On a recent episode of 60 Minutes, the interviewer talked with Bill Koch about a widespread scam in the industry of “fine wine”. Mr. Koch is a collector of many things, including rare and valuable bottles of wine. He began the interview by talking about purchasing four bottles of wine allegedly once owned by Thomas Jefferson. The price tag was $100,000 for each bottle.
After the purchase, Mr. Koch decided to do a little research on the bottles to get some more details, only to find that they were definitely not connected to Thomas Jefferson. It’s possible that this research could have been done before making the purchase, but that probably would not have led to this fascinating 60 Minutes piece. Silver lining.
The interview went on to reveal several well-known dealers in rare and valuable bottles were actually faking everything. One guy combined different types of wines into vintage-looking bottles and sold them to high-end clients, while another created fantastical stories about where the bottles came from to inflate the price (similar to the Jefferson bottles).
Most of us don’t run the same circles as Bill Koch, so it may be tempting to write this off as a “problem” of the super-rich. Who do you know that’s going to spend $400,000 (in one shot!) on wine, right? Mr. Koch discovered through his investigation that there are quite a few bad apples in the wine industry. He also realized that this has been going on for some time now, but nobody talks about it. The sellers obviously aren’t going to say anything, the auction houses keep quiet to both save face and continue to earn their commissions, and the buyers simply try to re-sell the bottles and get their money back if they discover a fake.
This reminded me of a popular product in the life insurance industry called Universal Life (UL), along with sister products Indexed Universal Life (IUL) and Variable Universal Life (VUL). People have been promised the benefits of whole life insurance while reaping the gains of the stock market and being protected from loss. Sadly, some people who have heard of The Perpetual Wealth Code have been led to believe these types of policies would work even better than Participating Whole Life Insurance (PWLI). Kind of like putting two-buck-chuck from Trader Joes in a forged Thomas Jefferson bottle. PWLI policies are contracts where both the cash value and death benefit grow guaranteed over time. UL policies not only do not have those guarantees, the cash value and death benefit will be reduced to zero over time. It’s part of the design of the product. Unfortunately, by the time the buyers realize this, it can be tough to recover the money they believed they were saving. It also may be too late to purchase needed insurance on their lives, so it’s a double whammy.
It’s not necessary to use a life insurance policy when practicing The Perpetual Wealth Code, but Participating Whole Life Insurance is the gold standard when it comes to where you should store your cash. Be sure to reach out with questions on how to implement this process in your life and business.
And if someone is presenting you with a Universal Life policy, ask them about the guarantees. Then ask them how many UL policies they own themselves. The answer will be zero.