Doug Andrew Laser Fund Book Review | Chapter 4 What is LASER Fund

everybody it’s chris with life180 and uh today i’m 
gonna be doing another breakdown analysis review  
of doug andrews laserfund book we’re gonna be 
doing chapter four today uh what does laser  
fund stand for so let’s get into this i’m 
just going to kind of pop right over here  
and get right into this into this book so here’s 
the deal this is an interesting so laser as you  
can see it’s it’s capitalized here would make 
me think that it stands for an acronym although  
he doesn’t really get into what uh what the 
acronym stands for laser he talks about liquidity  
uh safety tax advantages but like i don’t see 
where that fits into the laser maybe i’m missing  
something um happy if anybody has a comment on 
what that means definitely let me know but he  
doesn’t really go into this uh and give an example 
or give that acronym for what it stands for  
um that said um looking through here um you know 
i’ve just got some uh some fundamentals he tells a  
story talks about the importance of liquidity 
safety rates of return and tax advantages  
um here’s the deal i would agree with all these 
things being super important i think this is just  

another example everybody knows i’m a big believer 
in whole life insurance this is another example of  
taking the principles that make whole 
life insurance amazing at what it is and  
and basically twisting the story and trying 
to make it applicable for index universal life  
um i’m going to get into this and in a 
little more detail as i go through here so  
he uses some stories as he goes through 
here and he basically says okay liquidity  
as an illustration uh let’s say 
we have a family the thompson’s  
they have extra assets um they don’t have a lot of 
extra assets they do have a house they safeguard  
what they have they’re basically going through he 
tells this story about how they buy a house right  
and like the idea of controlling your money having 
liquidity when you’re when you have your mortgage  
when you have a mortgage the idea is pay the 
mortgage off as quickly as possible that’s  
what a lot of people that’s kind of like the dave 
ramsey’s of the world that’s the probably a core  
financial principle that they have is just get out 
of debt pay down that principle but the problem is  
you have all your money tied up inside of your 
mortgage it’s not very liquid and so this is the  
conversation about liquidity and the importance 
of having control of that money and liquidity uh  
can lead to opportunity um and he gives examples 
about what would happen if you took that hundred  
thousand dollars of equity and instead of having 
it there put it aside in a financial vehicle that  
provided liquidity with no income taxes right um 
so that’s basically where he’s going with this  
and and if you haven’t done it i have a video that 
i’ve done on how to pay off your mortgage the idea  
breaks down all the math behind all of this stuff 
so what he’s saying here is actually very accurate  
uh philosophically um the problem is putting 
it inside of a inside of a index universal life  
policy um it is not a predictable like that’s 
the part about this that he he misses um that  
he’s talking about is liquidity safety rates are 
returned tax advantages those are all really good  
but those need to be done on a predictable basis 
and they are not being done on a predictable  
basis inside of an iul i don’t care what they’re 
saying like and i’ll go through exactly why as we  
go through this chapter so um here’s the deal um 
let’s see here what is i got this circled in red  
i gotta figure out why i read this chapter like 
a week ago and now i’m circling back to it but  
um oh yes so he’s saying you do you don’t have to 
pay uh the government any penalties if you choose  
to cash out your policy earlier so basically what 
he’s saying is listen this is this a whole li  
or a an iul is what he’s saying a laser fund uh 
which is ultimately a properly structured um iul  
as he’s saying gives you um benefits and and you 
can cash it out you can borrow against it there’s  
a lot of ways to access the capital ultimately 
without having tax ramifications right so safety  
he talks about uh he tells a story um from the 70s 
he uh is sharing um a couple actually he shares a  
story about a couple who is in their 70s um you 
know they they’re growing um their mother passes  
away oliver money was in lehman brothers and guess 
what it was 2008 lehman brothers failed the money  
went up in smoke um so he tells a story about um 
ultimately how money can just evaporate and all  
obviously like if you haven’t done your research 
on this financial institutions in the life  
insurance industry historically speaking are 
the safest financial institutions in the world  
now i’m a little concerned um that index universal 
life companies are the companies that are really  
focusing on that methodology are not as stable 
as the companies that have been around since  
the 1840s right like because when you’re when 
you’re focusing on having a whole life platform  
and and focusing on the principles that go along 
with whole life insurance versus index universal  
life it’s a completely different methodology on 
how you’re managing things right and so the risk  
and um the strategies and how you manage your 
general account are completely different right um  
if you are focused primarily on iul that’s one of 
my biggest concerns that i say is like typically  
speaking what happens is when you it what always 
happens is when you put your money inside an iul  
you’re not really participating directly in the 
index you’re giving your money to the insurance  
company putting it in the in the general fund 
and they’re allocating your money according to  
the index that you choose inside of that iul now 
we live in an environment right now with the world  
is just where it is where we’re at all-time 
low income rate or interest rate environments  
right and so insurance companies right now are 
having a hard enough time getting four to four and  
a half percent on an annual basis in their general 
fund right so all these people like doug andrew  
who are out there saying that you can expect a 
life insurance company to be able to get you six  
percent on a predictable basis from here forward 
listen if it were that easy if it could be done  
the life insurance company would be doing 
that for themselves because if it worked  
and it worked predictably right mind you 
the life insurance company could do this  
without all the insurance charges and fees and all 
that stuff the only charges they would have would  
be the cost of the options to be able to do it 
right so if it worked really well with you paying  
for the insurance charges the life insurance 
company would do it without those insurance  
charges being incurred by themselves right so just 
use common sense it’s all i’m asking people to do  
here is like really think about this everybody 
who wants to bang on me and hate on me for  
for all this if you if you assume an iul is gonna 
perform at a four and a half percent interest rate  
i’m okay with that risk and you may even have 
performance that’s a little above that but if you  
assume and you and you base an illustration on six 
percent or or higher even five and a half percent  
or higher you’re setting yourself up for failure 
and that that’s my biggest problem it’s not the  
problem of an iul chassis it’s the problem of 
the expectations around them and how they’re sold  
so safety here’s the thing so this is what 
he’s talking about safety has two components  
uh the safety of the principal and the safety of 
the institution in which the money is entrusted so  
i.e lehman brothers failed that money went up 
what went up in smoke so by having your money  
with an insurance company it’s much safer i’ll 
agree that it’s safer than an investment bank  
even with an iul i’ll agree with that um but the 
problem is it’s not as safe as as it could be  
and the principle is not actually as protected as 
you would think it would be because there there  
are uh internal charges in these in these policies 
and and that’ll make sense as i go through this  
book i’m not going to get into that because 
i’ll get off track here but as you go through  
this book he’s going to get into more of those 
topics and i’ll address them as he does because  
i’m sure he’s going to go there so what he talks 
about is he gives an example of what would happen  
um you know if you if you well i’ll just read now 
when you talk about safety of principle ideally  
what you want to be is able to protect 
your principle from loss even more  
you want any gains you’ve experienced to 
become newly protected principle in other words  
save a hundred thousand in a financial vehicle 
that earns a net rate of of seven percent this  
year at the end of the year you want to have 107 
000 as your newly protected principal which means  
even if the market drops uh and the rate of return 
is less than zero next year your principal of 107  
000 would be intact you wouldn’t lose a dime due 
to market volatility so that in summary is just  
categorically false because you have expenses and 
charges inside of the iul so it’s not that clean  
as he explains if you have a hundred thousand 
dollars and you’re getting you’re participating  
in the index right and it’s a cap of let’s 
say ten percent and it’s a floor of zero  
and let’s say it does seven percent you’re not 
participating in realizing all seven percent  
of that you i mean think about it this way if 
you do if you buy an iul here’s the thing that  
people need to understand iul’s typically have 
about a 10 year to 15 year surrender charge but  
for the sake of argument let’s just talk about a 
10-year surrender period right so what happens is  
at the beginning of these policies and i know a 
lot of people out there right now have policies  
that are under 10 years old what happens is they 
have all these different levers that they move  
inside of these policies when you have a a policy 
that’s five years or less old you’re in the higher  
portion of the surrender period so even if you 
have cash value growing up in them uh you’re  
it’s not as liquid because it’s in the surrender 
period so the the amount that’s being credited  
from an indexing perspective is higher than you 
can actually have liquidity in accessibility to  
so when you think about that that’s the other 
thing where he’s going to go to next um actually  
is that this section right here no he’s talking 
safety there so that actually gets into the point  
of of the liquidity thing where he’s talking about 
after so i’m just gonna hop ahead there right now  
is that he talks about later that 
these are like the most liquid vehicles  
that exist but that’s just not accurate at all 
because when you design these the way that i’ve  
seen him design them um you’re not extremely 
liquid you’re you’re you’re you’re in fact i  
mean you you don’t have a lot of access to that 
capital and and what he’s talking about here with  
you know 100 000 in the market going up seven 
percent you’re not participating in all that 107  
that seven percent because think about it this way 
if i had a ten thousand dollar policy annually and  
then ten years from now i had put ten thousand 
dollars a year in and had a hundred thousand  
dollars if i’m participating at all seven percent 
of that then it’s it’s you would i would have you  
know more money and on a compounding basis i 
would have almost two hundred thousand dollars  
right because seven thousand compounding uh 
even in simple interest terms i’d have a hundred  
seventy thousand right so i’d have probably over 
two hundred thousand dollars in that scenario so  
in this in this situation you know when when you 
look at a properly structured iul you’re looking  
at year 10 if you have a one to two and a half 
percent internal rate of return annualized over  
that period of time that’s a really impressive 
thing so if you put a hundred thousand dollars in  
you know after all the surrender charges after 
everything comes into the in into the equation you  
take everything into consideration you’re talking 
about the fact that over a 10-year period you’re  
not even going to be beating inflation typically 
in one of these policies now not that i would  
have a problem with that because when you do with 
whole life in all fair comparison with whole life  
insurance it’s pretty similar um the the fees 
work differently the surrender charges you can  
design to have a lot more liquidity in a whole 
life policy that’s why i love whole life for  
entrepreneurs and for real estate investors and 
stuff of that nature and people of that sort  
um but the reason i don’t mind it with a 
whole with a whole life policy is because  
whole life has guarantees that equate 
it to more of a banking alternative  
index universal life has fees and non-guarantees 
that equate it to more of an investment  
alternative and when you compare the two why am 
i gonna go to get the results that i would get in  
a whole life policy after 10 years you know and 
and take on the risk of an investment portfolio  
which is ultimately what you have in you know 
with when you’re participating in this index  
no you don’t you don’t you don’t have the risk of 
losing 20 30 of your account value overnight but  
when these don’t perform the way that they’re 
illustrated and they don’t eat into that net  
amount at risk from a life insurance perspective 
as he talks about later your fees get higher and  
higher the cost of insurance they can’t increase 
your insurance tables most of the time anymore  
but as you get older the cost of your insurance 
does get more expensive right just look at the  
illustration that you were given and and ask for a 
cost of insurance breakdown if you haven’t already  
because it will show you that on an annual basis 
your cost of insurance does go up because you  
are getting older it’s like annual renewable 
term and so if the early stages of your policy  
don’t perform well or what he does is he likes 
to fund these things in like five year increments  
typically and tries to just really jam a lot of 
money in because it gets them more commission  
but then what happens is you’re not through the 
surrender period yet so after you’re done that  
fees and expenses eat into the the performance 
of the contract and and it goes from there now  
should you keep funding if you follow him 
and you do a strategy worst case scenario  
if you go that direction you should just keep 
funding the policy that way it doesn’t like blow  
up on itself but the bottom line is he’s this 
even in this book he talks about and it’s in  
the next section i’ll get into it but he talks 
about the fact that you know you you should you  
can fund these you can have these fully funded 
in five years and he presses on that and listen  
his i’ve dead the doug andrew exposed video i did 
talks about the lawsuit that literally and you can  
look in the complaint in the filing of the lawsuit 
24 000 people complained about the way that he  
structured policies and they ended up lapsing 
because he really leans on this five-year period  
of of of you know funding mechanism and that 
leads to a lot of problems so rate of return  
i just kind of touched on that is like yes rate 
of return is really important the goal is to earn  
a competitive rate of return that’s historically 
beaten inflation um you know it’s just not doing  
it in an eye in an iul after after you talk about 
the fees and the expenses and while you’re going  
through that surrender period my problem with 
this is that you don’t get through the surrender  
period for about a decade god only knows where 
the world’s going to be in a decade so uh and  
and once you get into this you are stuck like i 
i’ve i’ve talked to four or five people you know i  
can’t sell them anything people call me asking for 
for help with these things their policies are not  
performing the way they wanted them to be after 
three four years and the problem is they’re stuck
even if i could sell them anything i couldn’t 
in good faith say hey it’s the best thing for  
you to do to move it you either gotta take it 
on the chin and pay the surrender fees which  
these insurance companies know they’re gonna 
do like they know they got you just trapped  
when when they get you into these policies because 
three four five years once you put two years into  
this if then you realize you’re like oh my gosh 
if i’ve been paying twenty thousand dollars a  
year on this for two years i either basically have 
to light that that forty thousand dollars on fire  
or at least like thirty thousand of it maybe 
maybe twenty five thousand of it on fire  
or i have to just keep contributing and 
hopefully more and more will become liquid  
and and hopefully continues to do well and 
the market performs and the index performs and  
they don’t drop my cap rates and all these 
different variables that come into consideration  
hopefully that stuff doesn’t happen so it’s kind 
of crazy so uh liquidity safety rate of return tax  
advantage so the laser rating once again okay so 
then he goes through this chart um where he talks  
about um what he’s looking for i’m not going to 
get into that like because i don’t want to break  
down that’s his stuff whatever so at the end of 
the day um top five takeaways um that he looks  
for so number one the four fundamental the four 
fundamentals of prudent financial strategies are  
liquidity safety predictable rates of return and 
tax advantages i would add in there that control  
is one of the most important parts and you 
know that goes along with liquidity and by the  
way these are not the most liquid because of the 
surrender schedule that follows him the fact that  
you know he’s able to say this is is just to me 
is horrible now can you structure them to be more  
liquid yes you can there are ways to do it um but 
the thing is i’ve i’ve probably met two or three  
iul agents in my life that actually structure them 
where you can do special dumpings and not every  
company can do it will allow you to do special 
non-commissionable premiums that you can put in
but agents typically don’t do that because they 
got to make a living they make money by selling  
insurance and so to sell non-commissionable 
premiums goes against flies in the face of  
what they would do and what i would say is even 
if you can do that uh get your money in there  
in non-commissionable premium uh capacity 
it still doesn’t work out over the long run  
um as as good as you would look at as you 
would think it would because of the fact that  
you’re not in control a lot of the variables 
of a lot of the variables in the policy so  
safety i would agree safety is super important but 
once again these are not the most safe vehicles  
that upside potential downside protection if it 
were that good i talk about cash value lines of  
credit there are banks that go out and lend um 
lend money to whole life policyholders leveraging  
their cash value at four lines of credit and 
saying hey we’re gonna use your cash value in your  
whole life policy as collateral and we’re gonna 
give you a line of credit tied to that they won’t  
do that for index universal life insurance why 
because it’s not as safe it’s not safe at all  
and so um and they know that and so 
there’s a ton of risk and banks are smarter  
than your life insurance agent when it comes 
to managing risk like that and so if they’re  
not willing to do it like to me it’s just common 
sense predictable rates of return once again um  
it’s not predictable it’s it’s that that’s one of 
the biggest problems with this is that it’s far  
less predictable in fact than than they will ever 
tell you tax advantages yes there are great tax  
advantages this if you can happen to accumulate 
the cash that you want my biggest challenge with  
this overall philosophy what i’ve seen and i 
can’t i don’t know this is a bit conjecture on  
my point on my perspective right now but from what 
i’ve seen is they deal with a lot of people that  
are 55 plus dealing with the retirement iul’s 
you you know how i feel about them in general  
but using an iul for retirement planning when 
you’re 55 plus for income purposes is really bad  
i mean i think it’s horrible there are other 
vehicles that you can use because there’s going  
to be so many fees you’re during the surrender 
period and you’re not going to give your your  
policy enough time to even get any momentum going 
for you at all before you’re going to need to tap  
into it for retirement income and it’s going to 
end up blowing up in your face so i would say if  
you’re 55 and older and looking at one of these 
things totally steer clear of it uh liquidity is  
the ability to access your money when you need 
or want it i agree that is a great definition  
and these things because of the surrender fees and 
the surrender charges during the surrender period  
um are not as liquid as you’d think safety 
relates to your principle uh protecting your  
money from loss due to volatility in the market 
and uh the safety of your financial institution  
working with reliable companies that 
can weather economic storms yup that’s  
working with great companies is important um but 
that doesn’t mean your money’s safe because those  
companies the whole idea of iul is companies are 
shifting to selling more indexed universal life  
because it shifts the burden of risk when they 
have we’re selling whole life insurance all that  
risk is on the insurance company to meet those 
guarantees when they do iul’s look at the contract  
all the risk is shifted to you the policyholder 
they can change the fees the cap rates the  
internal expenses all these different things to 
make it so your policy doesn’t perform to protect  
the insurance company so the insurance company 
doesn’t go broke but you instead have your  
policy have problems in the process right when it 
comes to the rates of return you want to earn a  
competitive rate return that’s historically beaten 
inflation and ideally you want the rate to turn  
under taxpayer favorable circumstances i agree i 
agree uh ius should do this for you quite frankly  
if you structure them max cash value minimum death 
benefit um they will beat that but i would say if  
you are looking at an iul make sure you call them 
out and you say do not run this at more than four  
and a half percent if you run it at four and a 
half percent and you’re happy with what you see  
get it and and you’ll have some upside and you’ll 
at least be able to be comfortable and clear on  
what your what your realistic results are because 
once again that’s what the insurance company is  
getting in the general fund you it you cannot 
separate the performance long term in an iul from  
the general fund and think about common sense if 
an insurance company could get six percent for you  
using this strategy they would be doing it 
for themselves in in in today’s low interest  
rate environment but they can’t so uh take that 
into consideration uh tax advantage financial  
strategies help you avoid paying unnecessary 
taxes yup that’s true i talked about the taxes  
in the last chapter if you haven’t watched it go 
back watch chapter three um really good i actually  
agree i think he does a really good job quite 
frankly talking about a lot of the tax stuff um he  
takes these principles and essentially bastardizes 
them it’s it’s really uh it’s it’s horrible um  
but anyway that’s my breakdown of this section i 
still don’t get what laser fun stands for quite  
frankly i i don’t understand um but at the end 
of the day i guess that doesn’t really matter so  
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comment but yeah that’s it for today so have a  
blessed inspirational day and i look forward 
to seeing you on the next video take care

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