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Anybody heard of equity management and overfunding universal life?
Old 06-29-2007, 10:11 AM   #1
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Anybody heard of equity management and overfunding universal life?

Hi,

I'm new to the forum but have been reading for a few years, very on and off. I recently ran into an idea I've never heard of and wondered if any of you have. The related book is called Missed Fortune 101 by Douglas Andrew. In a nut shell he recommends mortgaging your house to the max and over funding a universal life policy way beyond the death benefit and get tax free use of your money when you withdraw.

This may not be much of an early retirement plan, but it could be if you start early enough and have some equity in your house. I would be interested in hearing any comments.

youngboomer
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Old 06-29-2007, 10:18 AM   #2
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Its a scam. Bad idea. Anyone telling you about this is trying to get you to buy a huge, unnecessary life insurance policy that will net them a fat commission that ultimately comes out of your pocket. Run away.

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Old 06-29-2007, 11:20 AM   #3
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Quote:
Originally Posted by youngboomer View Post
Hi,

I'm new to the forum but have been reading for a few years, very on and off. I recently ran into an idea I've never heard of and wondered if any of you have. The related book is called Missed Fortune 101 by Douglas Andrew. In a nut shell he recommends mortgaging your house to the max and over funding a universal life policy way beyond the death benefit and get tax free use of your money when you withdraw.

This may not be much of an early retirement plan, but it could be if you start early enough and have some equity in your house. I would be interested in hearing any comments.

youngboomer
Brewer is right, RUN!!!!! do not walk away. This scam, er I mean, strategy (sic) was written about extensively in the book "Missed Fortune". The bottom line - only one person gets rich with this scheme, and its not the person purchasing the 'policy'. I wrote a review of the book on Amazon:
Quote:
The book has one good idea - reposition part of your home equity into other investments. If you can afford the extra mortgage payments and have a high risk tolerance this idea is worthy of further consideration. But alas, that is the only good idea in the book. I recommend that you save your money folks, because the real goal of this book is to sell you an insurance policy. By the way, it's not a regular low cost term policy (that most people should own) either. Nope, he wants you to put all of your money into 'overfunded' equity indexed or variable universal life insurance policies. Then later on, ten or twenty years down the road, you simply borrow against these policies and enjoy tax free income in perpetuity. He even has the audacity to call these products "investment grade insurance policies" hah! That is an oxymoron if I ever there was one!! Sounds great huh?

In my opinion the author is just another glib snake oil salesman that promises much more than can ever be delivered. The book has literally dozens of charts (ridiculous oversimplifications) that rely on extremely dubious math. The worst thing is that the charts and spread sheets the auther relies upon to reach his 'conclusions' never even consider the negative effects that the extremely generous sales commisions and outrageously high maintenance fees that these policies generate. It all sounds good at first, but upon investigation, it just doesn't pass the smell test. That is, unless you have a grudge against yourself or actually enjoy being duped.

By the way, the author is running seminars across the country to 'teach' (for a fee of course) other insurance agents how to 'cash in' on gullible homeowners eager to 'reposition' their new found home equity. BUYER BEWARE!
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Old 06-29-2007, 11:42 AM   #4
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Old 06-29-2007, 11:43 AM   #5
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I posted about this book a while ago. You should be able to find that thread by searching for it.

Basically, I agree with the comments of brewer12345 and Alex. Andrew's math is pretty deceptive. You'd be a lot better off just putting your money in a traditional or Roth retirement account.
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Old 06-29-2007, 06:04 PM   #6
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The only thing that winds up over-funded is that @ssh#!3$ commission check.

Somewhere in there you are paying a mortgage to buy a UL policy. I suppose I could interpret it as putting more money into an existing UL policy. Either way... Not no but H3ll NO!

For life insurance... I adhere to the old sales pitch of Buy Term and invest the rest. But even with that, only buy what you really need.
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Old 06-29-2007, 06:41 PM   #7
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Read the book and he made it sound great, upon much further investigation though, RUN!!!!
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