Let’s look at his 13 benefits of using whole life insurance to pay for college: 1) Tax-deferral – Where’s the tax deferral?There is none other than the very minor effect of the cash value not being taxed as it grows.If you buy a whole life policy, you can’t fund a 529. There’s always lost opportunity cost and you don’t get it back by using whole life instead of a more traditional instrument.A whole life salesman likes to say that the policy cash value is still growing even though you borrowed money out of the policy.I’m able to see the good in a lot of “financial systems,” but this one is so bad it’s difficult to find any redeeming value in it at all.An Introduction To The System The book really serves as nothing more than an introduction to the LEAP system, effectively described to me by a former agent/salesman as “All Roads Lead To Whole Life.” After getting a grip on what LEAP is, I found it pretty funny the word “insurance” doesn’t appear until page 44/142, where the book attempts to get the reader to think of permanent life insurance as similar to a Roth IRA. Oh, perhaps it’s the fact that the whole LEAP system is designed to get people to buy whole life insurance inappropriately. The book explains “each dollar must be used for multiple purposes” and that you should “use the cash-flow-of-money system that moves your money from one asset to another to gain a greater rate of return, more benefits, and tax savings.” If it were written in plain English, it would clearly state (probably before page 44) that to accelerate means to leverage.
He separates the infamous compound-interest-demonstrating “mountain chart” into 3 phases- accumulation, growth and “take-off” and attempts to get the reader to believe that compound interest somehow works differently the first 10 years than in years 20-30 and complains that this is somehow a dangerous situation and compound interest is only helpful after decades.
In yet another way to mix insurance and investing (rarely if ever a good idea), I was recently mailed a copy of the book Lifetime Economic Acceleration Process by Robert Castiglione which introduces the reader to the “LEAP” system.
I recommend you don’t buy it and I certainly recommend avoiding any adviser using this system.
Of course, once you borrow the money out of the policy (or take out another loan with the policy as collateral) the disability rider doesn’t pay that loan back.
He also fails to mention the obvious alternative strategy – buying disability insurance.