Can I Change His Mind About Overfunded Whole Life Insurance? Finance Nerds Debate!

[@BetterWealth]

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[@DanRiggs-t4s]

BLESSED to be featured on BetterWealth! 🙏

[@BetterWealth]

Thank you for the support Dan! Not a lot of people are willing to do what you did.

[@DanRiggs-t4s]

@@BetterWealth I hear you! I left that rude comment several months ago, then was contacted by your team to do an interview, and thought, “This will go poorly!” 😅 🙏

[@advisorandres]

Whole life insurance is not to attain the highest rate of return but a place to store cash that allows you to borrow from it and deploy it into assets. Yeah, you could do that in a HYSA, but your money stops compounding once you deploy it. Let’s also not forget that HYSA are taxed. WL can be tax free up to withdrawals and loans - and non-direct recognition policies allow the money to continue to compound. Storing your cash in a brokerage account and holding the S&P is not the greatest idea (not sure if I misunderstood that) - what happens when the market has a correction or tanks? Let’s not forget about CG tax. The whole life contract also has a death benefit plus riders that overall beat a HYSA and/or a bond fund. Genuinely just think Dan wanted to get on the show 😂 no hate whatsoever but I can’t agree with his philosophy. Couple of holes on that boat. Not hating, Dan!

[@advisorandres]

Oh… and when you borrow from the insurance company, guess what now becomes apart of the general account? The loan. Any interest earned for the insurer is profit. Remind me… how are dividend rates calculated?

[@jadenvolchoff7105]

Does everyone forget that savings accounts and money market accounts made 0% for 15 years?

[@arizonatreestreedoctorhelp3172]

Great point! Savings & money market accounts only perform well when interest rates are high. In a low interest-rate environment, it can be a terrible place to park cash. 👍

[@Henry.Nibler]

This guy has never built a financial model in his life. The likelihood that a bond portfolio out performs properly structured whole life is less than 30%

[@maxpruger837]

Exactly. This guy suffers from recency bias. Money market accounts were paying less than 1% for nearly a decade.

[@jadenvolchoff7105]

@ great term. I will definitely be using that

[@JanelleRouthier]

That was cool Caleb ! Well done

[@HazeltineLLC]

A man who is willing to change his mind on a financial strategy? I've never heard of such a thing . . .

[@mda0214]

The difference is the host is very honest about the limitations of life insurance. He also don't pitch it as invest vehicle that can outperform the stock market. He definitely don't advise people to use the cash value unless it's in an asset that get far greater returns than the loan interest rate. So he can flip people unlike other content creators (hazeltinellc)

[@HazeltineLLC]

Definitely agree that life insurance shouldn't be pitched as an investment vehicle that can outperform the stock market (but who exactly is doing that?). Thanks as always for the comment / engagement.

[@mda0214]

@HazeltineLLC life180 literally just recently put out a video called whole life vs stocks which will make you wealthier. There are a lot of others comparing it to stocks as well. I think even Dave Ramsey would change his thought on it if he talked to Caleb one on one. I believe the biggest disconnect is when people try to compare it to the stock market. Dave Ramsey biggest critique is the horrible return in comparison to the stock market. He says the return is 1%. But if someone presented it to him as a potential bond or high yield savings account replacement, he will still be against it because of the loan factor. But i don't think he would completely trash it

[@AnthonyBove]

Congrats on the baby!

[@DanRiggs-t4s]

@@AnthonyBove Baby BetterWealth? 😁

[@RainWHW]

I love shoveling premium into my many HECV policies so I don’t have to spend my greatest asset…my time…watching CNBC 😂. I still struggle with “financially literate” people like your guest here, missing the BEAUTY of overfunded whole life. How can you not see??? Thankfully I see and it’s changed me and my family’s life. Good stuff Caleb. You had him wanting to “strip” before you even laid the hammer down.

[@DanRiggs-t4s]

I love your comment! (I'm "that guy"!) 😎

[@DallinBunnell]

I loved this conversation! I personally don't ascribe to following the business cycle like he does, but I probably could make a little more on my investments if I did. I don't like precious metals or crypto simply because they don't produce cash flow and/ or their value is not tied to any cash flow or creation. That said, as assets, they have made returns. I just don't believe in them. I like to keep things simple, so for me that looks like consistent investments into the stock market, and hopefully real estate when I have enough savings. I also believe in using life insurance properly. It certainly has merit! Especially for folks in a high tax bracket. And especially as a cash flow buffer in retirement. And, at least for me (who is not in a high tax bracket nor in retirement), as a long term bet that it will be more efficient than a savings account that also provides some protection benefits.

[@DanRiggs-t4s]

Hey Dallin, I agree with everything you mentioned, especially "dollar-cost-averaging" your investing if you don't want to spend hours each week following financial markets. If you wanted to take your S&P and Real Estate strategy to the next level, you could consider liquidating your Real Estate & equity assets anytime the Fed starts cutting interest rates (a sign of a pending recession), and re-investing in those assets when the Fed eventually starts raising rates again (a sign of the "expansion" phase of the business cycle). But, DON'T take my advice, I only have an Insurance License! 😎

[@DallinBunnell]

@DanRiggs-t4s I mean, that's the conventional wosdom, except recent markets haven't followed that pattern very well. Equities went up with the rate cuts and tanked with rate hikes. Home prices soared with low rates because of affordability. And, if I were to guess, as rates come down home prices will probably go up again. The recent dramatic increase in Gold is very intriguing to me, though.

[@sonjamccart1269]

Caleb, thank you for bringing Dan on. This was enjoyable to hear and I am heading to Dan's channel for my end of day laughs!

[@DanRiggs-t4s]

Trust me, you may be disappointed, my channel is very "Unnecessary"! 😂

[@sonjamccart1269]

@@DanRiggs-t4s Love your pugs!

[@DanRiggs-t4s]

@@sonjamccart1269 Thank you soo much! Me and Roxy (baby pug) are a little sad, her dog-mom "Ruby" passed away 2 weeks ago, but at least she had a hit KZbin Short before going to Heaven. 🙏

[@DanRiggs-t4s]

That guy is almost as crazy as his wardrobe 👕

[@BetterWealth]

It was a pleasure!

[@dontfighttheriptide4091]

Getting out from under like Dan was describing is the state that most people find themselves. And that state of mind draws people toward return through timing and/or market risk rather than certainty of controlling for finance cost, inflation and taxes. Timing based market indicators, e.g. gold/Dow ratio, is definitely “possible” and you improve the chances of success, but it’s not a reasonable approach until your household foundation is locked up with certainty

[@GreenPayStackers]

I totally agree, investing or trading precious metals is only a wise strategy for those well versed in finance.👍🏼

[@RainWHW]

All money has to flow somewhere. Why not allow “it” to flow through a guaranteed instrument that allows you to borrow against it …to do all those “things” your guest is a proponent of. My dollars have multiple jobs. He wants his dollar to have one.

[@DanRiggs-t4s]

I agree with most of what you said, however, investing in precious metals or Real Estate are NEVER a "buy-and-hold" investment. You have to be able to "channel" those holdings through buying low, and selling when those assets reach relative or all-time highs and lows, else you may end up negative on those trades. You may be correct with my dollars only having one job, I just try to multiply my dollars at both ends of the business cycle. But, if you don't have several hours each week to study financial markets, your advice is solid. 👍🏼

[@patrickdavenport9166]

My BS meter is going off with this guy

[@DanRiggs-t4s]

Mine too! 😂

[@arizonatreestreedoctorhelp3172]

Those shirts seem soooo Unnecessary 😅

[@BetterWealth]

Haha

[@cwall216]

What a great testimony!!! This was a great discussion

[@DanRiggs-t4s]

Thank you! It was a pleasure & honor to be interviewed on BetterWealth 🙏

[@GreenPayStackers]

I like that guy!! 😎

[@AndAsset]

Those T-shirts though 😆

[@BetterWealth]

First time experience for me haha

[@DanRiggs-t4s]

@@BetterWealth Me too!! 😁

[@mda0214]

Only point i disagree with him on is this is 2024 you dont need to know too much on investing. Someone who dont know anything at all can google an etf tracking the s&p500. Or a dividend paying etf. Theres so many funds to park money in now and some can beat the s&p

[@Mhapple]

Nice guy but his perspective is limited

[@maxpruger837]

So this guy trolls a whole life video and then admits that he he doesn't know much about overfunded whole life. He is also obsessed with rate of return and tries to compare a guaranteed savings vehicle with a volatile investment and declares the investment better because it has a higher RoR... almost as if these two assets have a completely different risk profile. I mean, based on his logic, I guess the US govt has never sold treasuries under 4%... oh wait, it looks like they may have sold a couple Trillion worth. Does this guy even know what a Sharpe ratio is? I'm always amazed by the confidence some people have in their ignorance... especially those who are supposed to be "professionals". Nice job keeping your composure Caleb but if you took the kids gloves off, this guy would've been destroyed.

[@DanRiggs-t4s]

OK, so you believe it’s acceptable to have to pay a high interest rate to your insurance company to access your own capital at any point? I look at that as “dead money”. Let’s imagine that you want to re-allocate your portfolio, or make a large purchase. Would you be willing to pay 5% interest to the “bank”, forever, to have access to your money again? I think that’s foolish. But, if you want to pay your overfunded whole life company 5% interest just to get your own money back, enjoy! 😎

[@maxpruger837]

@DanRiggs-t4s you're a financial planner, you can't be this financially illiterate. I'm not borrowing my money, I'm collateralizing an asset and using other people's money to make investments. I, and thousand of real estate investors all over the world, do this exact same thing when we borrow against our real estate. Every single HELOC in America is collateralizing the equity you have in your house and every single one of them carries an interest rate. I know you have recency bias, but a couple of years ago when rates were lower, I assigned my cash value to a 3rd party bank and was borrowing at 2.75%, all while my money was safely tucked away continuing to earn uninterrupted compound interest. It's not that you don't know anything, it's that everything you know about cash value whole life insurance is wrong. Please educate yourself before spreading nonsense.

[@maxpruger837]

@DanRiggs-t4s Do you even know what a Sharpe ratio is? If so, what's the Sharpe ratio of whole life, vs. Bonds, treasuries, index funds or stocks? Maybe that will tell you something.

[@DanRiggs-t4s]

@ Ok, so are you denying the huge opportunity cost of locking up your capital in a vehicle where you have to pay interest similar to a bank loan just to access your money? Sounds like a ridiculous concept to me 💡

[@maxpruger837]

​@@DanRiggs-t4s Wow, just wow. You claim you sell life insurance but you neither understand the underlying mechanics of a policy nor the value of the asset you're selling. If you're too financially illiterate to understand the concept of collateralization (which is what nearly every single rich person in the world does) so be it, you can instead simply pull money out of your policy. The cash value is technically referred to as the cash "Surrender" value and you can surrender all or part of your policy any time you like (whole life policies have no surrender fees, just in case you're not aware). Of course, your death benefit declines and you interrupt the compounding of interest on your money which Einstein said, "compound interest is the 8th wonder of the world. He who understands it, earns it. He who doesn't, pays it", but if you can't get past using an asset as collateral to purchase other assets, so be it, simply pull the money out. With respect to opportunity cost, that is the entire point of IBC: you never lose opportunity cost by funneling your money through a policy first AND then collateralizing it to invest in whatever you want. The problem is that you are looking at putting money into whole life as an either/"OR" asset. Either you put money into whole life "OR" you put it into stocks "OR" precious metals "OR" any other investment. That's not how whole life works. Whole life is an "AND" asset. I invest in everything that you've said, the only difference is that I flow my money into my policy first "AND" then I collateralize it to invest in stocks, crypto, businesses, real estate AND anything else I want. I'm literally addressing the concept of opportunity cost by having my money work for me in two places at once. You completely don't understand this so may I recommend this fantastic book called "The & Asset", written by a really cool dude named Caleb. Maybe next time you troll a YT channel and the host invites you on their show, instead of coming in completely unprepared you could do a bit of research, maybe read the book that he's written specifically about opportunity cost (it's an easy read, took me a couple hours), and not sound so foolish when you're lecturing on opportunity cost to a guy who literally wrote a book on it. Finally, let me end this with a real world example. In 2001, I had the opportunity to purchase a shopping a center. The sellers wanted $2M but needed a quick sale. I offered $1.6M with settlement in 30 days and no finance contingency. They had offers as high as 1.9M but the others were reliant on 3rd party lenders so they couldn't close as fast as me so the seller accepted my offer. I have a good relationship with the local bank so I was able to secure financing at 5.5% but if I didn't I would've taken a policy loan for the whole thing and then refinanced after close. I still needed to bring in 25% so I called the insurance company and requested a loan for $400k. The only 2 questions the insurance company asked was "How much" and "Would you like a check or Direct Deposit" and the money was in my bank account in 2 business days (technically in 2001, I had assigned my cash value to a 3rd party bank and was borrowing at 2.75% but lets keep this simple). If you're not aware, an insurance loan is arguably the best loan you'll ever get. It is a simple interest, compounded annually, unstructured loan so you can pay it back however you like (or not at all, although I don't recommend it). Meaning you can pay interest only, interest plus principle, skip as many payment as you like, etc. The insurance company doesn't have a collections department, they don't care if you pay the loan back or not. Anyway, when I bought the center it was a great location but run down and only 40% leased. I spent the next 3 months rehabbing the center and getting it fully leased. During that time, I didn't make a single payment back to the insurance company. After 3 months, I had the center fully leased and it was net cash flowing 6 figures. A year later, I had an offer for $4M. So let's do the quick math on my ROI: Initial investment of 1.6M, Sale of 4M = 150% annualized ROI. But wait, I only brought in 400K, so the ROI on my loan was 1800%. But wait, there's more. Technically, my money continued to earn uninterrupted compound interest, I was using the insurance company's money and only paying simple interest of 11,000/yr. Do the ROI math on that and my annualized ROI was 36,263%. This is why I don't give 2 sh*ts about chasing a couple extra points in exchange for injecting risk into my foundational capital. This is the power of building your financial foundation on a safe, liquid, guaranteed asset that you maintain full control over and then collateralize to invest in whatever you want. A properly structured, high cash value whole life policy is a guaranteed savings asset that enhances ALL of your other investments and allows you to make riskier investments with less risk. Bottom line is that you don't understand what you're talking about and instead of educating yourself on your profession, you're spreading misinformation and nonsense and inadvertently hurting your customers in the process. To reiterate, you're lucky Caleb is such a nice guy and didn't rip your ignorance to shreds during this interview. Please educate yourself before posting more nonsense. PS. I'm not an agent and I don't sell insurance. I'm a high net worth individual who discovered IBC about a decade ago and it has changed my financial life. There are 300K life insurance agents in the US, plus thousands more CFPs and 99% of them don't know the first thing about life insurance and what they're selling. It's a disservice to the industry that I know more about life insurance than "financial planners" who spend 8 hours a day/week watching CNBC. BTW, did you google Sharpe ratio yet?