MPI®, Maximum Premium Indexing, is a patent-pending cash value life insurance plan specifically designed as a max-funded, increasing death benefit contract. MPI® has a unique combination of features and benefits making it different from the traditional Indexed Universal Life plan you may be familiar with, including the exclusive MPI® Match Program. By using the available RELOC™ (Retirement Equity Line of Credit™) to increase the capital working for you, the MPI® Account can accelerate the Compound Interest growth potential and significantly increase retirement income.
Frequently Asked Questions
What is an MPI® Secured Compound Interest Account?
Do I have to manage my MPI® plan?
No! The only thing you need to do is to make sure to Pay Yourself First by contributing at least 10% of your income. Although 10% is the goal, Pay Yourself First can be any amount and Starting Today is the first and only decision you must make.
What is the RELOC?
Inside the MPI® plan, the insurance company offers a unique feature called the RELOC™ (Retirement Equity Line of Credit™). This feature allows the owner of the plan to access an open line of credit from the insurance company using the cash value as collateral, dollar for dollar, requiring no credit check, underwriting, loan officer review, or additional expense making the execution quick and easy. It does not appear on your credit report. The contract fixes the rate – typically between 4-6%. With this additional capital, the MPI® Match Program accelerates the Compound Interest growth up to 15% and significantly increases retirement income potential.
What is MPI® Match Program?
The MPI® Match Program is a feature exclusively available inside of the MPI® Secure Compound Interest Account™. You can qualify for the MPI® Match after two years making scheduled premiums (beginning on the anniversary of year three). T Through the RELOC™ feature of the contract, the additional capital is added to your premiums to enhance the amount of money working for you. With the additional money from the RELOC™ inside your MPI® plan, the Compound Interest potential is accelerated, producing enhanced retirement income.
Who handles the MPI® Match Process?
Our team includes MPI® Specialists who are licensed life insurance agents and understand how to maximize the MPI® Match process for you. When you qualify for the MPI® Match Program, typically around the 3rd year in the plan, you will meet with an MPI® Specialist and review the steps appropriate for your situation. Once this is confirmed, the rest of the process is automated with no further action on your part.
Can I use the RELOC for something besides additional compound interest?
Yes! The RELOC™ in your plan is always available (equal to your Cash Value) for any purpose at a low, fixed interest rate of around 4-6%. Because your full account value remains in your account, it will continue to earn interest based on the S&P 500 Index MPI® crediting system. Retirement income, emergency needs, vacations, and other life expenses will all be accessed through the RELOC™ inside your MPI® Secure Compound Interest Account™.
401k and IRA money are all considered qualified money. If you withdraw qualified money before age 59 ½, there will be a 10% penalty on the amount that you take out. In addition, if the money was pre-tax (traditional, not Roth) you will also owe ordinary income taxes on the amount you withdraw. The MPI® financial plan is not a qualified plan, so it does not qualify as a pre-tax rollover. MPI® plans are more like Roth IRAs/401ks because after-tax money goes into the plan and the money can be tax-free when you use it for income in retirement.
What is the rate of return inside the MPI® Plan?
Interest credited within the MPI® system is based upon a S&P 500 Index crediting system, which has averaged a secure rate of return of around 7% historically. Through the RELOC™ feature of the MPI® Match Program, additional money can be added to your account at a cost of around 4%. This additional capital can also earn the 7% interest average, creating a 3% increase in interest in your account annually. As the MPI® Secure Compound Interest Account™ matures with time, the rate of return can achieve up to 15% interest on average.
What is a "Max-funded, Increasing Death Benefit" Insurance contract?
“Max-funded” means that the maximum amount of your money is going to your retirement plan, while the least amount required by the IRS is used to buy life insurance. This structure minimizes fees/expenses while maximizing the Compounding.ed upon a S&P 500 Index crediting system, which has averaged a secure rate of return of around 7% historically. Through the RELOC™ feature of the MPI® Match Program, additional money can be added to your account at a cost of around 4%. This additional capital can also earn the 7% interest average, creating a 3% increase in interest in your account annually. As the MPI® Secure Compound Interest Account™ matures with time, the rate of return can achieve up to 15% interest on average.
Is MPI® safe? What are the risks?
There are risks inherent in any financial plan that relies on future projections of the market. In a typical investment account, you participate in all the growth potential, as well as all the loss potential. In an MPI® Plan, you can never receive a negative credit on your cash value (see 0% Floor FAQ. The only other risks within the MPI® system are related to costs of insurance and expenses, both of which the insurance company controls according to various factors including inflation, profitability needs, and life expectancy of the population. Their incentive is to keep costs as low as possible to ensure client success and loyalty.
What is the 0% floor?
The 0% floor is a guarantee from the insurance company that your cash value will never receive a negative credit, even if the S&P 500 Index is negative that year. If you did not have that guarantee and your investment S&P 500 Index had a rate of return of -20%, your account value would decrease by 20%. With the 0% floor, the credit to your account value is 0%, as guaranteed by the insurance company.
The 0% floor is the ultimate feature! Because the risk of market downturns is eliminated, you don’t have to follow the traditional risk pyramid, and reduce your rates of return as you get older. You can continue to earn stock market type rates of return throughout your entire life. This enables your compound growth to continue to accelerate throughout your life instead of slowing to a crawl in your later years. What does this mean for you? It means that your retirement income is maximized because of the continued higher growth, compared to the slower growth in a traditional retirement plan.
What are the fees?
There are three fees associated with the MPI® financial plan. They are premium charges, expense charges and cost of insurance (COI). The premium charge is the cost associated to qualify your money grow inside of MPI®. Your fees are calculated based on contributions amount only, not the entire account value like most financial plans. The expense charges cover the administrative costs such as: plan design, medical examination, and agent compensation. The total cost of these expenses is amortized over 10 years, thereafter settling at a flat fee of around $60 per year. The COI depends on your age and health rating, charged each year as one-year renewable term insurance.
Aren't Life Insurance contract fees really high?
The MPI® Secure Compound Interest Account™ is built on a fee schedule called “Front Loaded”. This means that fees are higher in the earlier years to get the plan set up and diminishes as the plan grows. Because the majority of the fees are paid earlier, compounding accelerates in future years and produces maximum retirement income when you need it the most. The majority of financial plans that rely on the 401(k) and IRA for income, are built on a Compounding Fee schedule where the fees are a percentage of the account value. So as the account grows, the fees increase exponentially, diminishing retirement income in later years.
What does Cash Value mean?
Cash value is the amount of money in your account that is available and liquid. The cash value is the amount available to use through the RELOC™ for life expenses, and the amount that determines your safe retirement income and how much you would receive if you canceled the plan. Cash value can be different than total account value, which is the amount of money in your account producing Compound Interest.
How can I access my Cash Value (for retirement income or other goals)?
Unlike traditional retirement plans, the MPI® Secure Compound Interest Account™ has no age restriction, early withdrawal penalty, or other conditions to use your cash value in your account. Cash Value is typically accessed through the RELOC as tax-free distributions. Surrender charges may limit the cash available in the early years. Our MPI® Specialists are available to discuss the best strategy to maximize available income.
Is retirement income tax free?
Yes! Because we intentionally used IRS Code Section 7702(a), which defines Life Insurance, when it comes time to withdraw retirement income from the Plan, it is 100% tax-free! Our MPI® Specialists will ensure we structure your income as required to ensure it is tax-free.
What is a Surrender Charge?
A Surrender Charge is an early cancellation fee. If you were to make the decision to cancel the contract early, the insurance company would impose the Surrender Charge on your account value. The charge diminishes each year until it expires after the 14 th year. The Surrender Charge has no effect on your Compound Interest growth or retirement income and only is realized upon early cancellation.
Is there an age limit?
The owner of an MPI® financial plan must be 18 years of age (in most states), though the ‘insured’ may be younger. For best results, the optimal duration of the plan should be 15-25 years to fully mature. This allows for the majority of the front-loaded costs to be eliminated and the compounding effects to have maximum impact. The MPI® Children’s Account is owned by the parents on behalf of the child and is one of the most popular plans as it can be used for retirement planning, college planning, down payment on a house, and many other life expenses.
Is there a limit on how much I can contribute to my plan each year?
Unlike traditional retirement plans, there is no stated limit on the amount that you can contribute to your plan each year. The only consideration is related to the amount of life insurance coverage that you can qualify for. In order for the plan to retain all the tax benefits of life insurance (section 7702(a) of the IRS code), a minimum amount of life insurance must be purchased relative to the total contribution, with the remainder as cash accumulation (also called your nest egg). as a unique advantage over a traditional IUL and other cash value life insurance products through the patent-pending process of maximizing the leverage/loan feature. Inside of MPI®, the cash value is used as collateral to take out a secure loan at around 4%, then contribute into the MPI® system making around 7% on average, or achieving arbitrage on leveraged money of around 3%. MPI® allows for an optimal scenario of “interest earned vs interest paid” with OPM (Other People’s Money).
Can I defer my taxes?
The contributions you make to your MPI® financial plan are not tax deductible because they are made with post-tax dollars, much like a Roth IRA. However, all your distributions and retirement income from the plan will be tax-free.
What do I do about my company 401k and my roll over IRA 401k?
Typically, you cannot withdraw money from a 401k with your current employer. Once you separate from employment or reach retirement age, you have the option to move that money wherever you choose. Your Plan Administrator can tell you if your Plan offers an in-service, non-hardship withdrawal.
Both 401k and IRA money are “qualified money”. If you withdraw qualified money before age 59 ½, there will be a 10% tax penalty on the amount that you take out. In addition, if the money was pre-tax (traditional, not Roth) you will also owe ordinary income tax on the amount you withdraw. The MPI® financial plan is not a qualified plan, so it does not qualify as a qualified rollover. MPI® plans are similar to a Roth accounts because after-tax money is used to fund the plan making withdrawals to fund retirement (or other goals) is tax free.
Can my spouse and I both have an MPI® Plan?
Having dual MPI® financial plans in each spouses’ name is the ideal solution. As an example, rather than contributing one amount into a single MPI® plan, it is more beneficial for mutual financial security to build two MPI® plans. Compound growth are identical if all premiums are contributed to one plan or divided up into two plans. We typically suggest a 70%-30% split weighting more life insurance on the higher wage earner. However, the goal is to max-fund both plans for optimal results, so if your circumstance would create two under-funded plans, we recommend max-funding one policy until circumstances permit an additional max-funded policy for the other spouse.
Does the policy cancel if I stop making premium payments?
We understand that hard time arise and sometimes premiums cannot be paid. MPI® plans “lapse” or become void when the cash value in the account reaches $0. If you stop making premium payments, the expenses in the plan will automatically be deducted from the cash value to keep the plan going. The size of the cash value and the rate of growth inside the account, will determine how long a plan can survive without payments. Typically in an MPI® plan, after a few years of committed premiums, the plan can self-fund. Always consult an MPI® Specialist immediately if you are unable to make a premium payment as there are many options to protect your MPI® Plan.
Can my policy be canceled if I get sick?
No. Once you have been approved for the policy, it cannot be canceled due to illness or changes in your health that develop after approval. The MPI® plan is a permanent life insurance policy and only you have the right to cancel it.
What happens if I get divorced?
No two divorce settlements are the same. Life insurance policies may be part of a qualified domestic relations order (QDRO). This may mean that one spouse is required to continue to make payments on behalf of the other spouse, or that the cash value of the policy be divided amongst the spouses. After a divorce, we recommend reviewing your beneficiary designations to ensure that the death benefit passes to the individual(s) you intend.
What if I’m not healthy enough to qualify for life insurance?
If you have a disqualifying, chronic health condition, we may be able to design a Plan using other healthy individuals in your circle as your surrogate, so you have the full opportunity to build wealth and the retirement plan you dreamed of inside of MPI®. These are case by case scenarios that require additional customization.
If you have a health issue that is out of your control to eliminate that is disqualifying you for health insurance, we may be able to identify other individuals who could be insured and still allow you to fund the plan for your income benefit. These are case by case scenarios that we can review with you individually.