Using Whole Life insurance to save on tax money

[Mark Leclair]

Has anyone done this strategy, I know tony Robbins talks about this on his book money mastering the game book and google it and I find the same results. So have you done this with flipping a house profits, rent roll profits and avoid those taxes on the mo way and if you need it you take it as a loan. And that loan doesn’t need to be payed back. Thinking of setting one up that way I am ready to use it to my advantage if I can. Thoughts?....

[Thomas Rutkowski]

Originally posted by @Joe Splitrock:

@Mark Leclair I am a huge Tony Robbins fan, but I was very disappointed with this book. First of all he was promoting a financial adviser that he was going to partner with, which is a conflict of interest. Other than that I thought his book really just offered conservative advice. Probably fine for the masses. I don't recall anything about using life insurance to avoid paying taxes on income. Maybe tax free to your heirs when you die is what you are thinking? I am not a fan of whole life as an investment vehicle. You pay major fees on the front end and once your money is in the plan, you basically can't take it out. You can loan yourself money but withdrawing is difficult without loosing a substantial amount. Insurance companies ultimately invest your money in low risk investments such as bonds and mortgages. Your "return" is really limited by these investments. Ultimately you could invest directly into these type of investments and avoid the high fees. 

If you don't understand how life insurance works, you should really keep your opinions to yourself. You're spouting pure nonsense.

1. You are obviously confusing a minimally-funded whole life with a maximum over-funded policy. The fees on a maximum over-funded policy are minimal... which you know because we've been debating this for years and I have put my numbers up for everyone to see while you are just spouting your opinion. 

2. You can Withdraw your cash value any time you want. But you should never do that when you can get a loan against the policy's cash value.

3. You do not loan yourself money. A policy loan is a loan from the insurance company with your cash value serving as collateral. The cash value never leaves the policy. 

4. Why do you think it is difficult to get a policy loan? You call up the insurance company and tell them how much you want. They verify that you have the cash value to secure the loan and they send you a check. Alternatively, you go to a bank and give the lender an assignment of collateral against the policy's cash value.

5. Please show me how you "lose a substantial amount". If you have a $100,000 of cash value, you can get a loan for almost all of that. They usually only hold back enough to pay the interest for the first year.

The Double Play is not about the life insurance. The cash value in the policy may only capture a low debt market rate of return, but the loans against the policy's cash value are creating value outside of the policy. The sum of the outside investing and The Double Play will outperform real estate alone... as I've shown repeatedly in my posts.