We are going to talk about something that we hear all the time. You know people say, “I would never use life insurance for an investment. That is the worst investment in the world.”
Jim McKennon is going to tell you why. “Well, it’s too expensive. Compared to what? Well, compared to anything. Let’s look at the facts. Don’t believe everything anybody tells you including me. Make me prove it. I’m going to prove it today.”
Computation of an IUL Policy
“An example is an IUL policy owned by a 45-year-old individual and I don’t know if it makes any difference on what we are doing. We assume the mutual fund and we gave the mutual fund 8% per year and the IUL is 7.33%, so we are being totally fair. We assume that the mutual fund has a 1% load per year plus you are going to pay taxes of 20% tax bracket. That’s very realistic! In fact, we are giving an advantage to the mutual fund to see if they can compete with the IUL.”
“Now, we took the taxes out of the mutual fund every year. Let me, first of all, give you an absolute that most people do not understand. They think they can buy no-load mutual funds from these different companies. That’s not true folks. There is no such thing as a true no-load fund every one of them has some charges in there. How do you think these companies have their 10-, 20- or 100-million-dollar office building? How do you think they pay a million dollars a month utility bill? How do you think they have a payroll of a couple of million dollars a month? You don’t make that if you’re selling a product and you don’t make any money off of it. So, that’s a total of 100% baloney.
There is no such thing. The average even for a no-load mutual fund is somewhere between 1 and 1.6%. But we assume this one’s going to charge 1%. So, you know what? The people that say that life insurance is too expensive, are correct during the first year. You are going to drop on the first year. On a $25,000 contribution, you are going to pay a $4187 charge in the first year. How about the mutual fund? Well, $570. Oh man, you’ve just proved the point. We’ll keep going with it.
“If you want it for one year, you’re absolutely right, don’t buy it, it’s way too expensive! Let’s look at what happens at the end of 10 years. In 10 years, the total expenses of the life insurance are $46,498 and the mutual fund including the taxes is $37, 297. So, that’s not a whole lot of difference. In 14 years, the expenses in $984. The expenses for the mutual funds including taxes are $9,263. This is 10 times as much.”
Is Life Insurance Too Expensive?
Some people say, “I would never buy life insurance. It’s too expensive.” McKennon said, “Well, don’t let somebody tell you something that is absolutely not true. Make him prove it. I’ll prove it.”
“Now let’s keep on going. Let’s go down to 20 years in life insurance. You’ve paid a total of $58,363 and the mutual fund is $138,469. Now let’s take it all out. In 45 years, he will be 90 years old. The total expenses on the life insurance are $155,157 and under the mutual fund it’s $316,353.”
“So, folks I just want you to understand. It’s like my former business partner Frank been talking one time. When he called somebody, when I have him called somebody who wants to give me a large check, they want to talk to Frank before they did it. When they got Frank on the phone, it was on the speakerphone and this person I heard Frank say to him. ‘Don’t you let Jim McKennon sell you anything.’ O my Lord, I got Frank on the phone to say that. Don’t you let him talk and sell you anything? I can’t believe it.”
You Do What You Think Is Right
Frank said, “You do what you think is right. If you think this is the right thing to do, then you do it. If you think it’s not, then don’t listen to Jim. Listen to your own self but get the facts.”
McKennon revealed, “I’ve instructed all of my partners, including Jim, who is one of my very trusted partners, just tell the truth. Don’t mislead anybody and that’s what Frank believed in. That’s what he still believes in. And I believed in that for 52 years. If I had not, then I would not be still in the business.”
“So, in addition to having the lower expenses, it has roughly 55% fewer expenses. It also has a tax-free death benefit. So, if you die during the first year, let’s say, you’ve got roughly $500,000 death benefit tax-free. If you put the money in the mutual fund, then you’ve got your $25,000 plus the money you’ve earned. The mutual fund would never keep you with life insurance as far as a death benefit. So, it is self-completing in the event of death. You can add waiver premium into it which says, in the event that you can’t pay the $25,000 because of disability, $25,000 will be paid for you.”
“I’m not pushing something I don’t sell. If you are trying to get a mutual fund company to say, oh don’t worry about it, we’ll pay you $25,000. Now you pay a little fee for that it’s very small.”
“It has a tax-free death benefit and tax-free accumulation. Folks, I’m telling you don’t let anybody, I included tell you that life insurance is a great investment. Make me prove it. If I haven’t proved it, then call me and tell me you haven’t proved it. I want you to prove it and I will be thrilled. Let your CPA come, have your tax attorney come, have anybody call me and I will be thrilled to prove to it. What I’m telling you, this, in my opinion, is probably the greatest investment in the world right now. And the primary reason is not necessarily the low loads, but the primary reason is it’s tax-free if it set up right. That’s the problem it should be set up right. You need to work with somebody who knows what they are doing. We have 52 years of experience so we can set this right for you.”
You can get in touch with us by calling 601-990-2102. You can also text us at 601-757-6488 or email us at jim.mckennon@gmail.com or go to our website and check us out at www.moneymgtinc.com.
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