Lifetime Economic Acceleration Process (LEAP) – A Review


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.  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.  What could the author possibly be trying to hide?  Oh, perhaps it’s the fact that the whole LEAP system is designed to get people to buy whole life insurance inappropriately.  (Actually, they don’t care if you buy it appropriately or inappropriately, as long as you buy it.)  Here’s a couple of quotes to give you a flavor for the book:

“Whole life is the king of all policies providing the most benefits.”

“When you take into account all the benefits of growth in guaranteed cash value, declared dividends, income tax savings, avoiding costly term-insurance premiums, and the high overall rate of return over a period of time, it is very difficult to find a savings or investment vehicle that has consistently returned more money than whole life insurance.”

“Have whole-life insurance death benefits equal to your net worth at retirement.”

It’s All About “Acceleration”

The LEAP system’s big point is that you need to “accelerate” your money.  That sounds pretty good, right?  Who wants their money to be moving slowly, especially when it’s supposed to be growing.  I want my money going 100 mph!  What do they mean by accelerate though?  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.  The author advocates that you invest in whole life insurance, then borrow back the proceeds to use for other purposes.  He also advocates that you use home equity money to buy life insurance.  Then you keep the money moving as fast as you can in and out of whole life insurance policies and mortgages until it is properly accelerated.  Why does this sound familiar?  Because you just read about it in February in my 5-day review of Missed Fortune.  It’s the same old crap in a different form.  Just like Bank on Yourself or Infinite Banking, it’s mostly a “financial system” that enables its proponents to sell more whole life insurance.

LEAP In A Nutshell

If the author really wanted the reader to understand what LEAP is, he would print this on the first page of a one page book: 1) Don’t pre-pay your mortgage because you can probably get a higher rate of return elsewhere, especially when you consider the benefits of tax-deductible mortgage interest. 2) Buy lots and lots of insurance.  Insure your life to “full economic value” (rather than doing some kind of analysis to figure out how much your family might need if you die) using whole life insurance.  Keep buying more and more throughout your life. 3) Don’t invest in tax-deferred retirement vehicles because it’s possible you’ll pay more taxes later (and might even pay at a higher tax rate.)  Instead, you can use this money to buy whole life insurance.

Why Compound Interest Sucks

A really interesting chapter is the one where the author explains how compound interest isn’t all it is cracked up to be.  He goes into a bizarre theory about the disadvantages and dangers of compounding.  You didn’t realize there were disadvantages, did you?  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.  Then he contradicts himself to say you should only use “compounding accounts” for 3-5 years.

Next he points out that with a tax-deferred retirement account you’ll owe more tax later after years of compounding than you would owe if you just paid the taxes now.  This is true, but irrelevant.  For example, if you contribute $10K now to a 401K, saving $3K in taxes, and then that $10K grows to $100K in retirement, even if you end up paying taxes at a lower rate in retirement (say 20% overall), you’ll owe $20K.  See!  More taxes!  The goal isn’t to pay the least amount of tax, of course, but to have the most money after-tax.  The other disadvantage of compound interest according to the author is that it doesn’t provide health benefits, disability benefits, death benefits, or asset protection.  Seriously.  And no, I can’t follow his extraordinary leap to believing that whole life insurance provides “health benefits” either.

The Worst Chapter In The Book

There is no better demonstration of the LEAP philosophy (“All Roads Lead To Whole Life”) than the chapter in the book about paying for college. I couldn’t believe someone had the gall to put this insanity into print.  The author cautions against using tax-advantaged college savings plans like 529s and ESAs because they have “the same drawbacks as other tax-advantaged plans,” like, you know, compound interest, tax-free growth, and tax-free withdrawals.  He then goes on to say that these plans “have only one use” and that tying your money up to pay for your kid’s college leads to many unspecified “lost opportunities and costs.” Then he suggests that instead of asking how you can pay for college, you should be asking how you can pay for college, get all your money back, and guarantee your children’s education even if you “become disabled or die, the market declines, interest rates drop, [you] get sued, or college costs skyrocket?…the money you pay for college is lost to you and you will never see it again for other uses….what is the point of having the earnings [grow] tax-free and then giving all the money to the college?”  Eventually, he gives you the solution to your college savings woes, which is…..wait for it……WHOLE LIFE INSURANCE! 

He then mentions all the benefits of using whole life insurance to pay for college (or better yet, taking out loans with the insurance policy as collateral), while failing to mention a single downside of this approach. It gets even better.  He finally admits that buying whole life insurance to pay for college might not be a good idea if your kid is already a teenager.  Actually, he doesn’t admit that, he just says that you might have to combine it with some other options like a home equity loan or a 529. 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.  It pales in comparison to the fact that most whole life policies don’t break even for a decade.  If there are no gains (premiums paid minus surrender value), there are no taxes due anyway no matter how much the cash value “grows.”

2) Disability protection – The assumption here, of course, is that you buy a disability rider on your whole life policy that pays the premiums if you cannot.  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.

3) Pre-mature death protection – Again, the obvious alternative (buying an inexpensive term life insurance policy) isn’t mentioned.

4) Possible creditor protection – If you want college funds protected from your creditors, 529s offer significant protection, although it varies by state (just like whole life insurance.)  One alternative, of course, being that you can actually use a UGMA 529, so the money isn’t yours anyway.  Irrevocable trusts or just a standard UGMA accounts are also options if credit protection of your 529 is a big concern for you.

5) Qualify for financial aid – There are lots of strategies to minimize the assets that count against you on a FAFSA, but the truth is that most financial aid isn’t free money, it’s loans.  529s and ESAs obviously do count against you in a way that life insurance does not, but if you have enough money to save a significant amount for college in a 529 or a whole life policy, your kid isn’t going to get any need-based grants or scholarships anyway, at least in a way that gives whole life insurance a significant benefit over more typical college savings accounts.

6) Convert term-life insurance costs – Uhhh….yes, if you have a huge whole life policy you don’t need a huge term life policy so you can save those costs.  Never mind that the insurance component of a whole life policy is more expensive than a term policy due to less transparency and competition in the market.

7) Liquidity without penalty – What exactly is the penalty of liquidating a 529, ESA, savings bonds etc for college costs?  There is none.  It’s a straw man argument.  How about liquidity without paying interest?  That’s something you get out of a 529 that you don’t get out of a whole life policy unless you cancel the policy, which comes with its own tax consequences not found in a 529.

8) No stock-market losses – No stock market gains either.  When the expected long-term return (and I’m talking 3 decades plus) for a whole life policy is 2-5% a year perhaps one ought to be more concerned about not getting stock market gains than enduring stock market losses.

9) No income taxes – Again, what income taxes do you pay on 529, ESA, and savings bond withdrawals used for college?  None.  It’s another straw man.

10) Peace of mind – Against what?  Knowing you won’t have enough to pay for college due to the high costs of the whole life policy and the low returns available through it, especially over periods of time that most people use to save for college (for instance, 18 years?) If you’re so scared of the market that you don’t want your college savings in it, buy savings bonds or just get the bond fund in your 529.  If you’re scared you’ll die or become disabled, buy a term life or a disability policy to cover those costs.

11) Elimination of lost-opportunity cost – There are lost opportunity costs no matter what you spend your money on.  If you buy a whole life policy, you can’t fund a 529.  If you save for college, you can’t buy a boat.  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.  The truth is it is growing slower if you borrow the money out in a direct recognition policy, but even if you get a non-direct recognition policy you still have to pay the loan back with interest (or the interest will be taken out of your return.)

12) Enhanced retirement income – While it is true that you can borrow from your whole life policy to fund your retirement, there are far better ways to pay for retirement.  Permanent life insurance is best used to cover a need for a permanent death benefit.

13) Estate planning.  Unless you have a very illiquid (think family farm or small business) or very large ($5M single, $10M married, indexed to inflation) estate there are no estate planning benefits with permanent life insurance.

What a contrived list of benefits!  Using whole life insurance as a college savings vehicle just isn’t very smart no matter how much spin you put on it.


LEAP is a system designed to help agents sell you whole life insurance, not a way for you to reach greater wealth.  It exists to sell software ($2500 a pop) and training courses ($750 each) to financial planners so they in turn can get you to buy whole life policies.  It is heavily used by Guardian insurance agents you may be meeting with to buy disability insurance.  If you’re already involved in the LEAP System or considering getting involved, do yourself a favor and spend a few bucks to get insurance expert Joseph Belth’s articles about it.  It’ll be $20 well spent.  The LEAP System, like most others that mix insurance and investing, is a product to steer clear of.


Lifetime Economic Acceleration Process (LEAP) – A Review — 21 Comments

  1. Keep in mind that many of these insurance companies have similar programs with different names. For instance Guardian likes to use one called Living Balance. Its the same garbage. Its all designed to get you to think you should purchase insurance products while not telling you the full truth (that you can do better). It isnt by chance that none of these books nor any of the these programs list insurance in the name. That should tell you something right there. I find it funny that the insurance people are always mad that permanent insurance gets a bad rap but dont realize the reason it has such a bad rap is because of how they sell it and they seem to do nothing to change that.

    WCI you were too easy on them in this article. For instance a typically vanilla whole life policy will take a lot longer for premiums to equal CSV.

    If one wants an example of some of the problems of using whole life to pay for things like college, then look no further than this thread at bogleheads from last week.
    It can be very risky taking loans against a policy early on.

  2. This is the exact book that my Guardian agent sent me years ago when I got talked into opening my whole life insurance plan when I was in my 20’s. The agent in fact quoted this book and “explained” how a 401k/403b plan with dollar-for-dollar matching would be a worse financial decision than whole life. I have since surrendered the policy after a few years at a loss, after I realized how bad it was. Whole life insurance was the WORST financial mistake I have made in my life. I’m thankful I I learned this financial lesson early in life.

    • I am at a loss for words. The WORST financial mistake you made was surrendering your whole life policy. That is going to cost you at least a couple hundred thousand dollars over your lifetime. You will get another whole life policy, and when you do, you will regret that you cancelled your policy at such a young and insurable age. By then you would have had enough cash value that the dividends would have been paying the premium and your step-ups would be exponential. Being a money manager myself I disagree with some of the author’s illustrations. However, the underlying economic principles of money holds much value. For a retail investor like yourself I would strongly encourage you to reconsider what you think are good financial decisions.

      • Really? The WORST mistake? Buying or selling a whole life policy is unlikely to be the worst or the best financial decision anyone ever makes. If the worst thing someone does is surrender (or purchase) whole life insurance, they’re going to be just fine.

        I’m surprised you can put a dollar figure on how much that is “going to cost him” over his lifetime given that he didn’t mention how large his policy was. Anyone who thinks passing up a dollar for dollar match in a 401K in order to buy whole life insurance is a good idea is simply mistaken, and likely sells whole life insurance for a living.

    • The best growth of the whole life policy occurs after the 12th year. I’m not clear on how your policy was structured for cash accumulation, but I agree with Chris, surrendering was the worst thing you could do.

      You would have been much better off borrowing the money from the policy if you needed cash. At least the value would still be compounding.

  3. The thirteen benefits listed, while possible options for Life Insurance, should be considered only after a thorough retirement plan analysis.

    Using life insurance as an accumulation/distribution option for retirement income may make sense. One needs to know the effective tax rate during retirement. You have to know will taxes out-weight the cost of owner the policy or vice versa. The tax-deferred accumulations with non-tax withdrawals/loans and a no lapse design may be one method to increase income for retirement. The most effective design is to use the least amount of life insurance to maximize accumulations.

    A triple A rated company is needed with a proven dividend scale for long term security. When properly designed the surrender value will equal or be very close to premiums paid after 10 years. The caveats – age – do not plan to implement this strategy with someone older than 52. You won’t have the time to compound the accumulated cash value. Health – the client needs to have minimal health issues. The cost of insurance component will be too expensive for someone with health issues.

    If someone needs money for college, this plan is not for them. You don’t mortgage the house or drop your 401k for this technique. Is it for everyone? Absolutely not.

    The client needs to have the cash flow to pay premiums over the number of years designed. The design needs to be suitable and flexible at the same time. An experienced properly trained agent knows how to help the client decide if this strategy makes sense.

  4. I recently had a similar experience with a guardian agent. A wealth management advisor (another person who wants my money) says LEAP stands for Let Every Agent Prosper

  5. Like all products, Whole Life Insurance has it’s benefits, it shouldn’t be an end all or be all. Many of the posts I read and the LEAP book and LEAP process content are abusive and not in full context. I was taught and used the LEAP process as an agent, and although I am not a LEAP agent now I do not think all of the LEAP content is bad. I do believe that many who use LEAP and promote Whole Life insurance only are doing a great disfavor to their clients. The LEAP process does allow you to plug in all your financial decisions and see how things will roll out into the future should things remain exactly the same in the financial plan. Of course that is not the intent of any good financial plan-to leave everything exactly how it is. I do believe all financial advisors and insurance agents believe in what they sell, some for their own benefit and some for their clients benefit as they benefit from a sale. No one who is selling insurance or financial products does so for no commission. So please state the fact that all products have up sides and down sides to any client, depending on the clients financial condition, their ability to stay committed to any product and financial plan. To increase their own knowledge of products they want to use and how they work. Education is the key-this is what a “Good to Great” financial planner or insurance salesperson should be. Get off the high horse and get your clients informed, be an honest part of their financial goals. Lay all the different products at their feet and guide them with integrity. What works for some doesn’t work for all. I have some whole life, some term, a Roth IRA and a 401k, as well as a fixed annuity. Be kind, be honest, have integrity.

      • How? And dont forget, EVERYONE is selling something. Even doctors get paid on scripts they write. So I shouldn’t see one if he gets paid by the pharma company?

            • Most of those payment fees are speaker fees, not prescribing fees, although it could be argued they are related. How much do you expect to get paid for speaking? It’s not unreasonable to pay a doc a couple grand to give a talk.

              You’ll notice my name isn’t on the list at all, but if you divided up all the payments by all the doctors, it doesn’t come out to much. For example, the biggest spender, spent $40 Million. Divided by a million docs and that comes out to $40 a doc. Given the average income of $200K, $40 isn’t exactly a huge chunk. Even if only 1% of docs are getting these payments, that’s only $4000 per doc, a fair price for a speaking engagement or two in my view.

              Medicine has far bigger problems than this if you wish to criticize medicine. But since this site isn’t about medicine, any further comments on this topic will be deleted as “off-topic.”

              • Here’s a case study on a whole life policy. My father in law wrote it on me in 1985. Single premium whole life. $30,000 one time dump in and it provided a $115,000 death benefit. 30 years later, we never put another penny in. The cash value is over $136,000 and the death benefit is $227,000. We have borrowed from it twice: 2003 to pay half the cost of a car ($10,000 loan from the policy which we paid back in 3 years) and 2007 to pay half the cost of a kitchen remodel ($21,000 that we paid back to the policy in 2 years). It continues to grow at an average rate of 5.5 % a year, tax deferred and tax free upon withdrawal, as long as we don’t collapse the policy. Would I say it’s the best financial decision we ever made? Yes, I would. Tell me what would have given me more bang for my buck, if you disagree.

                • Correct me if I’m wrong, but a “single premium whole life policy” is a MEC, no? Were the rules different in 1985? That should mean all loan proceeds are fully taxable.

                  But ignoring that issue, $30K invested 30 years ago that grew to $136K is an annualized return of 5.17%. While I’ll be the first to confess that isn’t bad, it certainly pales in comparison to the alternatives available in 1985. If your dad had put it into Vanguard’s 500 return, your annualized return from 1985 to 2013 would have been over 11% per year. You could also buy a 30 year treasury yielding more than 11% that year. Sure, you’d have to reinvest the proceeds each year at lower and lower rates, but I’m sure you’d have still done much better than 5% on average. I don’t know if zeros were available back then, but you could avoid the reinvestment risk if you’d bought one of those.

                  I don’t doubt it is now growing at ~ 5.5% a year, however. That may very well be the best financial decision you’ve ever made, I don’t know. It’s the only one I know about so far.

                  At any rate, you probably don’t want to cancel the policy now, and if you’re happy with its performance, then I’m happy for you.

                  On a related note, I had a reader write in about a whole life policy he bought around that same time. I think his annualized return was around 7%. I’m not sure why his performed so much better than yours, perhaps the borrowing you did that I wasn’t able to factor in without more information.

                  As I’ve mentioned to others, if you’re good with long term returns in the 3-4% range (getting 5% seems less likely given our low interest rate environment), then buying whole life policies available today may be a great option for you. However, I only save 20-30% of my income for retirement so I can’t reach my goals with such a low return. I need my money to work as hard as I do. Perhaps you make more, save more, plan to work longer, or plan to spend less in retirement, I don’t know.

                  • It was not until 1988 that Congress passed laws enacting MEC. I had a single prrmium policy purchased for me in 1987 after I was born that I took a loan against to pay for a fair amount of a year of med school. I am still unsure if I will pay that loan back eventually but wanted to leave myself the option.

  6. Thank you for sharing this content. I am new to the financial services industry, and was approached by a “Professional Poacher”, touting this LEAP program as the end-all-be-all program. I have to admit, as a Noob to the industry, it was very appealing. I can certainly see how it would sell a lot more insurance to the uneducated consumer, willing to trust blindly. Looking forward to seeing more of your reviews. Thanks!

    • I posted a reply about my own whole life policy in the previous thread. You might be interested in taking a look to see how whole life can work. It’s not about blind trust, as my results will testify.

  7. [Numerous ad hominem attacks deleted. In essence, the commenter, who is now blocked from the site due to his rude and inappropriate remarks, feels that a doctor shouldn’t have a financial website. Thanks for stopping by to leave that lengthy comment that no one will ever read.]

  8. Critics can talk all they want about how whole life sucks, it’s a bad investment, bluh, bluh, bluh, but rarely talk about facts. First fact- how other financial institutions use permanent life insurance- Particularly banks- to reward executives and most importantly cover their own risk. Second fact, blended whole life cash generating properties are well documented in the business industry ( J.C Penny, Walt Disney, Mc Donald’s, Pampered Chef, Vice President Biden, Senator John Mcclain) Fact three, its’ false that all life insurance policies operate the same way… Design of policy makes ALL THE Difference. Fact Four- blended whole life outperforms fixed accounts ( bank cds, government bonds, saving accounts, etc) Fact Five- Life Settlement industry which are buying seniors with 100,000 or more life insurance at a profit for them and the owner. More than cash surrender value, more than the premiums they put in. I’m tired of reading people’s opinions. Come with facts. I can.

    • Oh fun! Another insurance agent has found my website and left comments on multiple posts on whole life written over 4 years about how little I know about it, how much he does, and how awesome it is. Look, if you love whole life and think it’s a great deal, buy as much of it as you can. If you think you’re doing people a favor by selling it to them, then sell them as much as you like. No skin off my nose. I don’t make any more or less money if people buy or don’t buy it. But realize that rehashing these arguments, which have all been had at least a dozen times before in the comments section usually leads to the agent typing personal attacks into the computer and eventually being banned from the site.

      The argument about financial institutions, rich people, and businesses owning whole life was covered in the Debunking The Myths of Whole Life series under myths # 13, 20, and 21:

      I agree that design of policy makes a big difference. Too bad the vast majority of whole life policies sold seem designed to maximize the seller’s commission. Perhaps that’s why 80%+ of them are surrendered prior to death.

      Let’s talk about your last two “facts” and how they’re misleading. Maybe they’ll make it into the “next Myths.”

      # 4 “Whole life outperforms fixed accounts.”

      That’s probably true if you hold it for 5 or 6 decades. However, most whole life policies don’t break even for 5-15 years. Since fixed accounts pay more than “breaking even” there is a certain period of time where fixed accounts outperform whole life. That might only be 10 years if you’re comparing a particularly well designed whole life policy to a particularly low-paying fixed account, but it certainly exists. However, if you’re going to tie your money up for 50+ years, I’m not sure a fixed account is the ideal comparison. If I wasn’t going to touch money for decades or more, I’d be investing it in something with a higher expected return, like stocks or real estate. But if you have such a high income and/or savings rate that you can afford to retire on the measly returns provided by whole life, then feel free to invest in it for the long run. Most investors, however, haven’t actually run the numbers to see what that means.

      # 5 – “The Life Settlement Industry pays seniors more than their cash surrender value and more than the premiums they put in.”

      This is true. If they weren’t paying more than the cash surrender value, the owner would just surrender it. Duh. The fact that they pay more than the premiums put in means very little. Let’s say we’ve got someone who has paid $10K a year for 30 years for a whole life policy. It’s reasonable to assume this thing has made perhaps 3% a year (not guaranteed, but certainly reasonable) overall over that time period assuming it was reasonably well designed. So the cash surrender value is $490K. Whatever the death benefit is, let’s assume the viatical purchaser figures if he can get the policy for $500K that he will have an expected 10% return on it given this guy’s health. So he offers $500K. Is that more money than the cash surrender value? Yes. Is that more than the premiums paid ($300K)? Sure. But what is the return to the insured? Well, it’s 3.12%. Nowhere near the 10% the viatical purchaser expects to get. Hardly a reason to buy whole life. In fact, the right move or this guy is probably to hold on to his policy rather than sell it.

      Thanks for stopping by.

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