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Legal Reserve Insurance Report

The Last of the Great Tax Loopholes! Tax Deferred or Tax-Free?

Are Americans building for their future by saving money in Tax-Deferred Annuities and Qualified Plans such as IRAs? Or are they unwittingly providing the Federal Government with cash for the Government's Deficit Bail-Out Plan? Financial security - what a comforting thought! What a worthy goal! Anyone who has achieved a measure of financial security knows that it only comes as a result of hard work, sacrifice, and careful planning. In fact, over the past 40 or 50 years, some Americans have done such a good job that economists tell us that 70% of all the wealth in the United States is in the hands of citizens ages 55 and up! Still, there are many financial fears that older Americans face today.

For example:

  • Fear of outliving their money
  • Fear of not having enough money to leave to their children
  • Fear of illness and medical expenses

Thanks to congressional spending over the past several decades, our government seems to be falling further and further into debt. The government has already decided that older Americans should be penalized even further by taxing Social Security. Now we're hearing talk of cutting benefits in Medicare and Medicaid. It's no wonder so many Americans are becoming alarmed about the aggressive manner in which the federal government is attacking their life savings. It seems that anytime a government body lacks the ability or will to responsibly run matters; their answer is always the same … raise taxes!

Americans are investing in annuities by the trillions. Why? Because they're a great tax-sheltered CD alternative. Like CDs, they are liquid and subject to penalties. Unlike CDs, annuities avoid probate. The most attractive feature of annuities is the tax deferral, which ironically creates a great tax time bomb guaranteed to explode at some point in the future. The longer you hold it, the greater the explosion.

Defuse now or pay later. Now don't get me wrong, we like annuities. But if you can qualify, there's a better alternative for most people, especially if you have liquid assets or equity over $100,000 to invest. Since CDs were the first wave of financial planning, we can consider annuities the second wave.

Is Tax Deferral a Tax Break from the IRS, or Simply a Tax Time Bomb Set to Explode at Some Point in Your Future?

Here's a question for you. Taking into account our country's current economic condition, do you believe federal and state tax brackets are headed down or up? If you believe taxes are going to increase, you definitely think like the majority of people. In fact, if you were to ask 10 of your friends the same question, I think you would find that nine of them would agree with you. Here's your dilemma.

By tax deferring your money in a qualified plan such as an IRA/401k or a tax-deferred annuity, you are trading a known tax liability for an unknown - and probably higher - tax liability, a current tax bracket for tomorrow's unknown tax bracket. There's a myth that has been circulating for years. It goes like this: "You should defer your taxes so that when you retire and are earning less income, you will naturally be in a lower tax bracket and pay less tax.” It doesn't make too much sense, does it?

The only problem with this scenario is that it's an IRA salesperson's pipe dream! People who bought this "pay 'em later” idea in 1975, when IRAs first came out, are paying more taxes today on the money they saved, than if they had paid the taxes then and put the balance into other tax-sheltered plans.

You see, no matter what burdensome legislation congress imposes on its citizens, they always provide an escape hatch for themselves and their families. In addition, you can be sure that's true when it comes to their wallets!

The Good News Is That Federal Taxes Are Voluntary!

Now you're probably thinking I'm advising you not to pay your legal taxes. Not at all. I'm simply saying that you have a choice of how much you pay simply by how much you plan. If you take advantage of the proper tax reduction strategies, you may pay little or no taxes, like most of our politicians. On the other hand, you can do no planning and give the majority of your hard-earned money to the IRS, lawyers, and Uncle Sam.

A famous federal judge by the name of Judge Learned Hand issued this statement, "Anyone may so arrange his affairs that his tax shall be as low as possible. He is not bound to choose a pattern that will best pay the treasury. No one owes any public duty to pay more than the law allows!”

I think the judge very clearly states that it is one's duty to use the tax codes of the United States to legally pay the least tax possible. If you don't agree, you might want to stop reading right here, because we're about to discuss one of the truly great secrets hidden away in the IRS tax codes.

The IRA concept has been highly touted by financial institutions as the ultimate retirement savior. Although there are advantages, the disadvantages could far outweigh any advantages. Again, do you believe taxes will be lower or higher in the future?

The Last of the Great Tax Loopholes! Tax Advantaged Life Insurance

Yes, you heard me right; life insurance is without a doubt one of the greatest financial planning tools available to Americans today! It's the last tax shelter. Unfortunately, most people and insurance agents do not really understand how it works.

If you would rather leave your property and money to the IRS instead of your loved ones, you can keep on listening to those other sources.

The IRS in its code and congress in its wisdom have provided a little-known secret that allows you TAX-FREE income and income TAX-FREE death benefits. However, they are not going to advertise and tell you how to do it. You must find out on your own. Most financial and professional advisors don't even know how to implement these strategies correctly. Make sure your advisor has extensive experience in these specialized concepts or you may pay for their advice the rest of your life.

Tax-free is the third wave of financial planning - the ultimate in tax-free income and benefits.

Regardless of your preconceived notions about life insurance, you need to understand that we are talking about a brand new IRS approved concept, and just how valuable a proper tax-advantaged life policy can be. Not simply as a death benefit, but as a savings plan that stands above any other guaranteed plan on the market!

There is one type of life insurance policy and its companion contract that is rarely advertised. Although this tax-free product has been available for many years, few agents or consumers know anything about it. This tax-advantaged contract is designed for people who are not necessarily looking for life insurance as a death benefit but are looking for a safe, guaranteed place to put their life savings in order to receive a lifetime of tax-free income.

As long as you deposit payments for a certain number of years into a tax-qualified life insurance contract and follow IRS guidelines, you may use the loan provisions to withdraw money not reportable as income.

Imagine a Lifetime of Tax-Free Income!

A retirement plan's cash flow has only three parts:

  • Deposits
  • Accumulations
  • Distributions

The IRS says that one of the three parts of a retirement plan's cash flow must be taxed. You have the right to choose which one! This little known tax-free program makes sure that only the smallest part is taxed. Accordingly, all of the plan's accumulations grow tax deferred, and all of the distributions may be received tax-free!

Eliminate the unwanted partner, the (IRS) Federal Government!

  • No IRS approval needed
  • No IRS reports to file
  • No tax penalties for early withdrawal
  • Guarantee of both principal and interest
  • Competitive market interest rate
  • Present values grow tax deferred
  • Lifetime income and tax-free death benefit

The Real Story!

Life Insurance Companies and Banking Institutions

Say you have an appointment with Mr. Banker, the not-so-friendly banker at Big City Bank USA. After introducing yourself, you say, "Good day, Mr. Banker. Thanks for taking the time to speak with me today. I wish to purchase an asset of real property. The property I want to buy is valued at $1,000,000."

Here are the terms you say you would like to have for this purchase:

  • I want to purchase this property with no down payment other than the first monthly payment.
  • I also want to purchase the property without any credit check. I would like your decision based solely on my willingness to commit to level monthly payments.
  • I want your bank to guarantee that those payments will never increase.
  • I want a guarantee from the bank that the property will never decrease in value.
  • If your bank successfully invests my monthly payments, I want your bank to refund a portion of the earnings from those investments to me.
  • I want any growth in the value of the property I am buying to be tax-free.
  • If I decide later that I no longer wish to own this property, I want the bank to guarantee that the equity I have built up will be paid to me in cash or as a lifetime income that I cannot outlive and that the property will revert to the bank.
  • If I decide that I don't wish to make payments for some period of time, I want the bank to automatically make those payments for me as a loan against my equity and at a guaranteed rate of interest.
  • If I want to borrow against my equity for any reason, I want the bank to make the loan without question or qualification.
  • If I do borrow, I want the bank to only charge me the guaranteed rate we agree upon before signing the purchase application - even if the loan is requested years into the future - and I want the bank to accept any payments I make, even if they are less than enough to repay the loan.
  • If I die prematurely and before the property is fully paid for, I want the bank to pay my heirs the entire $1,000,000, less any loans I have taken, regardless of how many payments I have made - even if I die in the very first month after purchasing the property.
  • I want to be able to make extra payments without incurring any penalty or expense, and
  • I want the bank to keep track of them for me.
  • I want to pay the bank a few extra dollars each month so that if I get sick or hurt and can't work, the bank will make my payments for me.

"So, what do you think Mr. Banker," you ask, "do we have a deal?"

Mr. Banker responds, "That's too tall of an order. No way! No to everything. Such foolishness is wasting my time. My bank doesn't work that way."

For better results, a different approach is needed.

A conventional banker finds these terms ludicrous; however, if you were to apply those questions to a cash value life insurance contract from a legal reserve life insurance company, the answers would all be "Yes!"

It's true. You can purchase a $1,000,000 asset that is recognized as real property and requires only that you demonstrate a need and qualifies medically. This asset:

  • Guarantees a level monthly, quarterly, semi-annual, or annual premium payment
  • Lets you skip payments if you wish and automatically deducts the payments from your equity account
  • Guarantees a tax-free increase in equity each year
  • Commits to the payment of dividends when earnings exceed what was planned and expected
  • Allows you to take a loan against your equity at will, requiring no qualification and cheerfully delivering your check within a day or two
  • Guarantees the interest rate that you must pay when you borrow from your equity account
  • Allows you to repay loans against equity on your own terms
  • Provides variable payment amounts based on your ability and resources
  • Have irregular payment dates based on your needs, not theirs
  • Assures heirs' full value of the asset, less any outstanding loans, at your death
  • Promises to pay your premium if you get sick or hurt and can't work

Wouldn't a "bank" that offers this be valuable to your portfolio?

Cash value insurance policies from legal reserve life insurance companies have been delivering this kind of power and flexibility to Americans for more than 100 years. During the past 30 years or so, however, many in the financial services industry have ignored this incredible tool and even treated it with disdain.

Chasing returns became the mantra of the industry and look where it's gotten us. Take this opportunity to explore the advantages of cash value life insurance policies from legal reserve life insurance companies and how you can benefit from such a policy.

It's all about safety and peace of mind!

It's all about financial clout. Collectively, the insurance companies of North America own, control, or manage more assets than all of the banks and oil companies in the world combined. During the Great Depression, it was not the government that bailed out the banking industry, it was U.S. insurance companies. So when the new mega financial collapse hits the U.S., the insurance industry will be next to last to fold - second only to the government. And this is only true because the government has taxing power and of course, the ability to print more money. If the insurance industry were ever to collapse, we would look back at the Great Depression as a walk in the park in comparison.

You also have the legal reserve system that protects the investors (policyholders) of insurance companies by assuming the liabilities of a defunct member of the pool. The reserve pool operates in a straightforward manner. If an insurance company goes out of business, the remaining insurers must assume the liabilities and obligations of the now-defunct insurance company, which means zero risk for the investor (policyholder). Best of all, the reserves of each insurance company are government regulated to ensure they maintain all annuities and life insurance premiums in a general reserve account at all times to stay solvent and conduct new business.

The Voice of Reason: Commentary Lifestyle Financial Checkup...

An Economic "Perfect Storm 2016”

Systemic failure of the financial system becomes greater every day.

Our financial markets are ridiculously over-leveraged. Futures and derivatives markets are distorted. Prices for financial assets such as stocks, bonds, and real estate are artificially inflated. Commodities, manufacturing, and unemployment figures are bullish. The U.S. dollar is being propped up with historically low interest rates and massive money printing. The government is at risk of flooding the system with fiat currency, causing inflation. There's a risk of deflation as credit markets tighten and spending stops. Not to mention the $200 trillion in unfunded federal liabilities, and finally the risk of global emerging markets.

A change in any one of these markets could cause financial chaos, throwing the economy into financial panic. Put another way, America is headed for economic collapse! You have a choice to make.

You can disregard this warning or let the consequences follow.

Do nothing and pretend the markets will not collapse so there will be zero effect on your portfolio and retirement plans - or reposition your finances now. The choice is yours; however, the consequences have been determined.

There will come a day of reckoning. It's only a matter of time!

How much can you afford to lose?

You are invited to contact "The Money Doctor,” Mr. William F. Richardson, author, speaker, financial strategist, and retirement specialist for Citizens Financial Security and its affiliates. He is also the founder and director of The California Educational Institute of Wealth Enhancement. To learn more, please email William (at) This report is for educational informational purposes only. It is not designed or intended to offer tax, legal, investment advice, or an offer to sell. When making financial decisions, always seek the advice of a qualified professional.

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