Real Estate Investor? Fund deals doing THIS...

[Brandon Beaudoin]

Real estate investors ❗🫵

🏘️🏠🏞️

WHY❓

..... are you relying on banks for funding your deals when whole life insurance offers the same function but with (many) MORE benefits, both short and long term?

🤔💡

**Access to Cash Value**

Why limit yourself to banks, savings withdrawals, or retirement account loans when you can use your policy's cash value to fund diverse deals like fix-and-flips, rental properties, commercial ventures, land development, and REITs?

**Continued Growth**

Did you know your cash value continues earning interest and dividends in certain products, even when you borrow against it, unlike withdrawing from a savings account?

**Tax and Term-Free Loans**

Are you leveraging the advantage of tax-free loans against your policy’s cash value, with the added benefit of no mandatory repayment terms? This flexibility is unmatched by traditional banks. Or retirement accounts.

**No Credit Checks**

Forget the hassle and delays of credit approvals. Access your funds almost instantly, without a credit check, making it faster and easier to capitalize on investment opportunities.

**Fast Capital Access**

Seize real estate opportunities swiftly with very fast access to your capital, ensuring you never miss out on a lucrative deal. I can access cash value in one of my policies and as little as the next day through a policy loan. No questions asked!

**Asset Protection**

Benefit from the protective features of whole life insurance, where your investments are safeguarded against creditors and market volatility, providing a stable funding platform even in uncertain times (and there will be uncertain times!).

🤔 So, why not leverage the full potential of your financial resources?

Consider the strategic use of whole life insurance to make your real estate investments in residential, commercial, or speculative land work smarter.

Leave a comment 👇 on your 'why' for either case.

[Josh St Laurent]

As a financial advisor and professor of finance, I want to provide a more detailed analysis of the use of whole life insurance as a funding source for real estate investments:

1. High Fees: Whole life insurance policies often have upfront commissions that can be as high as the first year's premium, and ongoing management fees. These costs reduce the cash value and overall return on investment. For example, a $1 million policy could have an initial commission of $50,000 to $100,000, significantly impacting the policy's cash value in the early years.
2. Limited Access to Capital: Accessing the cash value requires taking out a policy loan, which accrues interest, typically at a rate of 5-8%. This interest can compound over time, reducing the net cash value available for investment.
3. Restricted Investments: The growth rate of the cash value in a whole life policy is often lower than the average return on real estate investments. For instance, the average annual return on the S&P 500 over the past 90 years is about 9.8%, while the dividend yield on whole life policies is typically 5-6%.
4. Opportunity Cost: The premiums for whole life insurance can be significantly higher than those for term life insurance. For example, a 40-year-old healthy male might pay around $500 per year for a 20-year term life policy with a $500,000 death benefit, compared to $4,000-$5,000 per year for a whole life policy with the same death benefit. This difference could be invested directly in real estate, potentially yielding higher returns.
5. Long-Term Commitment: Whole life insurance is designed to be a permanent policy, with the expectation that premiums will be paid for the policyholder's entire life. Surrendering the policy early can result in substantial surrender charges and a loss of the death benefit.
6. Tax Implications: While the policy's cash value grows tax-deferred, policyholders must be cautious of the potential tax consequences of a policy lapse or surrender. For instance, if the cash value exceeds the total premiums paid, the excess amount is taxable as ordinary income.
7. Risk of Policy Lapse: If the policyholder cannot maintain premium payments, the policy can lapse, resulting in the loss of the death benefit and potential tax liabilities on the cash value. This risk is particularly concerning during economic downturns or personal financial hardships.

In summary, while whole life insurance can provide certain benefits, it is crucial to consider the costs, limitations, and long-term implications before using it as a funding source for real estate investments.

To be clear, I don't fault @Brandon Beaudoin for promoting products like this.  Insurance companies often prey upon agents (Especially new ones) telling them only half the story to encourage them to sell as many of these "infinite banking" policies as possible and make large commissions.  I was one of these agents 13 years ago and have since educated myself on both sides of the coin.

*Not advice* Just my opinion.