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Podcast Episode 133: Beyond Tax Deferred: The TEFRA TAMRA Corridor

| April 03, 2019
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Episode Summary

In this episode of the Sound Financial Bites Podcast, Paul and Cory discuss the value of whole life insurance as a financial investment. They cover the restrictions and legislation that govern these policy investments, including the TEFRA TAMRA Corridor and the 7-Pay Test. Finally, Cory and Paul compare whole life insurance with other investments such as a 401(k), rental real estate, and starting a business.

What Was Covered

  • 01:13 – Paul introduces today’s topic: Whole Life Insurance
  • 02:24 – This Week in Planning
  • 02:52 – Breaking down the article, ‘Why Whole Life Insurance Is a Bad Investment’
  • 03:26 – The real reason whole life insurance is a ‘bad investment’
  • 04:02 – Examples of other ‘bad investments’
  • 05:00 – Rebranding the Sound Financial Bites Podcast
  • 05:57 – Why most investors who accumulate assets do not have an overall philosophy of how to engage their finances
  • 07:15 – Acquiring and using life insurance effectively
  • 08:47 – Paul talks about three key ideas of how to assess life insurance
  • 09:17 – Cory discusses how life insurance used to work in the past
  • 12:12 – How legislation impacted life insurance
  • 12:57 – What the government did to limit the use of life insurance as a tax shelter
  • 14:00 – The 7-Pay Test
  • 16:14 – The importance of utilizing a mutual life insurance company
  • 19:08 – Why many insurance companies don’t construct policies in the best way to benefit policyholders
  • 20:12 – Abiding by the TEFRA TAMRA Corridor
  • 22:48 – Cory interrupts the podcast to provide the audience with a special offer
  • 24:19 – Paul compares the guaranteed rate of return from whole life insurance with other investment tools
  • 26:39 – Cory and Paul speak to the metaphor of starting a business
  • 28:06 – Comparing whole life insurance with a 401(k)
  • 30:01 – Comparing whole life insurance with a rental real estate investment
  • 31:35 – Breaking down the limitations and the amount of money a person access from their whole life insurance policy
  • 33:59 – Cory touches on the investment of savings accounts
  • 35:52 – Paul urges the audience to subscribe and review the Sound Financial Bites Podcast

Tweetables

“I would have no reason to want to do a CD, or US Treasuries, or taxable corporate bonds, or munis, because all of the bond assets also have market volatility when interest rates change.”

“You don’t buy life insurance with money. You buy it with your health.” 

“It should always be that way when you’re working with a planning professional is that they’re helping you understand the consequences of different decisions. You and your spouse get to choose which decision you make”

“The key component is that you can actually have both the money deployed somewhere else while it’s still growing inside the contract.”

Links

Sound Financial Group’s Website for a Financial Inquiry Call - [email protected] (Inquiry in the subject)

Sound Financial Group on Facebook - @SoundFinancialGroup

Sound Financial Group on LinkedIn

Why Whole Life Insurance Is a Bad Investment 

Sound Financial Bites Episode 81

Sound Financial Bites Episode 82

Cape Not Required (Cory’s Book)

Sound Financial Advice (Paul’s Book)

Clockwork

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