https://www.youtube.com/watch?v=ATfbEBmtzjE

What is the perfect funding ratio between base premium and the paid-up additions rider (PUAs)?  You may be surprised to discover that this question comes up often in our one-on-one conversations with people who want to implement the Infinite Banking Concept personally.  And since whole life policy design is important enough to discuss one-on-one, it’s relevant enough to dedicate some airtime to answering this question upfront.

In this article, we dig into the more technical design of a whole life insurance policy.  We’ll have a candid conversation about why we design whole life policies the way we do, specifically regarding base and paid-up additions premium.

Instead of looking at it so closely that your eyes start crossing, you’ll zoom out. Then you'll get the best big-picture and long-term perspective.

If you’re in the consideration stage, this will matter a lot to you.  If you’re still doing research, it will direct your attention to what to think about.

You won’t have to merely trust someone else to lead you to your goal.  You’ll be more in control of the process of becoming a Infinite Banking user because you’ll be empowered with understanding. 

Table of contentsDoes It Work vs. How It WorksBase Premium vs. Paid-Up AdditionsWhere Does Whole Life Insurance Fit into the Cash Flow System?Privatized Banking Introductory ResourcesThe Art and Science of Policy DesignWhat Are Paid-Up Additions (PUA)?Base vs. Paid-Up Addition PremiumTo Understand Long-Term Cash Value Growth, Follow the DividendsDividend Rates Over TimeDifferences Between Mutual Insurance CompaniesDividend Application to Base vs. Paid-Up AdditionsPUA Rider and Policy Design ConsiderationsPremium Payment FlexibilityPolicy UtilizationThe Big Shift: Policy Performance More Important Than Policy DesignStart Your Whole Life Policy Today

Does It Work vs. How It Works

You may be more of a conceptual person, like me.  For instance, I want to know the car is safe, reliable, and drives well. I don’t need to know anything about what happens under the hood as long as it serves me well.  Same with a computer.  I don’t want to know anything about circuit boards and coding.  I just need to be able to use it to write, record, store photos and videos, and use the internet. 

If you’re the person who wants to look under the hood and understand how everything works, this episode is for you. This is more about how high cash value whole life policy design works, rather than what it does.    

Whole life insurance policy design is like the levers on a soundboard.  It’s nuanced and technical, a dance between art and science. 

However, whatever your style, it helps to keep the main point in focus. More than understanding the mechanics and adjustments of how it works, you should pay close attention to the resulting performance.  This is like turning your attention from the controls on the soundboard to the quality of the sound produced. The outcome is what matters. Your ultimate goal is to deliver a moving and transformative ambiance and experience for the person listening to the music.

However, if you don’t understand the concept, the details don’t matter.  And usually, if you do understand the concept, the details don’t matter. 

Base Premium vs. Paid-Up Additions

You could think of base and paid-up additions premium as the two opposite ends of a sliding scale. On one side, you could have a life insurance policy with all or mostly base premium. At the other end, you could have a whole life insurance policy with mostly paid-up additions rider premium payments (10/90 Premium Split & Blended Term PUA Rider Risks, with Rodney Mogen). 

Whole life insurance policies can be designed with all base and no paid-up Additions rider (PUA), and on the other end of the spectrum, they may have 10% base and 90% paid-up additions. And you'll also see just about everything in between.