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Life Insurance Tax Shelter

Finishing Well / Hans Scheil
The Truth Network Radio
September 17, 2022 8:30 am

Life Insurance Tax Shelter

Finishing Well / Hans Scheil

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September 17, 2022 8:30 am

Hans and Robby are back again this week with a brand new episode! This week, Hans and Robby discuss using life insurance as a tax shelter.

Don’t forget to get your copy of “The Complete Cardinal Guide to Planning for and Living in Retirement” on Amazon or on for free!

You can contact Hans and Cardinal by emailing or calling 919-535-8261. Learn more at Find us on YouTube: Cardinal Advisors.

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Rodney from a masculine journey podcast. We explored manhood within Jesus Christ your children Truth Network podcast starting in just a few seconds back and enjoy sure most of all, thank you for listening and choosing The Truth Podcast Network. This is the Truth Network welcome to finishing well brought to you by Cardinal certified financial planner long child, best-selling author and financial planner helping families finish well for over 40 years of finishing well will examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Medicare IRA long-term care life insurance and investments and taxes. Now let's get started. Finishing well, finishing well is a general discussion and education of the issues facing retirees Cardinal partner advisors. I'm sure I'll see if Pete some insurance this show does not offer investment products or investment advice.

So, life insurance, tax shelter today on finishing well it's not fun. How about a little tax shelter that is always a good way to start off a shower right on and so made to me, to end and you can't help but just think about what it what it said what Jesus said in the sermon on the Mount in Matthew six, you know, and he said lay up, not for yourselves treasures upon earth, where moth and rust corrupt the IRS can break in and steal contents kit but lay up for yourselves treasures in heaven, where the IRS can't touch it.

Rust can't destroy it.

You know that's the Robbie standard version there but nonetheless it of the ideas sound sound that oh my goodness you know about when I think as we share what we have to share in today show. The idea of so many of you who have laid up money in our IRAs and laid up money in it in different investments and that now are bearing fruit. Can you imagine how God will leverage all that for the kingdom, but it was laid up a little bit of the time and and so you know almost every day.

We have an opportunity to sow into the kingdom of God stuff that we know is going to get Jesus more glory and and more honor and so as you think about all were talking about today and the fruit of of how these things grow and can you imagine because I love Hans is always talk about these buckets of money and so think of this bucket of treasure that you got in heaven in the end that you just keep putting this little piece of treasure and most of that. Honestly is in your life in your relationships and the way that people see you so in love with Jesus that they want a piece of that and and so there in your line you're laying up that that treasure that you treasure most of all, which is your relationship with Jesus but I love the way this works out just financially. Hans and so was good. Don't so what were talking about today is life insurance tax and I'll talk about it because the real reason for life insurance purpose that serves to provide money for the widows and articles for the people who meet in early and their family is able to go on 11 and living perhaps well or at an acceptable level or better than poverty level, because somebody had the smarts to buy life insurance and the money come in is a tax shelter because it comes tax-free to beneficiary. Allow beneficiary. They don't realize that somebody you million dollars term policy half $1 million term policy and a guy coming and they leave their spouse and children million dollars and that million dollars comes tax-free. FRP free is no tax without you know you really think about that. That's a whole lot different than $1 million sitting in a 401(k) or an IRA or money that before you take a dime out of it. You got a pack but you know, day in and day out. That's not the problem that I'm solving for people and the people that are coming to me now or 5560 6570 sometimes a little older than 70 and they have the rest of their life and the rest of their spouse's life to think about and they need to create a new company got up workup with Social Security coming in to candidates for that amount think he had and I got pay taxes and that most people the problem that they need solvent. They got a lump of money in an IRA or 401(k) them pay taxes on Malaga figure out a way to live off of that for the rest of their life along the problem that we solve for people and pretty much every show that we do is little pieces fell so today were talking about part of the solution for somebody in this one might be for you not talking about life insurance and the terms of life. Having $200,000 life insurance policy that how much my beneficiaries are going to get one Hyundai me that that is how the things that were working this from a whole different angle. Myrna set up a savings account that you get to decide how much you want to save every year again here okay and then you know I'll help you do that, but it's gotta be after-tax month so if you got a lump of money in an IRA there and maybe are not drawn anything out of it now because your in your 50s are more likely your 60s and you're just trying to get by without pollinating their you know you have to start at 72 and so what this is is we might consider taking some of that money out now paying the tax, and then just little bit every year.

Whatever amount and then whatever is left after we pay the taxes you put into this life insurance tax shelter life insurance savings and will I need life insurance to do that put the money in an investment binge accredited an annuity and she put it in the bank and the answer is yes, you could do that but you your guy have been have to pay taxes and okay and you're also going to be tempted to go spend the night that I think about life insurance is a long-term proposition. So let's take a break for just a minute here. Maybe you can react to what I said at this point were not given a model that's okay. I love the way you usually start out this discussion where you know people have this IRA when they have a 401(k) now you know what's the goal of this people, different people have different things that they want to do with that money.

You know they may want to travel or nothing want to leave their kids or they want to give it to us a certain ministry that they've been working with and and and you know all those lead to great ideas when it comes to you know taking the money from one pocket which is this bucket over here that's still the IRS is can I get their hand in the butt versus this bucket over here as we begin to transfer this money out pay as little tax as possible right and and over here. There's different benefits with this life insurance policy, then there would be an annuity for somebody say you wanted to give all the money to either to a beneficiary of their kids or a ministry right so you know you know when I would sure love it if somebody would say hey the Jesus labor love. I would love to give a bunch of money to single moms. What is it trying to fix her car well and life insurance policy be a great way to do that when it is wonderful in the life insurance people in the 50s. You know, early 70s, there is still not ready to give their money away or committed yet largemouth if you really care if I really pin them down you know a lot of people like that. I'm there and think the minimum when I have to figure out a level of security and my other savings and I don't want to pay taxes. This IRA is really forgiven and italic want to give until now I don't do that I might need it. Okay now talk so late yet and that if he did give it to him now. The IRA that have paid much tax so you don't do that. And so this life insurance tax shelter is a way is really a life insurance policy that starts with the amount you want fellowship. I had a guy writing to me about the video just got it this morning I wrote and how much is the premium that I said well the premium can be whatever you want. So I gave him an example is that they have $300,000 in an IRA and you don't really need it and you don't want pointing out pay taxes now that you'd like converted to an after-tax account you'd like to make a tax shelter, but we could simply pull out $10,000 a year for 10 years, 300,000 IRA would become a $200,000 IRA over 10 years, but grow both llama going on the market these days. We bought 10,000 a year. We pay 25% tax and try to make the samples that we net 7500, and that the premium for the life insurance policy 7500 a year for 10 years so over 10 years. 75 grand put into this policy and then disable how much of the policy, how much debt well I just cast $200,000 Say that it is a $200,000 death and you say, why can you just get well that the minimum amount of insurance that you have to buy to justify the $75,000 savings account that you paid in over 10 years the IRS has ruled complicated so we are reselling a life insurance policy as part of this thing to make it all have tax benefits or savings account at reloadable and so you know you go through a lot of gyrations and you know there's a way that we've taken a piece of your IRA and we got it in something.

Now we do not have to pay taxes. If you get and Kyle sounds a lot like a Roth IRA and it has characteristics like a Roth IRA. The difference being that there is some added features with this one of which is demanded early death.

Your beneficiaries are getting a $200,000.

The only made three payments for two payments and then you die. $200,000 and that's one benefit. The other benefit is you get down the road and then you say what I need some of this money then you can take it out if you structure properly, you pay no taxes on accessing the money and then ill simply if you never pay back never put it back in illness be taken out of the ultimate death benefits is like a savings account that you can go make withdrawals and you can go back or not, put them back it's it's a wonderful thing in the on the video I show where I set these things up younger you are, the better. This is most people. The problem I have is when they were younger than any money and they needed to take whatever little he could buy term insurance so that their families would get a large payment if they die, I'm all for that. This would be a good place to take a break and so remind you all the shows brought you by Cardinal guy that's where you can find out how to email Hans contact where there's a seven worries tab. In today's worry would be life insurance of any defined show notes which include a link to the video that's on the subject of the board that initially offered information and shall not give you great detail about these policies is all there are no as well as on the Col. guide to planning for living in retirement right back with life insurance tax.

Hans and I would love to take our show on the road to your church, Sunday school, Christian or civic room.

There's a chance for you to advance the kingdom through financial resources and leveraging Hans expertise and qualified charitable contributions veterans aid and attendance, IRA, Social Security, Medicare, and long-term care. Just go to Cardinal and contact Tom to schedule a live recording of finishing well at your church, Sunday school or civic contact time to Cardinal guy.that's Col. welcome back to finishing well show life insurance tax shelter and no doubt that you know from my standpoint, you know, one of the neatest things about this is nobody's got more experience with this particular investment vehicle than you Hans) is one that you really really has helped you in your life video you to know all think about breaking because I've got a substantial amount of money in one of these policies for me and I have one of the same amount of my wife. Both my sons and they have substantial cash value in them that I started in my late 30s early 40s alter my 40s and I found myself earning a lot of money. My income doubled and then doubled again and kept increasing from there and I know will last forever. I didn't want to start blowing the money and in one become addicted to these high income I donated the appropriate amounts but I had a good sense that stuff away. You know and save and stuck a good bit of it is these life insurance and accumulated a very substantial amount and then they grew very well, so that now I've got a pretty good sized, money in four different policies and when I opened the business. I left that big high-paying job to start my own business and really all around.

It wasn't all a money thing. I really wanted to operate in the business the way I wanted operate according to my values and I want to go about the business. I really want to eliminate something that I had allowed myself to participate in. I want to say that those guys were doing because I was one of those guys that I started a business based on my own values in the direction that I want to go God certainly helped me with all that and I borrowed these big balances that I had inside of the life insurance policy. I was 12 years ago I got just about all of it paid back so I took the money out.

No taxes no interest mainly just by cutting paid interest complicated to get to basically cost me nothing to borrow my own money and that I paid it back and now is there and it's just securing my retirement is like a savings account.

That's totally accessible and I actually had a very large life insurance benefit on that is just kind of like an extra benefit of the savings account is going to go to my wife, 5 m early demise here and it also enables me to to sell the business to my partners in here for. Not a huge amount of money just because my wife can be very well taken care of the licensure so as God keeps blessing us through this money and ultimately what I think is going to happen to it is my wife in Iraq and a really probably touch that money at retirement were discovered passed away and got elected in there to keep right on tax-free. I might add that our kids are going to be able to fulfill all they want to do with their lives in.

Now my grandson so it is a wonderful way to transfer wealth to the next generation and it's also a wonderful way to have a tax preferred savings account for yourself what Tom had pointed out in the video that it even has some benefits over Roth IRA which Roth IRA if you took the money transferred it from that the regular IRA it would come over there and it would be tax-free to your beneficiaries as well. But you can't.

Once you take money out of her Roth IRA doesn't continue to do that.

So you know it's kinda cool to think if you got this Roth IRA and this is doing really well in growth you you know she took the money out of second row, but the life insurance policy and I love the idea of the way you set that up really for you personally, was that you didn't want to be subjected to the market or that it could lose the money so that life insurance has that huge benefit of York, Elizabeth, and then write a huge rate rose up over time that up for me quite late and then if you want to access. You don't have to pay taxes on that girl borrow it and that if you never pay it back if I had never pay back the money I borrowed for the business. I would just get deducted out of the death benefit identity don't have to pay it back, but being able to pay back is a privilege because I have paid and I can go take it out again Save it five years from now I want by place at the beach or something and I don't know what I want to get some something Ron and I want to do in an and perhaps let me can always go get a mortgage is that I want to do. I could pull money out of one of these policies are two of them and just could pay cash and then just gradually pay back community gives you a huge amount of flexibility, and put it back taken out keep it out permanently. And then the whole thing gets squared up tax-free. When you died with the death so I can't speak highly enough about.

I'm not talking about the downside too much today so everything is not perfect and we need to pay for that life insurance benefit every month so like in my policy to have $2 million life insurance of me now is 64-year-old man that has a charge against that account every month, but the interest that I earn every month far outweighs the life insurance charges, like one deduction against the other and I guess that's about the only downside to the savings account regular pay for the life insurance that I have minor and the other thing you talked about from my perspective is as that thing grows with the interest that's being built into it. The actually the life insurance benefit if the idea if the plan was, wow, I want to I want to give this money to the church. I want to give this money to my kids the life insurance benefit actually grows because the IRS requires a degree right will inherit you have to give the money all green not like it but I could help other people set it up work instead of 2 million bucks all at once or both Ron and I work on both thank them for million by you could send him 10,000 a month for however many years or whatever delight you can you can set up a structured settlement with life insurance is better than trust the top 10 things she could do. You know you want to give money to the church. We may use the life insurance but we may use just a regular traditional IRA treatment for the portion you can give to the insured. I'm probably gonna leave that in the IRA and then donated to the church after around 70 1/2 in bits and pieces, or even a big chunk of the pretax dollars to the church than pay taxes so there's all kinds of ways that I find elites. That's right now from our 501(c)(3) writing, any charity that's like the Jesus labor love again to say in there that you know. Hey, I thought about that, but that's exactly right. You know there is one place for that IRA money to go right here so the whole idea you are talking about this like for everybody. This is clearly for everybody but for the right people is wonderful.

The piece of what we do. We don't ever have clients that come in with a stick all your money and life insurance is one we work and I regret that I am relevant the problem with their need for income look at their desire to leave things to the next generation look at their desire in getting to the church and the God look at their needs for each other.

Look at the survivor look at all the things that will delimit the tax situation now in the future. We discussed quality programs multiple programs to make all this stuff work well together and even long-term care being one of the critical ones that you can do with a hybrid type like this.

We talked about that you can use the death benefit to pay for long-term care while you're alive and you can use this thing is a long-term care insurance policy set up and even the ones you have. When I was sick I think about it you know is your talk about Hans that the cash value there.

If you know you got a bad situation right now. I mean, clearly, your family could use that all sorts of ways to take care of me because there you've got tax-free money and surveilled wonderful so we like. I very much enjoyed the people and you know some of the numbers I'm talking about. You know there just were taught in large numbers that you can do this stuff in small numbers, you know, the small number of maybe to use their big user data. I get my most enjoy helping people that are very much in the their problems seem worse to them just because they've got a small amount can being able to help those people is what God called me to do well.

As always, we've run out of time before you show we want to remind you of course all this information is it cardinal cardinal there you can email Hans easily find his contact information and there you see is famous seven worry tabs which today is life insurance which live show notes all sorts of charts as well as links to the video that goes with today show and information directly on these amazing insurance policies and of course always haunts his book the complete cardinal guide to planning for and living in retirement. So thank you Hans for another great show.

Thank you. Finishing well is a general discussion and education of the issues facing retirees cardinal cardinal advisors upon trial CFP some insurance this show does not offer investment products or investment advice. We hope you enjoyed finishing well brought you by cardinal visit cardinal for free downloads of the show previous shows on topics such as Social Security, Medicare and IRAs, long-term care, life insurance, investments and taxes as well as constant best-selling book, the complete cardinal guide to planning for and living in retirement and the workbook once again for dozens of free resources past shows what you get.

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