With funding life insurance for IBC, a little-know fact is that you can only buy so much.

Many people are already familiar with MEC (Modified Endowment Contract) limits that limit how much premium you can pay relative to the death benefit. But there is also a limit on how much total death benefit you can buy.

The insurance companies will only underwrite you for a maximum amount based on your income and/or net worth.

For example, if your lifetime income and/or net worth is $2M, the insurance company will not sell a $20M policy.

This creates yet another set of tradeoffs that need to be understood when designing a whole life insurance policy for The Infinite Banking Concept.

----

Episode Highlights:

0:00 Intro

0:43 Human Economic Value

2:50 Your Greatest Asset

6:38 Calculating Your Maximum Potential

7:44 Don't Forget About Your Family

9:34 Policy Components Determining Underwriting

12:08 As Income Rises

13:59 Human Life Value and Total Underwriting

17:10 The Modified Endowment Contract (MEC)

18:52 Understanding the Purpose of Life Insurance

25:26 So How Much Life Insurance Should You Have?

29:04 Effects on Retirement

30:16 Story of a Typical Financial Advisor

Real estate investors are familiar with the idea of a 1031 exchange that allows them to exchange like-for-like value from one real estate asset to another without paying capital gains tax. Similarly, you can exchange permanent life insurance polices using a 1035 exchange without creating a tax obligation.

While 1031 and 1035 exchanges are similar in spirit, because life insurance is an actuarial product, there are unique and significant tradeoffs that need to be considered when exchanging life insurance policies.

0:00 - Introduction

0:30 - Exchanging to get an "IBC Policy"

1:04 - What is a 1035 Exchange?

1:45 - Everything is a tradeoff

2:00 - How is a 1035 Exchange done?

5:09 - Can the existing advisor hold this up?

6:00 - Why would someone do a 1035 Exchange?

7:30 - Rule of thumb is to NOT to exchange a policy

8:23 - Analyzing the decision to exchange

12:35 - Misunderstandings and misconceptions of 1035 Exchanges

19:35 - You must be your own advocate. Is there any reason not to check back with your original Agent?

22:15 - There are many options in life insurance. Don't get caught up with random details justifying an exchange

23:00 - Nelson Nash Institute - A higher level of professionalism

23:55 - Sales commissions

26:35 - Good reasons to exchange (whole life to whole life)

29:33 - Exchanging from IUL/VUL to whole life (Reference Episode 37)

33:40 - Taking back control and guarantees with whole life insurance - A peaceful state of mind

35:05 - Becoming your own banker - there is only one true "permanent" life insurance and that's whole life

The Paid Up Additions (PUA) rider is one of the most well-known components of an "IBC-Style" whole life insurance policy.

Most people think PUA = Cash value. And while it can look this way in an illustration, that's not exactly true.

In this episode, we'll discuss the often misunderstood PUA rider, base-to-PUA premium ratios, and how designing policies with PUA as the primary (or only) focus can lead to significantly constrained and smaller policies.

Tune in and learn to love the base (premium)!

0:00 - Introduction

0:12 - Episode beginning

1:39 - What is a PUA rider?

3:01 - What does the PUA rider do for you?

6:33 - Designing a policy with a PUA rider

12:01 - The option to pay a premium for as long as possible

16:20 - “Short runway” policies

17:44 - PUA priorities

21:13 - Your options with paying premium

25:37 - One more thing about the death benefit

27:09 - Episode wrap-up

One of the biggest financial problem we all face comes straight from the book, Becoming Your Own Banker; Parkinson's Law.

"A luxury, once enjoyed, becomes a necessity." In financial parlance, this means expenses tend to rise along with our income.

Taxes, debt service, and lifestyle expenses always tend to rise at the same rate as our income, leaving only what's left over to save and grow.

And we've found this to be just as true for someone making $1M per year as it is for someone making $30k per year.

In this episode, we talk about this and many other problems The Infinite Banking Concept solves. By having access to capital and being able to finance our own purchases and investments in a strategic manner, we kill many proverbial birds with a single financial stone.

0:00 - Introduction

0:12 - Episode beginning

0:21 - “What problem are you trying to solve?

1:31 - The official problem

4:54 - The problem that we all have

9:36 - Protecting your family against the loss of income

15:19 - Passive income

21:39 - Thinking long range, protecting your family in the future

30:21 - Accelerating the payoff of debt

33:23 - Reducing of eliminating taxes

39:18 - What whole life can’t do

41:32 - Episode wrap-up

There is a ton of information about Infinite Banking out there and opinions about "correctly-designed" policies probably top the list.

We want to help you cut through the noise and help you understand what an "IBC Style" policy should be.

Like everything having to do with insurance, it's all about trade-offs. There is no secret, magical way to design a policy to give you the "best" cash value without some kind of corresponding tradeoff.

That being said, in this episode, we'll give you some guidelines on what to look out for (and what to avoid!) when looking at a whole life policy designed for IBC.

Link to EPISODE 37 (Why Universal Life is Not Right for IBC), mentioned in this episode.

0:00 - Introduction

0:11 - Episode beginning

3:44 - “What is an IBC policy?”

8:28 - The long-term perspective

12:01 - Thinking about your design

15:31 - “Design your policy like it’s your last one”

22:49 - Typical design components that you should look for

27:13 - Where the cash value really comes from

33:40 - Episode wrap-up, a couple of riders to consider

With current rising interest rates, many carriers have similarly raised the interest rates on policy loans. Many whole life policy owners are wondering how this will affect their practice of The Infinite Banking Concept ®.

In this episode we talk about policy loan rates and what to expect with whole life insurance dividends as interest rates rise.

As John Montoya tells us, “interest rates are relative”.

Episode Highlights

0:00 - Introduction

0:12 - Episode beginning

2:19 - Interest rates

5:23 - Interest rates are relative

10:00 - What it means to take the control of the banking function in your life

13:01 - Taking loans

19:01 - Make sure that you’re calculating life properly

23:28 - Episode wrap-up

Unlike your typical investing, whole life insurance must be looked at in a different light.

Life insurance is not an investment and it never has been. The good news is that, while life insurance is not an investment, what it actually is makes all of your investments perform even better.

Tune in to this one and get a better understanding of how life insurance can play an important part in your overall financial life.

0:00 - Introduction

0:15 - Episode overview

0:44 - “IBC is not an investment”

7:54 - Creating a financial system to replace the one you already have

13:12 - How you think, the “business owner mindset”

16:45 - John Perring’s mindset change, guarantees

20:37 - “Building on bedrock and not sand”

27:16 - The moral case for using life insurance

32:35 - Episode wrap-up

In his book, Becoming Your Own Banker, Nelson Nash did something very special to help readers gain a deeper understanding of the importance of capital formation.

Rather than discuss money directly, he talked about it through the example of a grocery store owner stocking cans of peas.

Nelson used food inventory because, just like money, it can be both sold and consumed.

In this episode, we discuss the Grocery Store Analogy as a foundation to understanding The Infinite Banking Concept®.

"Don't steal the peas!"

Link to episode: https://www.thefifthedition.com/ibc-grocery-store-analogy

0:00 - Introduction

0:12 - Episode beginning

1:16 - The grocery store analogy

3:03 - How does this relate to IBC?

8:18 - Being a part of what you consume

11:56 - Capital has to come from somewhere

13:55 - Being an honest dealer

18:26 - Episode wrap-up

Hosts John Perrings and John Montoya are dedicated to spreading the word about The Infinite Banking Concept so you can discover for yourself how you and your loved ones can benefit with a virtual streamlined process that will take you from IBC novice to sharing the strategy with friends and family... even the skeptics!

John Montoya is the founder of JLM Wealth Strategies, began his career in financial services in 1998 and is both an Authorized IBC® and Bank on Yourself® professional licensed nationwide.

John Perrings started StackedLife Financial Strategies after a 20-year career in the startup world of Silicon Valley where he specialized in data center real estate, finance, and construction. John is an Authorized Infinite Banking® professional and works nationwide.

https://www.thefifthedition.com

One of the most valuable traits an IBC practitioner can have is patience - you need to be able to “think long range”, as Nelson put it.

Which brings us to today’s topic: short pay and long pay policies.

This is a hotly debated topic amongst life insurance agents and there is a lot of confusing, contradictory advice out there. Today, we are going to weigh in on the matter and help explain these policy design approaches and how they pertain to the Infinite Banking Concept®.

Remember, everything in the insurance business is a tradeoff between cost and risk. There is no free lunch. So what are the tradeoffs when it comes to short-pay and long-pay policies for the purposes of deigning a whole life insurance policy for IBC?

This is super-important information so please give this one a listen!

0:00 - Introduction

0:12 - Episode beginning

2:55 - Some more context on “short pay”

7:27 - Why do people write short pay policies?

12:04 - Two other reasons that short pay policies have gotten more popular

16:07 - Another trade-off and long-term payments

18:06 - A policy becoming “paid up” and some more trade-offs

23:07 - Another trade-off, lower death benefit

24:24 - “Using your flexibility” and how it affects performance

27:29 - “The ability to go down”

29:45 - Measuring the performance of both

35:35 - The rule of thumb and where you would do a short pay

40:51 - The IBC mindset

43:19 - Episode wrap-up

One of the most common questions we get about starting the process of acquiring a whole life insurance policy for Infinite Banking® is how the application process works.

Applying for life insurance can be somewhat daunting but it doesn't have to be. With an experienced advisor it is possible to navigate the underwriting process with ease. Even if you have some pre-existing conditions.

Tune in to this episode and learn all about the application process for IBC whole life.