I am actually putting together a video series on this on YouTube, so check it out - Subscribe to see when it comes out YouTube.com/LIFE180
Here are the basics of it:
1. You take out an IUL policy. He uses Mutual of Omaha Income Advantage IUL
2. Fund the policy - say $10,000 per year
3. After a 3-4 years, take a loan against the policy for the same as your annual premium ($10,000 in this case) and roll it into more insurance.
4. Repeat that process every couple of years.
Here is the philosophy:
By taking a loan against the policy using the indexing loan strategy, you can take advantage of arbitrage (the policy potentially earning more than you are paying in policy loan interest). Because of rule AG49, you are able to illustrate a positive arbitrage of 0.5%, which is super dangerous, but he is able to do it, so he does. That positive arbitrage built into the illustration is what his entire system is built on,
THE PROBLEM:
It is NOWHERE near guaranteed. In fact, the carrier tells you that you are taking on significant risk and you need to acknowledge that by taking loans, you may be required to pay them back, make lump sum payments, or risk the policy lapsing.
In addition, he is basing everything on his proprietary calculators on his website assuming a 6.4% return. Ironically, a couple of weeks ago, the carrier (MOO) just reduced the assumption for the product he uses to 6.2% and that is still risky, in my opinion.
To top it off, this 6.4% assumption he is giving is not the real internal rate of return (IRR). After fees, expenses, etc, you are lucky to get a real IRR of 4.5-5% in these policies. And I mean LUCKY if you pull that off.
So, not only are you taking on that risk, but by committing to this system, you also need to remain insurable every 3-4 years. Otherwise you can't keep stacking the policies as he does.
His RELOC is a great marketing ploy, but life insurance companies outlawed this concept long ago where people would design policies with the ability to do their own premium financing and take loans to purchase the premium of the same policy by design. He is basically doing the same thing, but just to buy separate policies, I believe. Either way, RUN FAST away from this concept.
Insurance company can and always has reduced cap rates. That creates risk
They can increase insurance and admin charges. That creates risk
Health risks
Market risks (come into play when you take loans)
I fear what Curtis Ray is doing is going to hurt a lot of people...and give the industry yet another black eye. This guy is relatively new to the industry. It looks good on paper, but it will NEVER perform as he shows it.
Here are the basics of it:
1. You take out an IUL policy. He uses Mutual of Omaha Income Advantage IUL
2. Fund the policy - say $10,000 per year
3. After a 3-4 years, take a loan against the policy for the same as your annual premium ($10,000 in this case) and roll it into more insurance.
4. Repeat that process every couple of years.
Here is the philosophy:
By taking a loan against the policy using the indexing loan strategy, you can take advantage of arbitrage (the policy potentially earning more than you are paying in policy loan interest). Because of rule AG49, you are able to illustrate a positive arbitrage of 0.5%, which is super dangerous, but he is able to do it, so he does. That positive arbitrage built into the illustration is what his entire system is built on,
THE PROBLEM:
It is NOWHERE near guaranteed. In fact, the carrier tells you that you are taking on significant risk and you need to acknowledge that by taking loans, you may be required to pay them back, make lump sum payments, or risk the policy lapsing.
In addition, he is basing everything on his proprietary calculators on his website assuming a 6.4% return. Ironically, a couple of weeks ago, the carrier (MOO) just reduced the assumption for the product he uses to 6.2% and that is still risky, in my opinion.
To top it off, this 6.4% assumption he is giving is not the real internal rate of return (IRR). After fees, expenses, etc, you are lucky to get a real IRR of 4.5-5% in these policies. And I mean LUCKY if you pull that off.
So, not only are you taking on that risk, but by committing to this system, you also need to remain insurable every 3-4 years. Otherwise you can't keep stacking the policies as he does.
His RELOC is a great marketing ploy, but life insurance companies outlawed this concept long ago where people would design policies with the ability to do their own premium financing and take loans to purchase the premium of the same policy by design. He is basically doing the same thing, but just to buy separate policies, I believe. Either way, RUN FAST away from this concept.
Insurance company can and always has reduced cap rates. That creates risk
They can increase insurance and admin charges. That creates risk
Health risks
Market risks (come into play when you take loans)
I fear what Curtis Ray is doing is going to hurt a lot of people...and give the industry yet another black eye. This guy is relatively new to the industry. It looks good on paper, but it will NEVER perform as he shows it.
