All of your frequently asked questions in one convenient place
Q: Do I need to make an appointment with a banker, go down to the bank and fill out a bunch of paperwork for the Line of Credit?
A: While the process may seem complicated, we help coordinate and monitor everything. We take care of all the paperwork for you. By the time it gets to you, all we need is one signature. This will usually happen after 2 or 3 years when we leverage the policy. There are few things that you could do with this small amount of time that would be more valuable.
Q: How does Desert Rose Capital Management fit into the Flex Method?
A: Desert Rose Capital Management is a Registered Investment Advisor. As such they are heavily regulated. They have the ability and the mandate to act as a fiduciary on your behalf. They monitor the cash value growth of the policy and administer the financing portion of the Flex Method which amplifies your returns.
Q: What if the market tanks and my IUL underperforms?
A: IUL policies bring in an additional variable not found in Whole Life policies. We recommend using a plan that incorporates both for added stability and growth. In regard to an IUL only strategy, We have back-tested our strategies in many different economic environments, including the Great Depression, the volatile interest rates of the 80’s and the Great Recession. Even under additional stresses during these same time periods, an IUL using the Flex Method would have still showed very favorable projected returns over time.
Q: What if rates change at the bank? At the insurance company?
A: If, for any reason, leverage with a bank is no longer favorable, we can adjust the plan in two ways. We may simply do a “wash loan” from the insurance carrier and pay back the Line of Credit or, in an extreme case, surrender enough cash values to pay the line of credit off. Your policy would go back to earning the typical underleveraged rate until conditions changed and the spread returned. We don’t anticipate economic conditions that would cause the spread to close, but if it did, the Flex Method adjusts to it. More on this topic can be found in the “Leverage Video”.
Q: How does the Flex Method compare to an annuity?
A: Annuities have unique guarantees not offered with the Flex Method, but if it’s high income or growth that you’re looking for, it’s very hard to beat the Flex Method. Individual situations will vary and should be designed accordingly. Please consult with your Flex Method Specialist to learn more.
Q: Can I use Qualified money?
A: Yes, depending on circumstances.
Q: This seems too good to be true. What’s the catch?
A: There is no catch. Remember, this isn’t magic. We have discovered that if we use age-old financial principles of leverage and apply them to one of the safest assets on the planet in a systematic way, the process is extremely safe, is very flexible and has great potential growth. In order to utilize the Flex Method on your own policy, it will need to have a growth rate that is higher than the current financing rate. If this is not the case, we can help you apply to qualify for a better policy. If you are uninsurable there is a way you can still benefit from the Flex Method.
Q: What if I need income right away?
A: Depending on the situation, income could be provided after only one year. Certain requirements would have to be met as explained in our Preferred Partnership Program, but it is possible to get income very quickly. Access to the cash values during the first year are also possible when needed.
Q: I’ve always thought buying term and investing the rest was the best strategy. Does the Flex Method change that?
A: Permanent life insurance, when done right, shouldn’t cost money, it should make you money. Outside of the Flex Method a whole life policy averages 4.5-5% tax-free BUT ONLY AFTER paying into it for 20 years or more. With the Flex Method, all of that changes. Expected rates of return are typically double and the time period to reach profitability is greatly reduced, and in many cases eliminated. For this reason we don’t see the Flex Method being a cost, but instead, a resource; just as we wouldn’t consider putting money in a savings account an expense.
Q: Is this only available because of the low interest rate economy? What happens when rates change?
A: No. We believe that the Flex Method is a great opportunity in nearly all interest rate environments and are easily adjusted during any brief environments where it wouldn’t be favorable. More detailed information is available in our “Leverage Video”.
Q: Do I need to pay taxes on any income I receive from my Flex Method Plan?
A: Not usually. All contributions to your plan are made with after tax dollars and grow inside the #1 LEGAL tax shelter in America (cash value life insurance). Income is drawn from your Line of Credit, which is not taxable. In some instances, loans from your line of credit may even be tax deductible. As always, we encourage you to consult with your tax advisor.
Q: I’m uninsurable because of “X”. Is there any way for me to still benefit from the Flex Method?
A: Absolutely! Anyone you have “insurable interest” in is eligible for a Flex Method plan that you can own. For example, you could own a policy on your spouse, children or business partner. While this doesn’t immediately address your death benefit needs, over time it may provide a substantial lump sum to take care of final expenses.
Q: I like Real Estate. How can I incorporate this into my current strategy?
A: The Flex Method works very well with building a real estate portfolio. With the Flex Method you will have access to a Line of Credit at a much lower rate than traditional mortgage financing. The policy cash values are available right away. It takes about a week to access you cash values during the first year. Also, you could literally write a check after the first year. When your money is not being used in real estate, it’s not sitting in the bank account earning less than 1%, it’s working for you, in your policy, at a great rate.
Q: Is there a minimum amount needed to make this work?
A: Every situation is a little different, but we generally like to see a lump sum to be used of $20,000 or a minimum annual premium commitment of $10,000.