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The Journey Out
The Journey Out Podcast is a podcast designed to be the helping hand for everyday people who are on their Exodus Journey!
You were designed for a purpose and many times, just like Moses, we need a burning bush or sign from God that it is time to leave, or journey out, from what we are used to, to be propelled to where we are called to be.
Join us for engaging, informative and resourceful conversation ranging from healthcare to entrepreneurship to family values.
The Journey Out
The Hidden Financial Power of Life Insurance Policies
Life insurance isn't just about what happens after you're gone—it's a powerful financial foundation that can build wealth while you're very much alive. This eye-opening conversation with Amanda Lewis, a life insurance agent with five years in the financial space, reveals how both everyday people and the wealthy use permanent life insurance policies as strategic wealth-building tools.
Amanda breaks down the crucial differences between term and permanent life insurance, explaining how permanent policies create a tax-free vehicle for compound growth that's protected from market downturns. "The number one rule is never lose money," she quotes Warren Buffett, highlighting how life insurance provides this essential financial safety net while still allowing for significant gains.
The most fascinating revelation comes when Amanda explains the "infinite banking" concept—how you can leverage your policy's cash value through loans that allow your money to continue growing uninterrupted. This strategy lets you use your insurance for real estate investments, business opportunities, or other financial needs while your original investment keeps compounding. Unlike money sitting in a bank earning minimal interest, properly structured insurance policies can deliver 4-5% growth regardless of market conditions.
For families concerned about legacy planning, Amanda offers invaluable insights on using trusts with life insurance to create true generational wealth that avoids probate and provides specific instructions for heirs. She shares practical advice using the DIME method (Death expenses, Income, Mortgage/debt, Education) to calculate appropriate coverage, and explains how living benefit riders allow access to death benefits while still alive if diagnosed with serious illnesses.
Whether you're just starting your financial journey or looking to optimize your existing strategy, this conversation provides clear, actionable knowledge about a financial tool that's often misunderstood. Subscribe now and share this episode with anyone who wants to build wealth while ensuring their family's financial security—because proper preparation prevents poor performance.
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I know some people probably had it hard, but I was blessed. They ain't never saw my mom and dad in stress, they only shows. They said I'm living comfy from the sweat off they bags and that's why all I ever wanted was to give it back. I'm not ashamed cause I was raised right. I would only be ashamed if I didn't help you fight through the pain, help you drain out the games that your mind plays. No matter what, I'm never letting my shine fade away. Forever searching for knowledge. Outro Music. Discuss your disassistance for the public. A little love will help recover from your struggle. If iron shop is iron, then let's journey out together Forever. J-o-p. J-o-p. It's Journey Out. Journey Out Podcast. Welcome to the Journey Out.
Speaker 2:Podcast. Hello everybody and welcome back to the Journey Out Podcast. We have an amazing episode here for you today. But first, like want you guys to like, share and subscribe to the channel. Please be sure to share all this wonderful information that you did here from the podcast with loved ones, with friends, with anyone who could benefit from the awesome things that we talk about here. Amanda lewis okay, let's give her a big thank you thank you.
Speaker 2:Thank you for having me being on with us, and so amanda is a life insurance agent, and what we wanted to talk about today was really bringing generational wealth to everyone, so everyone can benefit from it, and talk a little bit about really what life insurance is and how it could benefit you. So, first and foremost, amanda, please tell everybody who you are, what you do and how long you've been doing it.
Speaker 4:Okay, so, um, my name is Amanda Lewis. Um, I'm a life insurance agent. I've been in the financial space about five years now and I recently well, I got started in the industry because, like most people, I knew of life insurance Actually my old job that I was working at. A lady came in and she was like, hey, sign up for this policy. You know it's $10 a month. And I'm like, okay, $10 is no big deal, I need life insurance, I'm going to die.
Speaker 4:The time I didn't have children, I wasn't married, so I got the policy. That's great, but I was underinsured and no one she didn't sit down to teach me about life insurance and actually how it's a fundamental block to build your wealth on Right. Because the thing that people may not know because we think of life insurance as a death benefit, like I said, when she said, get a policy, I'm like, ok, I'm going to die someday, fine, seems like the responsible thing to do. But long story short, it was. It was that building block of understanding how to utilize it in every scenario, like to make, save and protect your money tax free. And I was just not given that education. So once I was taught those things, it became very important to me to educate other people about it, because you can start from wherever you are, but just having something in place that can protect you in any scenario of life.
Speaker 3:All right, so we're going to start off with this. How does life insurance fit into the broader wealth management strategy?
Speaker 4:OK. So life insurance fits into the broader wealth management strategy because, as Mr Warren Buffett likes to say, the number one rule is never lose money Right. And so with life insurance as a foundation, you're guaranteed never to lose Right. There is a such thing that's called a floor with a life insurance policy. So, depending on the type of policy that you have, you're not going to lose money.
Speaker 4:You want to have those gains. You want to gain compound interest in certain type of accounts, depending on the type of account that you have. But you want to have something that's safe as your financial foundation, where you're guaranteed not to lose. So when people think about diversifying their portfolio and again, what may not be taught to certain demographics of people is that you don't necessarily wealthy people don't necessarily put their money in banks to long term save it, meaning a bank serves a purpose of liquidity, meaning I put my emergency funds here If I need access to wealth very fast. It protects a certain amount of their money. But when it comes to long term saving their money, they're putting it in account. That's one guarantee not to lose. Two, that's going to compound interest when the market does do well, so you can get some of those gains, and then three that's tax free, it's a tax free vehicle.
Speaker 3:So OK. So give me, give, give the listeners a real life example of using their insurance in the financial OK.
Speaker 4:So it just all depends on the person in the scenario Most people know when they think of permanent life insurance, because it's two different types of life insurance. For the most part, you have term insurance as a policy that's a set amount of time 10, 20, 30 years. It expires. These policies can be good for in terms of covering your insurable need. If you have a home, if you have children in school, just to protect your finances, if indeed, in fact, you die or if indeed in fact you get a illness while you're alive, there is something called a living benefit, meaning that you can access a portion of your policy.
Speaker 4:If you get cancer, heart attack, stroke, you get really sick and you're off of work, because those things can be disastrous too. Think about it. You may not necessarily pass away, but if you have a stroke and you're not able to work and you're the sole provider, or even someone in your family who does provide, that can be financial ruin for a family right. And if you're off of work, you can't and you know you can get behind on bills. How long will your savings last, you know, between you getting sick from a very critical injury. So it just depends.
Speaker 4:But when you're saying in terms of permanent life insurance, those policies tend to have a savings account that's attached to it. If it makes sense, where a portion of your premium goes into an account that builds attached to it, if it makes sense, where a portion of your premium goes into an account that builds compound interest, and so that interest incurs over time uninterrupted. And the best thing about the vehicle is, again, it's tax-free. According to the IRS code 7702, any money that's accumulated in an account is tax-free to use. So it's like a way to create wealth without protection against the rising tax environment.
Speaker 2:Okay, so you talked about the wealth management strategy, so where should someone start if they've never considered insurance to be part of like their wealth portfolio?
Speaker 4:Okay, I would say, first start with sitting down with someone who's able to educate you right. You need to. You can't get started in something you don't understand or even know why you really need it. So the purpose of an agent is to ask those questions. Why are you, you know, looking? What are your short-term and long-term goals? You know what do you feel comfortable with where you are, and then where you want to go, and then what's most important. Some people may say, hey, what's most important to me is making sure I have a large document of it for to pass down a legacy to my children when I pass away. Some people may say, hey, what's most important to me is building this wealth. Now I want to leave them something, but I want to make sure I have a vehicle that's compounding my wealth right now, while I'm alive. It just all depends on the individual.
Speaker 3:So you want to make sure you get with an agent that's asking those questions and educating you first and then starting from where you are. So you said something previous in the previous question term life and perm life, right? So what are the difference between those when it comes to building wealth?
Speaker 4:Okay. So the difference is term life insurance is more affordable, so a term life insurance policy will. Typically it can be used because you can have multiple life insurance policies. There is no, well, I just have to get this one. No, there's a way to, and the agent should be tailoring something that's specific for you. But a term life insurance policy, like I said, it expires in a 10 or 20 or 30 year time frame, but it could be used to cover your insurable need. So your insurable need is how much insurance do you actually need? If you own a home, let's say you die and you want your home to be paid off, that would be calculated into your insurable need, and then, if you have children, you may want to pay for your children's college education. No-transcript.
Speaker 4:So you can change it to one you can change it right, and so the good thing about convertible is you don't have to go through underwriting again.
Speaker 4:So let's just say you have a term policy, say you're paying $20 or $30 a month, it's fine, you're just utilizing it for the death benefit and you get sick, you get a terminal illness or say it's not a terminal illness, say you have some type of mental breakdown and you're no longer insurable. Then you can still convert that policy to permanent life insurance without having to go through underwriting again. That's why I always encourage people, when they have insurance through their job, to get their own personal policy, because you have those advantages as to say you know you can still be if it's something on your job. Let's just say you leave your job or you get fired or laid off excuse me or you quit. Then you have to go through the process of getting and you may not be insurable again. They may have been giving you the insurance while you're on your job for group, but then when you go to apply on your own now you're not insurable because of health reasons.
Speaker 3:And that underwriting part. Explain that a little bit. Give a little explanation on why it's important to do that convertible option so you won't have to go into underwriting. Absolutely so underwriting.
Speaker 4:Absolutely so. Underwriting is a process of what the insurance company looks at when they have an applicant to determine your risk and to be approved for the life insurance policy. So it could be health. It's several factors. It could be your health. They're going to take your age into consideration, your demographic, also sometimes credit your driving record.
Speaker 4:All these things may be because it puts you at a higher risk of you know something happening. So an insurance policy is an allegory contract which basically means that the insurance company is legally liable to have to pay out if something happens to you, but you're not legally bound to have to pay your premiums. Now, if you don't pay your premiums, your policy will lapse, but you're not legally bound to have to pay that. So the insurance company wants to make sure that your risk is as low as possible. That's why it's encouraged to get insurance while you're young and while you're healthy, because it's affordable and so it can grow with you, even though you start off while you're young. If you have a policy that's either permanent, where it takes you to the end of your life, or you have a convertible policy, you're covered even if your health declines.
Speaker 2:Now talk to us more about the permanent policy. So what does that look like compared to the term life policy?
Speaker 4:So the permanent policy again takes you to age 121. However old you live, that's the plus of a permanent life policy. It just takes you to pass away. The other good thing about a permanent life policy is the like I mentioned the savings account. It's kind of attached to the policy where a portion of your premium goes into it. And I have to stress this because oftentimes people think well, you know, if I can just save all this money and put it in the bank? No, it's still a life insurance policy.
Speaker 4:So a portion of your premium goes to the cost of insurance and that's going to be different for everyone, depending on your age and certain facets of your health. If you're a smoker, your insurable need will be more than someone who's not a smoker. But with a permanent life insurance, maybe 20 to 30%, let's say, of your premium will go into an account that's going to build compound interest. Now the type of policy that you get will determine the amount of interest that you get, because there are several different umbrellas for that. You can get a whole life policy, which is the most common one that people know when they think of permanent life insurance. A whole life is a little more outdated but it serves a purpose, depending on the person and depending on the need.
Speaker 2:Right.
Speaker 4:But then you have universal life insurance, which is a little bit more of a flexible policy With whole life. Things are locked in. So whatever you get, you pay it for the rest of your life. It's kind of just locked in. It's more concrete With universal life insurance. It's flexible, so it changes with your circumstances because life happens.
Speaker 4:Say, you want to increase your policy, you want your death benefit to increase or you may want to decrease your death benefit. You have that flexibility of that with the universal life policy and then again, depending on the type of policy, that will determine the gains that you get. As far as your compound interest, If you're a little bit more like, hey, I want to get some gains from the stock market because, think about it, people invest into the stock market for the gains, right, you want. When the market does well, you want to have those gains. So if you're someone that's saying, hey, I want to still have participate in that, with the safety of not losing when the market goes down, then you would get a certain type of account that will give you a little bit more of interest, but they will cap it.
Speaker 3:Right, so now you're talking about show me the money, right? Okay, so let's ask this question. So can you explain how cash value and permanent life insurance policy works and how can it be leveraged?
Speaker 4:Okay, so cash value and permanent life insurance policy works like, let's just say, like I mentioned about the compound interest, what portion of your premium goes there and over time, and so the good thing about it is, once that money accumulates, there's no specific way. You can also put in a lump sum of money into the policy. You can start with a larger amount, and so how people can sometimes utilize and then what they call it is infinite banking. It's just a strategy of how you structure the policy Because, like I mentioned to you, it's a tax-free vehicle and so people oftentimes can use it for reasons of growing their money. Because the thing about it is when you put the money, when the money grows tax-free inside of the policy.
Speaker 4:Now you can have, you have two options you can take from the policy and do a policy loan. You say, well, why would I want to borrow money from myself, right? Well, the thing about it is when you take the loan out on the policy, you're not actually taking the money out of the account. The insurance policy is giving you a loan based off your death benefit, because this is a life insurance policy. So the money is still accumulating in the account even though you've taken out the loan. So what people sometimes can do. As an example, I've worked with several real estate agents, or people who are real estate investors excuse me, not maybe so much agents, but real estate investors so they put in large sums of money, large sums of money, into the policy.
Speaker 3:So they're putting the money into the policy.
Speaker 4:They're putting the money into the policy. You can do that, the permanent life policy. You can put in a lump sum of money into the policy. Let's just say six months, eight months, however much, a year, two years. You have a property that you want to now go purchase. You can say, okay, give me $100,000 of this money in the loan right from my policy that I placed here. Now you take the hundred thousand dollar loan and go purchase the property. However, the money is still compounding interest inside of your account. So it's like you took the money but you didn't take the money because it's still growing at the rate as if it was still there so with this is it, would you say they need a to structure this for this type of insurance?
Speaker 3:will they need to talk to an agent or will they?
Speaker 2:make it, so I can say hey, yeah.
Speaker 3:I want permanent life insurance and I get permanent life insurance, but that don't mean I can do that. So talking speaking with an agent, I guess would help you structure it the way you want it, to where you can get that money.
Speaker 2:Absolutely Okay, absolutely Perfect. And then so, with that cash value, how soon can they typically access that money?
Speaker 4:so it depends on the company. It depends on the amount, um. There are some companies where you can access it after 30 days, um, but the thing about it is depending on the amount that you have, um, that's going to determine the, because really it is a better long-term vehicle. The longer you put the money there, the more time it has to compound, the better it's going to be. But if it is something like I said, that you need, you want to have access to right away, especially if you're putting a lump sum in. If you're not putting anything in, then you won't have anything to have access to.
Speaker 3:So At any time can they put money in.
Speaker 4:Absolutely. So how you structure the policy is there is something called a modified endowment contract. So you really have to get with someone who's willing to educate you, because if it's not structured properly you can get taxed. The IRS can say hey, we can tax this vehicle. So the modified endowment contract means you can put a certain amount of money into this policy per year without being taxed. But it is different for everyone, depending on how much you put in, depending on how much you want to grow. So if you have a policy, let's just say you put in $2,400 in it a year right, a couple of hundred dollars a month, and your modified endowment contract may be $5,000 a year. So that means you can put up to $5,000 into this policy per year tax-free without you know any. You don't have to call your agent and like, hey, can you restructure this or can you do that, like with whole life insurance? You can't do that.
Speaker 4:You know whatever you're locked in is what you're locked into. But with the universal life insurance it's more flexible. So then you can put in, say you have more than the $5,000 for the year, then you can go back and your agent is able to go back and restructure the policy.
Speaker 2:When you have the universal Perfect.
Speaker 3:So is it any risk or implications when borrowing from their money or Could there be some, like you said, maybe if it wasn't structured right.
Speaker 4:Right, right, if it's not structured right, yes, it's not going to. It can be a bad situation If you're with someone who is not structured in the policy Right, or, you know, trying to get commissions or things like that. Because, again, you have to talk about these things. It gives insurance agents a bad rep when people are not doing the right thing for the, for the client, right. So you have to know what the person's, what their goal is, because, again, if your goal is to say so, to structure a policy to get more interest, or to really create or grow your wealth while you're alive, you would get a lower death benefit and more cash value accumulation. But that would be for someone who says, hey, I have a policy over here for when I die. I'm good Because you can have multiple policies, so it would be this particular policy I want to have for growth accumulation.
Speaker 2:Now when you say that and I want to go back from the permanent, so is there ever a time where you can do the term and permanent together? Absolutely Okay.
Speaker 4:Absolutely so, because you want to make sure that the term is going to cover your insurable need. The term is going to make sure that your house is paid off because permanent life insurance costs more. So if you want to get a million dollars in permanent life insurance, you're going to pay some money per month or you're going to put in a large lump sum. You're going to pay some money per month or you're going to put in a large lump sum. So, again, in order to make sure that your insurable need is covered meaning you know mortgage or education or debt, whatever you have funeral costs in order to make sure that's covered, you can get a term policy.
Speaker 3:And this stuff can be used for within the family and that family member that has these policies to help him start a business or her start a business as well.
Speaker 2:Absolutely Perfect, and so I know most people don't think of life insurance as a financial planning tool at all. But what are some?
Speaker 4:of the common misconceptions people have about using life insurance as a planning tool financial planning tool, I would say one. I guess I hear it like it's a scam or it's not a real thing, but think about it. You're going to pass away. And do you feel like car insurance is a scam? Think about it. You can drive, you can pay insurance every year and drive and never have an accident and you never complain about spending the money that you put.
Speaker 3:Because you ain't getting it back.
Speaker 4:Exactly, but you're definitely going to pass away. So it's no way around it. Someone will get that money. Even if you, like you say, even if you just have a term insurance policy, if you die within that term, someone will get that money Legally. Their insurance company has to pay out.
Speaker 3:So how do you educate people that are skeptical about learning about this or being presented with this information?
Speaker 4:Honestly, it's a process. You have to get to know people because it is, it's a mindset, and it's oftentimes based off culture, family, experiences. So you have to just take the time to understand or try to get to know if people are open. Especially when you first meet people, it's kind of like Right, right. But over time you know, you're able to understand where these speculations come from. And social media is big right now, and social media is big right now. So I just create content where people can go back to it at their leisure and look at it and say OK, ok, well, this kind of makes sense. And then it's all about timing, where people are ready, and then, unfortunately, sometimes things happen in life and then it might be too late. And then it might be too late because we're not preparing for these things, but it could be someone that you know that has an unfortunate situation.
Speaker 3:It prompts you to be like, okay, well, now I need to go ahead and take care of it. And this is why I enjoy doing this podcast. It's because to help families right To be their resource to families to get the information out Things that I didn't know nothing about, right. Things that you didn't know nothing about that you learned about right, so this is perfect information.
Speaker 2:And I mean just today, just today consulted with the family, and we're talking about her using veterans benefit to pay for her care. She's a spouse of a veteran and so and she was like, oh well, her daughter was like, well, I'm married to a veteran. I'm like, well, why don't you go ahead and start now, so that way, when later comes, you're not behind the eight ball to have to catch up or wait for that.
Speaker 3:So I love that you said that, so we don't have to wait for things to happen, right? No just in case Great.
Speaker 4:Proper preparation prevents poor performance.
Speaker 2:Oh, wait, wait, wait. What'd you say again?
Speaker 4:Repeat that Proper preparation prevents poor performance. Okay, that's not my, that's not my quote. I actually that's a good one, but I follow him, he's very wealthy and he teaches people about how to create wealth.
Speaker 1:That's cool, so I like that.
Speaker 2:Okay, Well, talking about the wealthy right. So how can like high net worth individuals or business owners strategically use life insurance for estate planning or tax efficiency?
Speaker 4:Okay, so as far as estate planning now, life insurance agents some may, but not me specifically can set up a trust. So I know sometimes we hear about a trust and that's where you buy insurance on the people in the family and you put it inside of the trust. So the trust actually owns the life insurance policy and so when someone passes away, the trust will get that death benefit. So let's just say, mom and dad have both have million dollar policies and they both pass away. They get policies 500,000 or 250 on their kids and then when they pass away, now the trust now has two million dollars in it and that money can be divided or or dispensed, dispersed how they choose. Hey, this person gets this amount of money for a business or a house or however you would like for it to be dispersed, and then when someone passes away, the money gets replenished back into the trust so do?
Speaker 3:would they need an agent to help them structure that or plan that?
Speaker 4:well, I would say get with the agent to have the policies, couldn't okay and then trust is different yes, the trust typically comes from a lawyer okay from my understanding, you have to work with some type of lawyer okay, for the trust but in terms of also wealth building with the life insurance policy is um for business owners.
Speaker 4:There is something called key man, key person insurance. So when you have a person that you want to insure, let's just say you know right-hand person or whoever you're the next up in line, say you get sick or you get hurt or you pass away, who knows the business well enough to take care of the business During that time, you can actually get insurance on their life as well. So then, if they pass away, money is then distributed back into the business until you're able to find, train someone to replace them. So there's, you know business people utilize life insurance to help their business as well Indeed, in fact, a CEO or someone of importance, and if there's multiple owners in the company, they all get different policies on each other. So in the event where someone dies as the owner of this company, money is then put back into the company, the business, the organization.
Speaker 2:Now can you touch a little bit on how irrevocable life insurance trusts work?
Speaker 4:So it's it's irrevocable, meaning you can't change it, right, right. So once it's the trust is set in place and then, like I said, the money goes into the trust, then it has to be distributed. However, the person who created the trust has the instructions that they have, so they can't just go in and say, hey, we want to change and do this, that or the other, so it's it's. I guess the word may be irrevocable, but the good thing about trust is it avoids probate as well. So when you someone passes away in life insurance, the policy does go through probate, which can prolong the death benefit being paid out, but when the policy is inside of a trust, it doesn't go through probate.
Speaker 3:So I know you touched on it a little bit about hey, if the CEO loses someone that person they have insurance on the other person, right? So tell me how the life insurance plays a role in legacy planning and generational wealth. How does that work in the family dynamic?
Speaker 4:Okay. So for legacy planning, just it helps you to protect any assets that you have, any money that you want to leave for your children or things like that, and just preserving the things that you have built in your life or even started. Say you haven't built anything. But if you have a term life policy, I would say, uh, the first thing would be still to work with someone that's given that education, because generational wealth can be lost by the third generation. Typically, if people aren't educated how to utilize the money, if the mindset isn't changed, then unfortunately they're just going to spend the money. That's the good thing about the trust. It gives instructions on how this money is to be utilized. It can't just be y'all do whatever y'all want to do With a life insurance policy. That could be the case. If you just give it to someone and they don't do right by it, then it's gone. So it has to be someone that is getting educated about how to grow the money, how to make, save and protect the money.
Speaker 3:So you just kind of touched on something as far as the third generation or giving that money that could be lost, right? So how do you balance the emotion, the emotional goals for the family legacy, with financial ones? So how do you? Would you, what would be the? Yeah, how would you blend the two and speaking with a family on that?
Speaker 2:Okay, so blending the financial goals with emotional goals or building that family legacy, even after I'm gone okay, I would say the biggest thing would probably be to sit down and talk.
Speaker 4:Just start with talking about finances.
Speaker 4:A lot of times and it could be it's it's a cultural thing, I would say, but I do speak with.
Speaker 4:I do speak with people of other cultures that they were raised, their parents didn't talk about money, and so it's starting with having those conversations, even when your children are small, instilling things, and then, if you need to just sit down and write down the 50-30-20 rule, so 50% of your finances can go to your bills or the things that you really need, so 50% of your finances can go to your bills or the things that you really need, 30% of your finances, I would say, should be saved and then maybe 20% should be towards maybe the things that you know, 10 to 20% of the things that you enjoy doing extracurricular and things like that, but just having that basis of living underneath your means.
Speaker 4:You know, if you don't spend all your rent money, all your, all your checks shouldn't be going towards rent. To think about that and sometimes these things aren't even taught you're like, hey, I can afford this place if I make this much money a month, but you're not equating gas and food and the idea, every, all those things added. But all those things added up still should be 50 of what you, what you make that is.
Speaker 2:That's good advice. I really love that. You said that now we've talked about a lot. We talked about term, talked about permanent life, we talked about cash value family legacy all of the things, but how should someone decide how much coverage they actually need? Uh, not just for protection, but for wealth building as well.
Speaker 4:Okay. So a basic rule is what we call a financial analysis, what I do with all my clients where you, it's something called the dime method. So you start with the death benefit. I mean a death, excuse me. How much would you want to spend for a funeral? Ideally, there's no right or wrong answer to any of the questions. And then, how much debt are you in? That's going to be factored into the equation. And then I is for your income how much you make a year? That's going to be factored into the equation. And then the children, if you have smaller children.
Speaker 4:Typically again, there's no right or wrong answer it's ideal to replace your income in your household until the youngest child is of 18 years old. Which means if I die my spouse or not even my spouse, whoever will have my children my income will still be there until my children are at least 18. Some parents go to 21, some go to 25. There is no right or wrong, but that would be factored into the income. And then, or if you don't have children, say your children are grown, even your spouse. Hey, I would want to cover my income for my spouse for this amount of years, until they're able to grieve and they maybe find someone else or not. Either way, however it goes, you're saying hey look, I want to make sure that financially you're good, or even you're able to take this and again, create, invest, grow the money so that it can be built and passed down for generations to come.
Speaker 3:What questions should someone ask their agent before purchasing a policy for wealth management purposes?
Speaker 4:Hmm, what questions. I would say X. What's the interest rate? What's the compound interest rate of a type of policy Meaning, depending on the type of policy, do you have to pay in it for the rest of your life? Is it something that I can pay in for a certain amount of time? So I would ask those questions and I would also ask how much can I put into this policy per year without being taxed?
Speaker 3:Well, are there specific policies, features or riders that people should also look into as far as getting a policy?
Speaker 4:Yes, definitely For the term insurance. You're going to want to make sure it's convertible. You're going to want to make sure it has living benefits, which is a rider that comes attached to your policy for free. Terminal illness riders are what most insurance policy term insurance policy has, which terminal means you have less than 24 months to live. What the doctor says, hey, you're going to die in less than two years. Then you can access a portion of your death benefit while you're alive.
Speaker 4:However, not all companies offer critical illness rider and terminal illness rider. I mean excuse me, not terminal critical illness and chronic illness. So let's just say you get a heart attack, stroke or cancer and you live, you don't pass away. Then you can still access a portion of your death benefit while you're alive. So you have a million dollar term policy and you paying 30 bucks a month, or even 50, $60 a month, and you have a stroke tomorrow or you find out you have cancer. You can access $600,000, $500,000, if you so need, of that policy. Now, mind you, it does get subtracted from your death benefit, but the good thing about a convertible policy is, even with that cancer, you still can convert it to that permanent life insurance policy.
Speaker 2:Wow, that is so important for, like our listeners, especially those caregivers who are caring for a loved one, who may already have these terms and don't even know and could utilize those funds to care for a loved one, so I love that you say that. Uh, now our what would be a red flag answer from an agent? If there, if we have someone asking an agent some questions, what would be some red flags that people should watch out for? Hmm?
Speaker 4:I would say a red flag is so oftentimes when we're talking about permanent life insurance and the money growing inside of the policy. Again the agent's commission is based off how they structure the policy really for the most part. So again someone who?
Speaker 3:So is the agent structuring the policy or the underwriter's doing that, the agent? So?
Speaker 4:the agent structures the policy, the underwriter's just determined if the person is approved or not, right, so they give the approval. The agent doesn't give the approval of whether or not the policy gets approved. I would say, if, when it comes to permanent life insurance, again, if you're, whatever your goal is, if you're saying my goal is to make sure that I'm maximizing the money and the cash value while I'm alive for compound interest, then you want to make sure that you have a minimum death benefit. You don't want a large death benefit because you want most of your premiums to I mean most of your right premiums to go. You want your cost of insurance to be as low as possible so that most of your premiums go into that cash value account.
Speaker 4:So then you would, you know, you would kind of pay attention to the death benefit, right? And then that modified endowment contract how long are you because the policy could lapse? You want to know whether or not your policy is going to lapse in 10 years or 20 years. And you're thinking it's a permanent. Hey, this is a permanent life insurance policy and then it lapsed because of the way that the agent structured it. So that is a thing I would say make sure you're paying attention to that. And then also because the agent actually gets less commission when they structure it for the minimum death benefit and maximum cash value Other ways. There are other ways to structure it where you would get more of a commission, but it depends, because I've had people who you know they don't that may be their only life insurance policy and they want a little bit more of a death benefit.
Speaker 4:But they're still like, hey, I still want this. You know IUL, where it's still growing some compound interest, but I need my death benefit to be a little bit higher because I do have young children at home, right, so that. And then also, what would be another thing, making sure, like I say, you ask about the modified endowment contract. How much can I put into this policy per year without being taxed, because you don't want to go over that? And then what's the last thing? I think those are probably the major ones. Yeah, if I had to say. And then also there was one more, I just thought about it.
Speaker 4:So sometimes people say what happens to the money in my cash value when I die?
Speaker 4:Like, where does that money go? So go back to the insurance company? Now, ideally it can, but there is an option with life insurance, excuse me, there is an option with universal life insurance where you can, your beneficiaries can receive that money inside of your cash value as well as the death benefit. So that's called an increase in death benefit. It's level A and level B, so if you have the terminology to ask your agent that, they should know what you mean by that. But a level death benefit just means hey, this is a set amount that your person, your beneficiary, will get when you pass away and it will go up depending on how much money is in the cash accumulates in the cash value.
Speaker 4:So say your death benefit is $100,000 or $250,000. And you're paying into the policy your cash value. Or say you're not paying into the policy, depending on the policy, your cash value will still grow. If you live to be 80 or 90 and your cash value starts getting closer to 50, your death benefit will automatically start going up, because you're never going to have more money in the cash value than what your policy is actually worth. So if you decide to say, hey, I want to have an increase in death benefit, I want the cash value too and I want to have the death benefit, then the agent will get less commission for that for sure. But you have that option to take the cash value or to have your beneficiaries get the cash value and the death benefit when you pass away. And people who utilize it as a investment strategy. It makes sense because, say, they have taken out a loan and they die, then you know that loan can get paid off and then they still have the whole death benefit too.
Speaker 2:Okay, awesome. And then one last question for you Do you see any emerging trends in the life insurance industry that are changing the way people use it to manage wealth?
Speaker 4:Yes, definitely the infinite banking strategy that I mentioned about the investors and people, and it's not anything new.
Speaker 4:It's been around for years and years. It's just that it's been, it's innovative and now we have these terms and catchy phrases like infinite banking. But it's just the way that you structure the policy and it's not anything new. But that is something that grows with over time. Because, again, if you're someone who's saying look, I want to compound some interest, because the thing about life insurance policies, the banks again, the banks are designed to protect your money up to $250,000. Your money is FDIC insured in the bank, so you want that protection right. This is why life insurance is typically the foundation in what I teach people of building your wealth because you want the protection of not losing, which is what a bank gives you, but you want the growth.
Speaker 4:Your money's sitting inside of a bank account. You're not getting, excuse me, a savings account. Even with a high yield savings account, you may get 3%, 4% of interest. But on the lower end of a universal life insurance policy say, it's not even an IUL. That's something that's a little bit more innovative, with access, where it gives you more gains to the market. Say, you just get a universal life insurance policy that can give you up to 4.55% or 4.75 or 5% per year, regardless of what the market does. So say the market is up down, whatever is going on, you're going to consistently get that. Yeah, and that's typically more than your bonds or your CEs, the things that you get from the bank in terms of building that wealth Right.
Speaker 3:Well, hold on. That was a lot of information there really was a lot of great information. The. I'll probably have to watch this twice and look.
Speaker 2:I have you back. Right, yes, cause there was so much you can glean Like finances is just a big thing. It's just, it is what it is, and so being able to know how to use your money well but also make your money work for you is super important. So I thank you for all the just the amazing nugget that you've given us today, because it is going to impact so many people but also give them a different way of viewing it and, like you know, and especially the younger generation.
Speaker 2:The younger generation, and then for those who are business owners, who are wanting to, you know, build generational wealth and start something for your family. So I thank you, amanda, for being here today. Definitely be on the lookout for part two, because you got to get her back to talk more about the Universal Life Index and all that good stuff that she has.
Speaker 4:So thank you so much for having me guys. So Amanda Lewis and I am contracted with PHP Agency. I work with multiple life insurance companies within the life insurance industry and you can contact me first via email. That's going to be my first name, amanda, middle initial is C and the last four letters is E-A-L-Y, so Amanda C Ealy at yahoocom, and I also can be reached on all social media platforms. So, as far as Facebook, it's going to be my first name, amanda, and then my middle initial, which is C, and my last name, which is Lewis, l-e-w-i-s. That's for Facebook and for TikTok and Instagram, you can reach me at Agent ACL, so A-G-E-N-T-A-C-L, and both my Instagram and TikTok are the same, so you can reach me there and you can always send me a DM or preferably an email and then phone number. Phone number is 773-454-5460.
Speaker 2:Guys, we are out. I thank you for everything. I thank you for watching, sharing and liking.
Speaker 3:I hope this blessed your soul. Man, this is some great information. Take this information, share it with your family, use it in your community and we'll see you next time. We out family. Use it in your community and we'll see you next time.
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