Designing for a Real Estate Investor – Finding the Perfect Policy
This is the process we took her through we take everyone through as far as seeing what different options exist how to maximize the cash value then once I’ve got that asset maximized what are the next steps?
Using the money actually for real estate so the focus here was how to maximize the cash value and flexibility and then we did spend a lot of time going over how to use it with direct policy loans cash value collateral loans and made a decision on the best option but please enjoy if you have any questions feel free to reach out anytime and we’ll talk to you soon.
Happy Friday I hope all is well with you and the family so in this video I am going to go through an overview of your Guardian policy and the approval with the new Guardian product I’m going to touch on the old product but I know I did that in the last video.
The Short-Term Cash Value Long-Term Cash Value
It seems like you’ve got a good grasp of the old versus the new but mainly what I’m going to cover is the Guardian policy compared to different MassMutual policies that are available with their updated PUA fees and really have a laser focus on the short-term cash value long-term cash value to have a direct comparison.
I’m also going to go through some bullet points just with respect to the PUA flexibility how you can use the policy just additional awareness so you’ve got all the information upfront and you can select the option that you are most comfortable with so let’s get on into it.
The Excel Spreadsheet
So we’ve got a lot of numbers that I’m going to go through I’m going to walkthrough the Excel spreadsheet and the detailed illustrations as well but before I do that before I just jump into the numbers let’s begin with just an overview here.
So with Guardian we’ve primarily been looking at the L95 policy we wanted to get that in by the deadline but we were unable to I’m just with underwriting and such so if we still did pursue Guardian just based on the funding and everything.
you’re considering I would still recommend the exact same product the L95 policy it’s just the updated version which I know we touched on a couple of bullet points before mainly the main differences are the lower guaranteed rates higher PUA fees as we look at just a recap
The Upfront Cash Value
the old version the break-even point when you’re cash on cash was the 4th year whereas the new version the break-even point is now the 5th year and I know the upfront cash value just as you looked at it you said I don’t know if that’s really still going to work for me particularly if you plan on using the money for real estate
Guardian all of their products except for their 10-Pay but their L95 policy has a 3% guaranteed rate the total dividend rate however is 5.65% for 2022 and Guardian does have the index feature available as well I know we’ve looked at that before I can certainly send you a video we have on that too.
The main advantage to Guardian in my opinion they’re one of the major mutual companies but so is MassMutual the big advantage is their PUA flexibility with Guardian you can easily commit to the minimum premium only which comes out to a little over $25,000 per year with the term Rider and such but you can commit to the minimum.
The Big Advantage
Just pour excess funds into PUAs 100% at your leisure and that could be done through a mobile app it can be done through your laptop tablet, whatever is most convenient so that’s their big advantage where if you like the idea of saying hey aside from the 1st year.
I know you’re starting off with a lump sum hey I had the lump sum but aside from year 1 if you said I like the idea of just committing to a minimum premium only and then adding excess funds at my discretion as the money rolls in.
It is really Guardian’s sweet spot and their product will really accommodate that type of funding pattern if you like that idea so that that is the advantage to Guardian Here’s the advantage to the higher the cash value product strong early cash values long term not as much but upfront
PUA Flexibility
It is very cash-rich I’ve got 90% here you’re going to see the actual number is about 92% cash value in the 1st year meaning if you deposit $270,000 you’ll see approximately $92,000 in cash value at the end of the 1st year the beginning of the year you might see between 89% and 90%.
With respect to their PUA flexibility it’s not horrible but it is not the same as Guardian’s with MassMutual they’ve got a couple features with their different PUA Riders with respect to their flexibility but the way to make it most convenient for you as a policyholder is really if you’re comfortable with a 1-time per year payment adjustment.
Policy Anniversary
It specifically falls on your policy anniversary date so for example if you started a policy in January and that’s your policy anniversary date when your premium is due at that point in time you can easily adjust the total payment you make without any underwriting at all so making a 1-time lump sum payment you could break it up over 12 months or pay a different frequency .
I will add if you’re paying a frequency other than annual with MassMutual their charges are a bit excessive in my opinion they’re much higher than most carriers and I typically recommend annual but I can go through.
The other frequencies like monthly payments and such with you as well but back to this with the 1 time per year payment adjustment let’s assume year 1 I paid in $270,000 year 2 things were a bit slower and you only paid in $100,000 if you wanted to just add additional funds let’s say 6 months into year 2 you wanted to add hey I can throw the other $170,000 in now can I do that?
Per Year Payment Adjustment
The answer is yes and there’s ways to set the policy up where you can add funds at random but it’s typically a 2-year window where we can do that I can only do it 3 times per year it’s a bit complex but I can definitely provide some info on it aside from.
If I wanted to throw funds in at random MassMutual would require some type of medical underwriting and paperwork before they accept the money. Where they work very well is if you said okay I paid in $100,000 in January of 2023 in the 2nd year I’m going to wait until year 3 at that point.
I’ll increase my payment back up to $270,000 I can even make up for lost time if I wanted to but the big difference is with MassMutual it’s very easy to make the 1 time per year payment adjustment whereas Guardian it is at leisure so that’s just a difference in their flexibility features.