The Principles You Need to Protect and Preserve Your Family’s Wealth
By Doug Andrew
Just for a moment, picture the impact of a serious financial setback.
In 2009, the U.S. saw a staggering number of home foreclosures — over 2.1 million in that year of the Great Recession alone. In 2024, the number of foreclosures was down to over 322,000 home foreclosures. (Source: ATTOM)
That’s a big improvement, yes, but for each of those former homeowners, it is a singularly painful loss.
My Own Learning Curve
I know this firsthand. During the early 80s recession, my wife, Sharee, and I lost the 6,000-square-foot dream house we had recently built.
We put so much into creating that home and had envisioned an exciting future raising our family there. Then the unexpected happened and we found ourselves without an income for nine months. Despite several attempts to get caught up on our mortgage, it was crushing to watch the bank eventually foreclose on it.
Knowing that financial challenges can cause relationship problems, I dove into rebuilding our finances and our lives as quickly as I could.
What was at first a big blow became a big blessing. That setback prompted me to find financial strategies that could protect our family from market downturns.
As a financial professional who had been a devout buy-term, invest-the-difference proponent, I discovered Universal Life insurance, which was new on the scene at the time. Its ability to provide safety and tax-free growth was a big draw, and I pivoted both my personal finances and that of many of my clients to Universal Life.
After Indexed Universal Life emerged in the late 90s, I’ve since been able to help thousands of families experience even greater safety from economic storms and enormous tax advantages with properly structured, maximum-funded IUL, or what we call the IUL LASER Fund.
I share this story for a couple of reasons: to open up about the very real pain that can come from financial problems, and to show how using the right strategies can bring about greater peace of mind.
Guarding Against the Unexpected
Unfortunately statistics show that a large percentage of marriages fail when their Financial Dimension suffers. And it’s not just larger economic downturns that can trigger strife. Illness or layoffs can cause loss of income for a time. Family members might get in an accident or be diagnosed with a disease that requires expensive medical treatment.
When finances are tight and debt is racking up, parents worry that children won’t be able to experience much-wanted educational or extracurricular opportunities. Vacations are no longer possible. Cars and homes fall into disrepair or are repossessed by the banks.
This is why I absolutely recommend that you use LASER strategies to protect and preserve your family’s Financial Dimension.
What do I mean by LASER?
It’s an acronym we coined several years ago that means Liquid Assets Safely Earning Returns.
We also use the term because it alludes to the laser focus that can move you toward your financial goals, which may be income during retirement, or money to empower your Family Bank and loved ones’ worthwhile efforts, capital investments, or other objectives.
Liquidity to the Rescue
There’s the adage that it’s a lot better to have and not need than need and not have. This is why liquidity is so important.
Whether it’s having money on hand for emergency needs or the ability to tap into capital for a new business venture, having speedy access to tax-free money is critical.
When your money is tied up in things like IRAs or 401(k)s, if you’re under age 59½, you’ll typically pay a 10% penalty for withdrawing it, along with the taxes due. Let’s say you need to access $10,000 from your 401(k), in a 23% tax bracket, you would end up needing to withdraw $15,000 to cover penalties and taxes.
Or let’s say you decide to borrow that $10,000 from the equity in your home. You would not only have to go through the process of applying for a home equity loan (which you may not qualify for if you’re facing financial challenges at the time), but you’d also typically pay closing costs in addition to the loan interest until it’s repaid.
Contrast that with your IUL LASER Fund. No matter if you’re on solid ground or struggling financially, within a day or two, you could request a $10,000 tax-free loan from the insurance company, with the money in your policy acting as collateral. You have your $10,000 tax-free.
As for the loan interest, with a Zero Wash Loan, the interest credited on the cash value that is collateralizing the loan covers the interest on the loan. And with an Alternate Loan, you can enjoy the benefits of arbitrage, with the opportunity to earn a higher rate of return than the interest on the loan, so you often come out ahead. When it comes to repayment, your IUL LASER Fund gives you the option of paying the loan back later, or just having it eventually deducted from the death benefit upon your passing.
Safety From Downturns
With the market crash in 2008, millions of Americans lost 40% of their traditional account values. Our clients didn’t lose a dime due to market volatility that year.
That kind of protection has come in handy time and time again, like with market fluctuations during the pandemic — and it will continue to guard against future market calamities.
How is that possible? Because IUL LASER Funds are linked TO the market, not IN the market. This way, your policy earns when the market goes up, and it’s protected by a 0% floor when it goes down.
Predictability for the Win
Another marker of a prudent financial strategy is predictable rates of return.
This is why so many of our clients have a good portion of their financial portfolio in IUL LASER Funds, which have historically averaged 5% to 10% annual growth.
Does that mean I recommend you avoid other financial vehicles completely? Absolutely not, but there is a way to engage in other strategies and stay safe.
In my opinion, too many people see high rates of return as a priority, and they chase often volatile pie-in-the-sky opportunities. Take crypto, for example. Many have earned a lot in cryptocurrency, while others have lost as much as one-third of their money, depending on the timing.
When pursuing a higher risk strategy, I’d recommend accessing tax-free cash with an IUL LASER Fund loan to invest in those other vehicles. That way if the higher-risk strategy loses money, you are at least able to continue to earn interest on the full account value in your IUL. (You would subtract the loan balance to then calculate your net value.) And if your other ventures deliver returns? You can choose to pay back your IUL loan, or not.
Tax Advantages Along for the Ride
Finally, I always say you want to have tax advantages come along for the ride when choosing LASER strategies.
While you can often enjoy some tax advantages with traditional accounts, vehicles like an IUL LASER Fund can give you even more. Tax-free growth. Tax-free income. Income-tax-free transfer of your wealth upon your passing.
LASER Opportunities for Your Family
One of the most rewarding things I’ve experienced — and helped our clients experience — is using LASER strategies to empower your family. With loans from our IUL LASER Funds, Sharee and I have been able to help our children with things like buying cars and paying for education.
Our kids have repaid those loans, and we’ve put the money back into the IUL LASER Funds, a process that has become a perpetual generator of sorts for our Family Bank.
I’ve become my own banker as well, using loans from our IUL LASER Funds for business and real estate ventures.
The flexibility has been invaluable, as has the peace of mind. I’ll never again worry about a setback like we experienced in the 80s.
That kind of LASER focus is what I wish for you and your family.
I hope you enjoy this debut issue of 3 Dimensional Wealth Living Magazine, with insights on how you can benefit from proven strategies that can help you build a legacy of Authentic Wealth. To learn more, you can also order a free copy of our book, “The LASER Fund,” subscribe to our YouTube channel, or follow our all-new podcast (while you’re there, leave a review!).
Ready to start an IUL LASER Fund or open an additional one? Learn more by accessing our free books and tools — and connect with a certified IUL professional today by clicking here.
