all the wealth was thrown out on how all the people in America, all the wealthiest people in America whose tax records and information and investments have been exposed, did we learn anything about anyone making money on whole life? Is there anyone in there that was like, yeah, they’re doing a whole life insurance? That’s how they got that’s how they’re not paying taxes? No, none of them. What are they doing? They got real estate empires they built from the ground up. They got companies and entrepreneurship that they started. They’ve maximized Roth IRAs like Peter Thiel those are the things people doing to get wealthy with so many people like this is what the rich do. The rich do this? No, they don’t. I’m telling you, we consult them all the time. They don’t do this. They do

Mark Kohler: Not. I don’t have one client with a net worth of over five million dollars that’s doing this at all ever. Now, OK, let’s deal with a couple other specific naysayers. I know that some of you listening to this podcast are watching this on YouTube, are going to get the pitch. And I know there’s several groups that I know specifically and I’m not going to name them specifically. One of the founders got burned in the 2008 real estate crash terribly. A lot of people did. And his takeaway from that is real estate’s bad. And so there’s got to be something better where there’s no risk. So he started a life insurance investment type operation and he goes out and tells everybody, literally, sell your real estate, buy life insurance, drain your 401k, drain your Roth or whatever it is with an early distribution, pay the penalties if you have to and put it in insurance because you can count on it. Now, I get the point that there’s some security there with a one or two percent rate of return. But life insurance wasn’t conceived and designed for this purpose. Life insurance was designed for a death benefit. And then insurance agents at some point along the way said, oh, my gosh, we could sell more insurance policies if we really highlighted this death, this cash value instead of the death benefit. And now people can use it for something other than a death benefit. We can sell these things like hotcakes. And it wasn’t ever conceived for that. And people that are down on real estate for one reason or another or retirement accounts will try to get you to close everything down and replace it with life insurance. And that is an extremely dangerous proposition. If you want to do life insurance, fine. Couple it with use it in conjunction with your other investments, but don’t go all in. That’s the part that just really pisses me off, not just the pitch of it’s one thing, but to sell everything and do it. That’s like,

Mat Sorensen: Yeah,

Mark Kohler: We for

Mat Sorensen: It. I love it. Well said there.

Mark Kohler: I have one other rant. Can I, may I? OK, this is on the practical point. Here’s my practical point. I bought one of these, so you may say, well, Mark, you know, come clean. You know, if you’re going to call out this guy that lost everything in real estate, that’s gone one direction, then why don’t you, you know, pray tell and be transparent. So when I bought a whole life, policy was under the same plan. Same pitch was actually a friend sold me the policy and we kept it going, my wife and I for about three years. And then we had a bump in the road. We were building our business. We were expanding and I couldn’t pay the premiums. Now, here’s one of the sales pitches you’re going to hear people. Well, if you ever have a hard time paying the premium, the cash value can pay the premium for you. Now, that flies in the face at all. Well, I thought we were doing this for retirement and this forced savings account, which is you’re going to see out there, too. This is a forced savings account. And but hold it now. You’re saying give up on the retirement piece, let the premiums get paid with that cash value if you have to. What do 90% of people end up with five years after they start one of these plans. No insurance policy, they can’t keep up. These are dramatic, expensive policies that make sense on paper. They do people I’ve seen the spreadsheets. I bought the plan, I did it. I’ve gone toe to toe to the point people want to punch me in the face on this because I expose it and I get prior insurance agents have come on our podcast and will not share their name because they’re like Mark I had to get out of the industry because I knew ninety five percent of my clients that were going to buy that policy would not have it in twenty years because I knew they couldn’t sustain it. That’s the practical problem here. Yep. Oh, give me some. I just need to punch someone.

Mat Sorensen: Yeah, have you not been boxing.

Mark Kohler: Well how do you know my boxing club closed across the street. Oh taekwondo. And they had problems with the building. They sold the regulation boxing ring that I was in weekly.

Mat Sorensen: This explains a lot actually. I’ve been wondering what’s happened where. So you need to have an outlet for some of this. Now it’s the podcast rants, I guess you should be able to box it out, you know?

Mark Kohler: Yeah, I hit the bag and I have a bag in the basement, kind of like Bruce Willis in Red. You know, he goes in the basement. What, you didn’t like that example?

Mat Sorensen: I mean, I know you’re like big movie quotes. If it’s like a movie that’s worth seeing. But like Bruce Willis Red, have you not seen Red? Did that go, like, straight to the top? Was that a good one?

Mark Kohler: It’s on it’s played all the time

Mat Sorensen: On and I hard maybe I know what you’re talking about.

Mark Kohler: What I got a quote, Shawshank Redemption that’s on every other night on Turner Movie Classics. What you can’t deal with, Red and Red too. It was so good they had a sequel. Oh my. I mean, did you notice that Fast and the Furious is is that good that they have number ten, this copy. What is it? This faster furious? Thirteen, nine, nine.

Mat Sorensen: Ok, sorry I have no.

Mark Kohler: Quote from Fast and Furious after after eight movies because of family. Because of what? Because of family. That’s the best. Because of family. They because of family. Everybody who says that, is that just because of family? Apparently that’s an important quote in the fast and furious.

Mat Sorensen: The Fast and Furious. Because of family. Yeah. OK, yeah. All right. OK, good tip here. All right. Thank you.

Mark Kohler: Kohler makes no sense.

Mat Sorensen: Oh I get trust me because if so, it makes no sense. Yeah. Yeah. OK, so that’s how I feel when you’re quoting Red Mark. That’s how I felt when you’re quoting red. All right. Well all right. Well let me just say my little I felt like that was your closing statement. Was that your closing statement?

Mark Kohler: I don’t, I don’t have anything else. You know, I’ve already created enough hate mail for about three weeks, so.

Mat Sorensen: Yeah. I just really think I just want people to know where is the place for life insurance? It’s about replacing income and assets for your loved ones that you may pass on or a business partner or other things where remember life insurance that’s focused on that. It is not the place to to go instead of putting money in a retirement account, if you got a 401K at work, that’s companies going to match, that’s free money going in there. Life insurance companies aren’t giving you a free money. Max out your contribution to at least get the free message free money. I don’t think anybody will ever argue that point. Second, Roth accounts, Roth IRAs. You put money in. Security only put six thousand a year, and, you know, I mean, but

Mark Kohler: At a bare minimum, you can do more.

Mat Sorensen: Yes. And like, you know, we ran the numbers on a prior podcast of putting six thousand a year in for 30 years. That’s a seven hundred thousand dollar account or at the end of the day. So, again, only an eight percent by the S&P 500 type return. So so that’s what’s for retirement. That’s what you’re going to use in your 60s and 70s to live off of. If you’re not using a life insurance policy your whole life, loaning yourself out money from what you put in prior, go use that money to build other assets, make good investments, let it grow, let it grow or is it snow? That’s the

Mark Kohler: Point. Your kids are a little too old for buying

Mat Sorensen: Frozen my kids were already past when Frozen came.

Mark Kohler: Yeah, I just don’t know, I, I think when you’re OK, you’re ready for a decent quote. OK, here’s my closing statement. When you’re investing in life insurance for retirement, to quote the infamous Bon Jovi, you’re living on a prayer. Need I say more pen drop? Can you live with that?

Mat Sorensen: I like that one. I get that one

Mark Kohler: Oh OK, that’s because Mat guitarist called a guitarist.

Mat Sorensen: Yeah, yeah. I mean, I don’t know, I really to sit and play the guitar so I call myself a guitarist. You know, it’s like if you play music, are you, are you a musician just because you can play the piano. Yeah.

Mark Kohler: Mat rides a bike. And so I’ve called him a bicyclist bi-cyclist, bicyclist. But he’s like, no, I’m a cyclist.

Mat Sorensen: He’s like he’s like, oh, you’re a biker. No cyclist. It’s OK.He

Mark Kohler: He wears tight shorts and shaves his legs, so we’ll just leave it that. Well, everybody, I hope you have felt that you’ve gotten a straight answer on a topic that is very convoluted, very controversial and convoluted. Those are two different things. And there’s a lot of pressure out there. And some of you are regretting that you may have already invested in a retirement, I mean, in a life insurance policy. And you’re like, what do I do now? Get second or third opinions on what to do, just like unwinding a retirement account or just an unwinding, an annuity or an unwinding life insurance. That can be a bad thing rather than just keeping the train going down the track. So you’ve got to really, really be careful. We’re not saying to dissolve something you’ve already started, but be careful going in and getting on the train, buying your ticket.

Mat Sorensen: And when you mentioned that getting out, there’s one thing, too. There’s some surrender problems. When you kind of go to close out a whole life policy, there’s these penalties called and there’s these surrender penalties, usually the first ten years that you can get hit with, like, well, I thought I’d be able to get the whole cash value. No, you’ve got a penalty here. We’re holding back a certain amount of money whenever there’s an investment that penalizes you to try and get your money back. That just doesn’t sound right. It’s just like why? I mean, it’s invested, let’s just sell the assets and get my money back. Now we charge you a penalty. We need you locked in in order to make money on this. So, like I said, be careful out there. There is a place for life insurance, usually to protect your loved ones as you pass on. If you have whole life, maybe get a second opinion. It may not be worth putting more money into it. Maybe it is. I don’t know. Sometimes you’re far enough down the road. You got to kind of it’s a different analysis from someone starting out, but hopefully you learn something interation.

Mark Kohler: And although, as Phil Collins may say, you feel like you’re it’s against all odds, you can do it. You will.

Mat Sorensen: And you just try to throw out like John Red and now you’re coming back. I appreciate Bon Jovi, Phil Collins.

Mark Kohler: I’m just proving that I I’m a Renaissance man. I’m just trying to stay contemporary or you are just you got to up your game in this game, you know, next week. I’m expecting some good quotes.

Mat Sorensen: Ok, all right. All right. I’m on it. OK, see, I’ll see you next week.


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