The Money Advantage® Podcast | Infinite Banking Concept & Family Banking

By Bruce Wehner & Rachel Marshall | Family Banking GuidesBusiness Entrepreneurship Education Self-Improvement Investing

The Money Advantage® Podcast | Infinite Banking Concept & Family Banking episodes

January 23, 2023 Seven Deadly Economic Sins, with James Otteson
You have heard of the Seven Deadly Sins: pride, greed, lust, envy, gluttony, wrath, and sloth. Each is a natural human weakness that impedes happiness. In addition to these vices, however, there are economic sins as well. And they, too, wreak havoc on our lives and in society. They can seem intuitively compelling, yet they lead to waste, loss, and forgone prosperity. James Otteson, the John T. Ryan Professor of Business Ethics at the University of Notre Dame, is the author of Seven Deadly Economic Sins.
https://www.youtube.com/watch?v=FxZ8_rxEbyI
In this thoughtful and compelling book, James Otteson tells the story of seven central economic fallacies. He explains why believing in these fallacies leads to mistakes and loss, and how to avoid costly errors. This, ultimately, enables us to live in peace and prosperity.
Today, on the podcast, we discuss:
What economists agree about
Why wealth creation is positive-sum, not zero-sum
How market economies have enabled more prosperity than any other system of economics
Why business can be moral and honorable
If you want a conversation about economics, philosophy, and how nations prosper… tune in now!
Table of contentsFrom Philosophy to EconomicsTeaching Business EthicsWho is James Otteson’s Seven Deadly Economic Sins For? Is Wealth a Zero Sum?The Morality of BusinessAbout James OttesonOtteson at Notre DameBook A Strategy Call
From Philosophy to Economics
In the blink of an eye, James Otteson found his path changed from medicine to philosophy, thanks to a required college course.
[7:40] “I thought if you went to college, you should either become a medical doctor or a lawyer. I thought those were the two things you became. So I was going to be a medical doctor, and I just happened to take a course that I was required to take, that was taught by a Classics professor… It led me into the great books program at Notre Dame.”
He notes that when he was in grad school in Chicago, one of his philosophical heroes was David Hume. In particular, he wanted to write his thesis on Hume’s moral theory. His research eventually led him to Adam Smith and his book, The Theory of Moral Sentiments, which was a pivotal moment in Otteson’s career and became the new subject of his dissertation. What he discovered was that very few people had really written on or responded to Smith’s book, and Otteson viewed it as an untapped well. It was Smith's ideology on morals that sparked Otteson's initial interest in the economy and politics.
Teaching Business Ethics
After teaching courses on the history of economic thought for some time, Otteson was asked to teach a course on business ethics. When working on the course and how he would approach it, Otteson learned there was very little consensus on how a business ethics course ought to go.
[11:41] “I thought it might be more interesting and maybe more productive, if instead of just looking at all the ways that business could go wrong, instead turning it around a little bit and asking: “Is there some kind of moral purpose that a life in business could actually serve?”
By reframing the class slightly, he could have students think through whether it is possible to be fully engaged in a business and also be a virtuous person.
Who is James Otteson’s Seven Deadly Economic Sins For?
James Otteson’s research heavily influenced his latest book, Seven Deadly Economic Sins. The book was written with an intelligent audience in mind, specifically, those who are not economists yet are interested in working well within the existing economy.
[14:10] “We all have our opinions about politics. But we also, many of us, have very strong opinions about economic matters even though, curiously, many of us have not studied economics.”
So while everyone may have an opinion about something like minimum wage, not everyone has read the academic literature on the topic. And in fairness, as Otteson shares, when you open an academic journal it’s full of equations that require technical knowledge. And even when you understand them, many economists disagree on how certain principles and equations can best apply to real life. It’s tough to break into, and tough to know who to listen to.
Otteson wrote Seven Deadly Economic Sins with that in mind. It’s written for people who have an interest in understanding how economic principles affect real life and inform decisions. And even though economists disagree on many things, there are fundamental principles that basically every economist agrees on.
Is Wealth a Zero Sum?
The first chapter in Seven Deadly Sins is about the belief that wealth is a zero-sum game. In order for this to be true, that would mean that when someone wins, someone is losing at a proportionate level. Therefore, when someone amasses a fortune, there are people who are being “kept” from wealth. And unfortunately, this is an incredibly pervasive myth.
One reason it may be such a common misunderstanding is that other coveted resources operate this way. While time is unlimited, individual access to time is finite. Once you’ve spent an hour doing something, that’s an hour you can never recover. And while wealth is technically infinite, people operate under the assumption that their access to wealth will be finite. However, that doesn’t have to be the case—it’s possible to create more wealth for yourself in the marketplace, without limiting someone else’s opportunity. You don’t have to steal from someone to build your wealth and business.
Think about it this way: if your friend has an iPhone, and you take the iPhone, that’s a zero-sum game. There’s only one phone and no ability to create more. However, if you offer your friend money for the iPhone and they agree to sell, it’s no longer zero-sum. There was a value exchange, otherwise, the exchange wouldn’t have happened. You benefit from a new phone, and your friend benefits from the money. And that is the power of the marketplace.
The Morality of Business
[49:18] “There’s been a decrease in the kind of entrepreneurial spirit that students have. They want to get a job with an already existing company. They’re less interested in striking out on their own and finding some problem that they can solve on their own… And that does worry me.”
[49:54] “Everybody should think about themselves as being something like an entrepreneur.”
The thing is, everyone has a problem to solve in the marketplace, even if they’re not entrepreneurially minded. Yet those who lack that entrepreneurial spirit may cannot see how that fits into the marketplace.
To maintain morality in business, Otteson stresses that it’s critical not to seek benefit for yourself at the expense of others. Yet, those who don’t view themselves entrepreneurially may exclude themselves from this moral standard.
[51:05] “There is some unique kind of value that only you can contribute to the world… I think the positive aspect of honorable business is [to] figure out what that is. Be entrepreneurial and innovative in your own life.”
About James Otteson
James Otteson earned his Bachelor of Arts degree from the Program of Liberal Studies at the University of Notre Dame in 1990. He spent his sophomore year studying abroad at the Universität Innsbruck in Austria.
After completing his undergraduate degree, he attended the University of Wisconsin–Milwaukee, earning a MA in Philosophy in 1992. He then joined the Philosophy Department at the University of Chicago, receiving a Ph.D. in 1997.
Upon graduating from Chicago, he took a position in the Philosophy Department at the University of Alabama, where he began as an assistant professor, received tenure, and rose to become department chair. In 2007, he accepted a position as a joint professor of philosophy and economics, and director of the honors program, at Yeshiva University in New York City, New York. In 2013, he moved to Wake Forest University, and in 2020, he returned to his alma mater and joined the faculty at the University of Notre Dame.
Otteson at Notre Dame
At Notre Dame, Otteson is the John T. Ryan Jr. Professor of Business Ethics, the Rex and Alice A. Martin Faculty Director of the Notre Dame Deloitte Center for Ethical Leadership, and the Faculty Director of the Business Honors Program.
He has held visiting scholar positions at the Social Philosophy and Policy Center, then located at Bowling Green State University; at the Centre for the Study of Scottish Philosophy, then located at the University of Aberdeen; at the Institute for Advanced Studies in Humanities at the University of Edinburgh; in the Economics and Philosophy Departments at the University of Missouri-St. Louis; and in the Government Department at Georgetown University. He has also taught in the Economics Department at New York University.
Otteson lectures widely on Adam Smith, classical liberalism, political economy, business ethics, and related issues, including for the Fund for American Studies, the Adam Smith Society, the Acton Institute, the Fraser Institute, and the Tikvah Fund.
Book A Strategy Call
Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We can help! Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/, and find out how Privatized Banking, alternative investments, or cash flow strategies can help you accomplish your goals better and faster. That being said, if you want to find out more about how the Infinite Banking Concept gives you the most safety, liquidity, and growth… plus boosts your investment returns, and guarantees a legacy, go to https://privatizedbankingsecrets.com/freeguide to learn more.
1 hr 3 min
January 16, 2023 What Is Bank-Owned Life Insurance (BOLI)? Understanding Institutional Wealth Strategies
Why do top banks own billions of dollars of cash-value life insurance, if Dave Ramsey and Suze Orman say it's such a bad idea?
Today, we're looking into bank financials at a little-known, highly desirable asset banks use as a Tier 1 Capital Asset to increase their financial strength. We're talking about bank-owned life insurance, or BOLI.
https://youtu.be/7gqAiiHQLXI
We’re going to lay to rest the fallacy that this type of insurance is such a terrible investment, and explain exactly why the most successful financial institutions in the world are pouring billions into it.
So, if you want to fortify your finances and increase your stability through economic turbulence … tune in now to find out about becoming your own banker with the Infinite Banking Concept!
Quick Takeaways
What you'll discover:
Why the smartest money managers in the world are pouring billions into life insurance while financial gurus tell you it's a bad idea
The staggering amounts banks actually own - numbers that will make you question everything you've been told about life insurance
What banks did during the 2008 crisis that should change how you think about protecting your wealth
How to copy what banks do and apply their strategies to your personal finances
Why banks choose life insurance over other investments when they could put money anywhere
How to become your own bank using the same wealth-building principles as billion-dollar institutions
Table of contentsWhat Is BOLI?How BOLI WorksWhat About COLI?Why BOLI Is So EffectivePredictable Asset with Regulatory ApprovalHigh Cash Value Accumulation and StabilityHow Much Do Banks Actually Own?What Banks Did During the Financial CrisisWhat Individuals Can Learn from BOLILearn How to Use Life Insurance Like a Bank
What Is BOLI?
BOLI stands for Bank Owned Life Insurance, and while it’s widely available knowledge, it’s not widely understood. So why would banks want to own life insurance, and what does it do for those institutions?
Banks really didn’t own life insurance until about 1994. In large part, banks take life insurance policies out on their key employees. This doesn’t just give the banks an additional place to store and grow capital securely.
The death benefit also provides the banks with a means to train a replacement in the event of that employee’s death. In fact, even the cash value is useful in allowing the banks to prepare for a key employee to retire. This is how banks have “insurable interest” in their employees.
But banks don’t just take out these policies on their employees, either. Banks have actually started group policies on the bank's customers who have loans with the bank. This means that if a customer died, the death benefit would pay for any outstanding loans.
Banks are great at protecting their money. They see the value in having their money over-collateralized in order to protect it.
If that is something that this institution is doing, why shouldn’t you be doing it in your own life?
Banks didn't stumble into this strategy by accident - they discovered what wealthy families have known for generations.
How BOLI Works
Boli isn’t some sort of experimental strategy. This is how the smartest money managers in the world protect and grow capital.
Let's say a bank has a key executive making $200,000 a year. The bank takes out a $1 million life insurance policy on that executive, pays the premiums, and owns the policy.
Year one: The bank pays a $20,000 premium. Nearly all of it goes into cash value immediately, with full liquidity from day one. That cash value earns a competitive, tax-advantaged return.
Year five: The cash value has grown significantly. The bank can borrow against it if it needs capital for operations or lending..
Year ten: The executive retires. The bank still owns a growing asset with even higher cash value and a $1 million death benefit, which supports long-term planning and future expenses.
Or, if the executive passes away, the bank receives the full $1 million death benefit tax-free. This more than covers the costs of finding and training a replacement and compensates for any business disruption.
Meanwhile, throughout this entire time, that cash value has been growing steadily - no market risk, no volatility, just predictable growth that banking regulators actually encourage.
That's why banks love this strategy: it solves multiple problems while building wealth in the safest way possible.
What About COLI?
Like bank-owned life insurance, there is also corporate-owned life insurance, or COLI. The idea and usage of this type of life insurance is the same. Companies benefit from having growth and liquidity in a life insurance policy, as well as the death benefit.
Corporations like Walmart, Disney, Procter & Gamble, and many others rely on life insurance strategies.
So if life insurance is such a “bad investment” as some financial talking heads would suggest, then why are banks and major corporations relying so heavily on life insurance in their financial strategies? Clearly, there must be some merit to it.
Why BOLI Is So Effective
Predictable Asset with Regulatory Approval
Tier 1 capital is the core of a bank's capital that is held in reserves. It is also used to fund some of the bank's business. This kind of capital must be safe and liquid. In fact, regulators require that banks have a certain amount of tier 1 capital available. This determines the strength of a bank, and that capital is useful for funding any losses the bank might have.
Banking regulators actively encourage BOLI, which should tell you something. While they constantly question other investments as too risky, life insurance cash value gets the green light as safe, reliable capital.
High Cash Value Accumulation and Stability
In other words, tier 1 capital, like bank-owned life insurance, is directly related to the strength and stability of a bank. So if banks are using such a large portion of life insurance to provide a foundation for their institution, that same logic can apply on an individual level.
It's capital that is safe, liquid, and has growth that's not correlated to the stock market, after all.
Banks need assets they can count on, and BOLI delivers exactly that - steady, predictable accumulation without market drama.
How Much Do Banks Actually Own?
It might surprise you to know just how much life insurance banks have in their financial portfolios.
Here are the most current numbers available:
Industry-wide totals:
$205.7 billion in total BOLI cash value across all banks as of September 30, 2024
3,053 banks nationwide reported BOLI holdings on their regulatory filings
80% of banks with assets between $500 million and $10 billion own BOLI
Source: BoliColi.com, citing S&P Global Market Intelligence
And while the list above shares some of the more commonly known banks, there are tens of thousands of smaller regional banks with large cash values.
Banks are in the business of making money, and yet they have billions of dollars tucked away in cash value life insurance rather than investing it.
What Banks Did During the Financial Crisis
It's interesting that in 2008 and 2009, during the biggest financial crisis in our recent history, banks were increasing their life insurance holdings, not decreasing.
When we look at banking, if they say that during times of crisis and challenge, we're increasing this asset to hold more cash value than before, that should tell us that they are using this as a predictor of financial strength and stability. And we can do the same in our own lives.
When the financial world was crumbling around them, banks doubled down on life insurance.
Is BOLI a good investment? The banks answered that question with their wallets - they bought more, not less.
What Individuals Can Learn from BOLI
Model the successful few and watch what the successful are doing. Success doesn't necessarily just mean successful individuals; it can also mean successful entities, organizations, or industries as a whole.
Banks aren't emotional about money - they're strategic. They don't chase the latest investment fad or panic during market downturns. They choose assets based on safety, liquidity, and predictable growth.
That's exactly what you get with a properly designed whole life insurance policy:
Safety: Your cash value is guaranteed to grow, regardless of what happens in the stock market.
Liquidity: You can access your money through policy loans without penalties or restrictions.
Growth: While not explosive, the growth is steady, predictable, and tax-advantaged.
The lesson is clear, if the most conservative, heavily regulated financial institutions in the world trust billions of dollars to life insurance cash value, maybe it's time to reconsider what the financial talking heads are telling you.
Learn How to Use Life Insurance Like a Bank
If you want to learn more about BOLI, you just need to know where to look. We caution against finding your information on social media because much of what you see is opinion and not fact. Instead, you should look for more official sources of information or people you trust to tell you the whole truth.
Here are some resources we recommend for further research:
The FDIC
US Bank Locations
Lara Murphy Report
But the real opportunity isn't in BOLI itself - it's in understanding the strategy behind it and applying those same principles to your personal finances.
Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We can help!
Book an Introductory Call with our team today, and find out how Privatized Banking, alternative investments, or cash flow strategies can help you accomplish your goals better and
49 min
January 09, 2023 The 5 Rules of IBC, with David Stearns
So you’ve decided to buy a specially designed whole life insurance policy. You’re working with the right advisor, you have an excellently designed policy. But one day you think: How do I become the best banker I can and use my policy to its fullest potential? To get the most out of your IBC policies, you must follow Nelson Nash’s 5 Rules of IBC. Here to unpack these 5 principles for IBC is David Stearns.
https://www.youtube.com/watch?v=v177xxW5c4M
David Stearns is Nelson’s son-in-law and president of Infinite Banking Concepts, LLC. He is carrying on Nelson’s legacy both professionally and personally.
If you want to learn from the best, this is as close to the source as you can get… so tune in now!
Table of contentsContinuing Nelson Nash’s LegacyThe Evolution of the Nelson Nash InstituteHow to Find an IBC PractitionerDavid Stearns Shares The 5 Rules of IBCThink Long-RangeDon’t Be Afraid to CapitalizeDon’t Steal the PeasDon’t Do Business with BanksRe-think Your ThinkingBonus: Be Prepared for WindfallsAbout David StearnsBook A Strategy Call
Continuing Nelson Nash’s Legacy
Nelson Nash was the innovative creator of the Infinite Banking Concept and the Author of Becoming Your Own Banker. Now, IBC and the Nelson Nash Institute continue to educate people about IBC and how life insurance can play an instrumental role in personal finance. The company is now headed by David Stearns, Nelson’s son-in-law, who we have the pleasure of speaking with today.
David joins us today to share the 5 Rules of IBC that Nelson shared, and how he interprets them today.
[22:30] “Whole life insurance is not glamorous–okay, number one. Number two, it’s hard work because you’ve got to make the effort to build your portfolio over the years.”
The Evolution of the Nelson Nash Institute
Nelson Nash saw IBC as a way for people to get their money out of Wall Street, and have greater safety, liquidity, and leverage. Nelson was so passionate about IBC that even at the age of 85 he was doing dozens of seminars a year, teaching people about IBC.
These seminars were hosted by insurance agents and other financial professionals all over the country. They’d hire Nelson and fly him out, and he’d share his wealth of knowledge with whoever was in the room. But, according to David, no one ever really asked the question: what are people doing with this information?
Because the reality was, people were applying the information to the wrong life insurance products. Or, agents were sending non-selling associates to listen to the information. There were just too many instances of the IBC message being watered down or twisted into something it wasn’t. But, they were still using Nelson’s name.
That’s when David Stearns and a few others got together and decided that it would be critical to the future of IBC to implement a standard. That standard would become what is the Nelson Nash Institute and the IBC Practitioner Program, which was meant to hold advisors accountable to the information Nelson offered.
This would ensure that advisors couldn’t co-opt Nelson’s message, nor morph it into something that it isn’t meant to be.
How to Find an IBC Practitioner
If you are ever interested to know whether or not you’re working with or connecting with an IBC practitioner, there’s a database you can check. The IBC Practitioner database is extremely useful in verifying who has been through the training and whether they are adhering to the rules and standards of IBC.
The benefit of working with someone who is in the program or completed it is that you can be sure of their character. An IBC Practitioner will have all the values that Nelson Nash and IBC have shared and cultivated. Those in the program also get the benefit of working with other Practitioners to boost their knowledge and skills. This ensures that the training is solid and standardized.
The fundamentals of IBC are critical to the success of an agent and their clients, so it’s critical that you work with someone who upholds those fundamentals.
David Stearns Shares The 5 Rules of IBC
As David mentioned, IBC takes work. While you may be able to automate your premium payments, it’s not quite a “set-it-and-forget-it” product. You’ll have to work on it over time and be diligent in how you use it and construct your money habits.
Below are the rules of IBC that Nelson Nash came up with, at IBC Practitioners learn.
Think Long-Range
Long-range thinking is one of the most important fundamentals of IBC. Not only does your IBC policy take time to be at it’s best, it’s going to be something you use over your whole life. And more than that, it’s a seed you plant for future generations: your children and your children’s children.
This is a wealth-building strategy and legacy that takes time and effort and intentionality. This is the gift of IBC—wealth building that benefits you now and later.
Don’t Be Afraid to Capitalize
It’s up to you to determine the purpose of your money. Likely, to some extent, that purpose includes being able to have experiences with your family or to do things you enjoy. Or, you may have the desire to invest in assets that will further grow your wealth. That’s all a part of financial freedom. Don’t be afraid to use your money or take a policy loan, that’s what it’s there for.
Of course, there are ways to be more efficient and wise with how you capitalize on your cash value. However, you should not be afraid to use your money for things that matter to you.
Don’t Steal the Peas
“Don’t steal the peas” is a reference from Nelson’s book, “Becoming Your Own Banker.” By this, Nelson simply means that you shouldn’t shortchange yourself just because you can. If you owned a grocery store, in theory you could simply take something off the shelf—like a can of peas—if you wanted to, without saying anything. After all, it’s your store, who cares, right?
Yet when you steal those peas, you’re directly impacting your grocery store’s bottom line. Even if you don’t think it’s a big expense, it makes an impact. The same goes for policy loans—you have the flexibility to pay your loan however you wish. However, if you don’t come up with a responsible repayment schedule for yourself, you’re stealing the peas.
For the best results with IBC, you have to be a good steward of your money and your IBC policy. That means being a good steward of your loans and your policy. Making your PUAs when you can, paying the annual interest, and other actions keep you from stealing the peas.
Don’t Do Business with Banks
Part of Becoming Your Own Banker is just that… becoming your own banker. You are creating a system of wealth that you can leverage yourself so that you have the control and the power. Why would you want to put that control and power back in the hands of the bank? What you don’t want to do is use your policy for collateral with the banks, because you can already do that with the insurance company.
Re-think Your Thinking
Be willing to see the world in a new way. IBC requires that you throw away popular financial beliefs about debt, investing, and Wall Street. You’ve got to be open to seeing the world and finances in a new way, and then implementing that.
Bonus: Be Prepared for Windfalls
As important as it is to be a good steward of your IBC policy and pay down those loans, you also want to have a place for windfalls. This could be windfalls from an inheritance, the lottery, or even a large unexpected bonus.
One way you can be prepared for a windfall is to have a policy loan. Then you can use that windfall to pay the loan back. You can also open a new policy with a windfall, or contribute it to your PUAs.
The point is that you want somewhere to store a windfall where you can benefit from it, without squandering it. Because most people, when they get a windfall, end up spending it within a few years, and that’s not good stewardship. Be prepared and have a game plan for unexpected money.
About David Stearns
David Stearns is Nelson Nash's son-in-law. Nelson recruited David to help with the administrative side of Infinite Banking Concepts, LLC in June 2004. Nelson asked David to take over the company to continue the IBC legacy in 2009.
David retired from the U.S. Army as a Lieutenant Colonel. David served 27 years in the Army, first as a field artillery officer, then as an Army aviator. As with all military officers, he had a variety of assignments including command, operations, safety, and systems analysis/operations research. David served throughout the Continental U.S. and worldwide with a long tour in Egypt and multiple deployments to Germany, Korea, and Kuwait.
David is the President of Infinite Banking Concepts LLC, which controls the distribution of Becoming Your Own Banker and Infinite Banking Concept materials, copyrights, and trademarks. IBC LLC manages the administrative activities of the Nelson Nash Institute.
David has been a Director of the Nelson Nash Institute since the Institute's formation in 2013.
David graduated from Buffalo State College in 1975 and received a Master's of Public Administration from Auburn University, Montgomery in 1992.
He has been married to Kimberly Nash Stearns since 1979. They live in Birmingham, Alabama, and have four children and eight grandchildren.
Book A Strategy Call
Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We can help! Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/, and find out how Privatized Banking, alternative investments, or cash flow strategies can help you accomplish your goals better and faster. That being said, if you want to find out more about how Privatized Banking gives you the most safety, liquidity,...
1 hr 31 min
January 02, 2023 Tax-Free Retirement is a Bad Idea
Want tax-free retirement income? Tax-free money in retirement sounds amazing… at first glance.
https://www.youtube.com/watch?v=mylXCXThFl0
But before you dive into this strategy, there are three things you need to know about why “Tax-Free Retirement” is a really bad idea.
To find out exactly why you shouldn’t set up your financial game plan for tax-free retirement… tune in now!
Table of contentsSetting FrameworksWhat is Tax-Free Retirement?“Don’t Let the Tax Tail Wag the Dog”Retirement is a Concept that Needs FixingHow to Change RetirementSo Why Shouldn’t You Do Tax-Free Retirement?Why Tax-Free Income is Not the Best First SolutionLife Insurance is InsuranceBook A Strategy Call
Setting Frameworks
When you’re presented with a certain lens or framework, it’s important to step back and consider:
Where is the information coming from?
Who does this benefit?
What are the other options?
These questions can go a long way in helping you determine whether a strategy is a good fit for you, whether it has merit, and how you should approach it.
The idea of tax-free retirement using whole life insurance is popular. Just the name alone makes it sound amazing. So why wouldn’t someone want to implement it? Keeping the above questions in mind, we’re going to unpack the nuances of this approach so that you can use that information to better your strategy.
What is Tax-Free Retirement?
The general idea of tax-free retirement is that you have set up a whole life insurance policy for maximum cash value growth that you can use for retirement income. The strategy suggests that after maximally funding a policy, you can choose to retire and use that cash value for retirement income. You use a certain formula to determine how much you can withdraw each year over a certain timeframe (instead of borrowing against it) without creating a taxable event.
The premise is that by saving into a whole life insurance policy, you can pull an income from your policy without paying taxes. And while this is true, there are certain disadvantages that people don’t often consider or discuss.
“Don’t Let the Tax Tail Wag the Dog”
This concept comes from Garrett Gunderson, author of Killing Sacred Cows.
[14:10] “He talks about how you cannot ever make all of your financial decisions on the basis of, ‘How do I pay the least amount of tax?’ If you’re just looking at taxes, that’s a lens being put in front of your eye [saying], ‘Here’s the most important thing.’ Really, there’s not one most important thing; there’s a lot of factors that you need to consider.”
When you only make financial decisions out of the fear of paying taxes, you’re acting from a place of scarcity. The scarcity mindset doesn’t serve you, because it prevents you from seeing other options or strategies that may be even better for you, depending on the purpose of your dollars.
If you want to leave a large legacy to your children, but you choose a “tax-free retirement” strategy out of fear, you run the risk of disinheriting your children. This, of course, is not the outcome you want if you’re aiming for a legacy. So it’s important not to let fear dictate the lens through which you take financial action.
Retirement is a Concept that Needs Fixing
Let’s consider the typical retirement paradigm. Generally, you work from about age 20 or so until you’re somewhere between 60 and 70. In all of those working years, you work as hard as possible to make as much as possible. And hopefully, you save as much as possible. Then, when you’re ready to retire, you stop working completely and live off of what you’ve saved. You probably intend to continue living life at the same level of comfort and quality, so you take about the same income that you made when you had a job.
Unfortunately, many people only save about 10-20% of their income. But, they still want to live at 100% of what they’re used to. This means retirees are going through their money quickly—even with a tax-free retirement strategy.
[15:30] “The main reason why retirement is a really bad idea in the first place is that if you are stepping out of a position of working, you’re putting yourself out of service. To retire literally means to put out of use. And that means you’re in a position of no longer contributing to society in a way that is providing the value so that you can have an income. That’s putting you in a position of isolation.”
It’s also a poor perspective of work because work shouldn’t be drudgery. You have the potential to create meaningful, fulfilling work.
How to Change Retirement
This isn’t to say that you have to have the same career forever. You don’t even have to work in the same capacity in your career forever. We simply want to encourage people to show up in the world by creating value. The income naturally follows.
Choosing this path of service also serves to keep you healthy, mentally active, and connected to your fellow humans. It’s a blessing to live this way, not only to you, but to all the people you bless. This type of thinking provides incredible relief in what would be our retirement years because you’re less concerned with running out of money (on top of these other excellent benefits).
So Why Shouldn’t You Do Tax-Free Retirement?
You may be thinking, “Sure, I’m not going to retire in the literal sense. But I might slow down or do something different when I’m 70. Why wouldn’t I want to do a tax-free retirement strategy to supplement that?”
One reason is that you could lose out on tax exemptions by not having your money in a taxable position. When you take a tax-free income, your income on your return is zero, which sounds great. You owe nothing to the IRS. However, you don’t get to benefit from the $25,900 deduction (for joint filers) either. They don’t pay that out to you because you didn’t have enough taxable income to offset. So it’s just lost.
In other words, you’re losing the opportunity to take about $25,900 of taxable income each year without paying the taxes. The reason this is valuable is that you can take that money from any taxable account, and experience it without paying taxes. If you take a tax-free income from your whole life insurance, though, you’re limited to what you can withdraw without modifying the tax status of your policy.
You have the potential to create a much more robust economic environment for yourself if you’re not just thinking about taxes. Thinking about your business, your investments, your income, and the strategies you employ to make them synergistic are all critical components of wealth building.
Why Tax-Free Income is Not the Best First Solution
Even after all this, you might think that taking tax-free income still sounds like a great idea for retirement. We’d like to suggest that it shouldn’t be your first solution. Hopefully, from the above information, you can see that we’re not against this strategy as a whole. We simply want to help you expand your idea of what’s possible, and how there are many things to consider besides taxes.
A critical strategy at any stage of life is to diversify. Often, this is only applied to investments. However, you can apply this to any aspect of your financial life. We’d even suggest that it’s better applied to your income and assets than an investment portfolio.
The reason is that you want to have three things: safety, liquidity, and growth. Most assets can only achieve one or two of those things. That’s why one strategy you might want to employ is a volatility buffer. That’s when you pull income from securities, a 401k, or other correlated accounts during “green” years. Then, in lean years (when there’s a downturn in the market), you can pull from your life insurance. This extends the life of both accounts and makes your income last much longer.
Life Insurance is Insurance
Another reason we recommend not relying on life insurance as your first resort for income is because it’s insurance. You’re buying insurance for the purpose of guarantees—guaranteed premium, guaranteed death benefit, and guaranteed cash value. It’s a tool for insurance first, and cash benefits second.
When you use life insurance as your first and only source of income, you run the risk of losing those benefits. If you want to leave a death benefit to your kids, eating up your policy risks leaving them with nothing. If you live to your endowment age, you run a similar risk.
Life insurance is a great supplementary tool to everything else you have going on. It makes your investments better, and that includes your retirement strategy. Life insurance gives you so many options when you have it and use it as a supplement. When you use it as your sole strategy, you severely limit your options.
Book A Strategy Call
Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We can help! Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/, and find out how Privatized Banking, alternative investments, or cash flow strategies can help you accomplish your goals better and faster. That being said, if you want to find out more about how the Infinite Banking Concept gives you the most safety, liquidity, and growth… plus boosts your investment returns, and guarantees a legacy, go to https://privatizedbankingsecrets.com/freeguide to learn more.
1 hr 7 min
December 26, 2022 Whole Life Insurance Case Study (19 Years), with Tom Suvansri
How does whole life insurance work out over the years? Today, we're looking at a real-world case study of someone with basic whole life insurance policies that have become very productive and efficient assets when held and used long-term.
https://www.youtube.com/watch?v=D0tsSgckpTY
We'll discuss how policies for self, spouse, young kids, and future grandchildren work together. In particular, we'll see how the newest policies in Tom's family banking system have turned a corner. Now, they're accumulating more cash value than the cost of annual premiums. He then used these dollars to invest in cash-flowing assets that help fund the policies.
We'll explore how you can establish policies for future grandkids to begin legacy planning. You'll learn how to use life insurance as a foundational piece of your kid's and grandkids' financial lives.
If you want to see how Infinite Banking can work for your family ... tune in now!
Table of contentsHow Tom Found Infinite BankingFirst Thoughts On Opening a Life Insurance PolicyHow Tom Feels About His Life Insurance Policy NowThe Power of Having Policies on Your ChildrenSelf-Sustaining PoliciesTom’s Family Banking SystemConnect with Tom SuvansriAbout Tom SuvansriBook A Strategy Call
How Tom Found Infinite Banking
[5:45] “The concept of infinite banking wasn’t talked about [when I started my whole life policy]...it was just a long-term savings vehicle that protects you from these bad things that could happen.”
Tom shares that when he started his policy, he didn't even know about leveraging cash value. No one was talking about it. He was just aware that it was a suitable tool for saving money and protecting income. The knowledge about infinite banking came later.
Fortunately, Tom had the experience of those before him to draw on. His father had some universal life insurance that imploded, so they both knew to stay away from that structure of life insurance in the future.
[6:48] “It’s just one of those sad stories, but you know, that was something that stuck with me. And so we got into talking around just a permanent whole life policy, right? From a mutual insurance company. Which, I didn’t understand what that meant at the time.”
First Thoughts On Opening a Life Insurance Policy
[12:46] “I think things through pretty deeply, and it took me a while to even get to there—to accept and get a policy. And I did initially, as I got into the first year or two when there was no cash, [feel skeptical]. I saw that, and it did sort of strike me as, ‘Did I do the right thing?’ I was a little concerned.”
Tom opened this policy in 2003 and on top of still having his policy and benefitting from it, he now helps other people to implement Infinite Banking strategies. What helped him through these early years was to remind himself that it was a long-term product and that his results would not be overnight.
There’s a major mental hurdle to overcome because so many life decisions are short-term. We have to think and decide quickly, and expect to see quick results. But life insurance is a different beast. It’s something that takes time, and while you’re in the early stages it can be difficult to be patient. However, five to ten years down the line, you’ll be thanking your past self.
How Tom Feels About His Life Insurance Policy Now
[14:25] “It’s so funny, I was kind of joking with my wife about [our policies]. Because every time I get an annual statement come through saying your premium is due, some people think of it like a bill. I’ll tell you, I give it a hug because I know what it’s done for us and our families. It’s secured so much for us over these years, and what it will do in the future—like I cannot wait to contribute to it.”
Another added benefit of having a policy for 19 years is that as inflation impacts the value of a dollar, premiums actually feel like less. Premium payments are fixed payments, so inflation actually has the reverse effect on them.
The Power of Having Policies on Your Children
From Tom’s initial life insurance policy, his “portfolio” has steadily grown as his life has changed. For example, as his family grew to include his two children, he opened whole life insurance policies for them both, starting in 2009.
[29:35] “They were our fifth and sixth policies we put on the books. So we got smaller policies for them, I think their death benefit was like five hundred thousand at the time. And we just started because we said there’s savings for us, why not save for them? There could be some for college that they could use and protect them.”
Now, these policies are both at the point where the cash value is increasing by more than what Tom and his wife are putting into the account. It took some time for the policies to become this efficient, but now that they are, his family has some great options. And his children are 13 and 16, which means they’re just starting to be at the age where they might want to finance larger purchases (like school or a business).
And one day, Tom even has the option to transfer the ownership of the policies to his children. Then, they could fund the policy and manage it on their own, and they’ll already have an incredible head start.
Self-Sustaining Policies
In particular, Tom expresses how his life insurance policies have helped him to teach his children about financial concepts. For example, he and his wife have taken policy loans from his kid’s policies to invest in assets with cash flow. That cash flow is enough to pay their premiums and loans, essentially making their policies self-sustaining.
This is a great way to educate your children from an early age about IBC, leverage, and the importance of saving money. Through these policies, he has created great freedom for his family.
Tom’s Family Banking System
[[8:20] “Right now we have ten policies within our family banking world—whole life policies. Like I said, the earlier ones were kind of basic. The last four have been infinite banking-designed policies.”
These “IBC” policies are policies that have been designed specifically for early cash value growth. The base policies aren’t “bad” because they’ve still built up significant cash value for his family, and they’ve helped to protect his income and his family.
Tom also has some term policies that he hopes to convert into whole life insurance down the line.
The big picture for the Suvansri family banking system is to one day fund the grandkids, once Tom’s kids have families of their own.
[39:20] “That’s my plan today. Maybe ask me ten years later, it might be different. But my tune is, today, this is where I’m trying to start this engine for my family long-term. And I see that as a priority for me.”
Connect with Tom Suvansri
Perennial Pride
Perennial Pride Podcast
About Tom Suvansri
Tom Suvansri holds an MBA in finance from Penn State University. After working in the pharmaceutical industry for 15 years, he founded Perennial Pride.
Tom teaches his clients how banks, insurance firms, and brokerage houses make money. Then, he teaches them how to use those same strategies to build personal wealth with less risk. His work is informed by his life experiences. In particular, watching his parents, who lacked financial literacy, lose control of the wealth they worked so hard to build was a catalyst for learning.
This very personal motivation drives Tom to serve the families, professionals, and business owners he works with to help them establish control, freedom, and certainty over their finances so they can live their best and create an impact that will last for generations.
Book A Strategy Call
Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We can help! Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/, and find out how Privatized Banking, alternative investments, or cash flow strategies can help you accomplish your goals better and faster. That being said, if you want to find out more about how Privatized Banking gives you the most safety, liquidity, and growth… plus boosts your investment returns, and guarantees a legacy, go to https://privatizedbankingsecrets.com/freeguide to learn more.
54 min
December 19, 2022 How Do I Know If I’m Ready for Infinite Banking?
Are you learning all you can about Infinite Banking ... and wondering if you're ready for Infinite Banking?
https://www.youtube.com/watch?v=3pygSVCXpYI
Today, we'll talk about what's probably going on for you as you make this decision. We'll discuss:
The problems you're looking to solve
The mindset you need
How to know if you're not ready yet
How to go from interested to securing your first policy
So if you want to know if you're ready for Infinite Banking... tune in now!
Table of contentsIs Buying Life Insurance a Big Life Decision?Is Life Insurance a Good Investment?How to Make Good DecisionsThe Advantages of Infinite BankingThe Right Mindset to Be Ready for Infinite BankingYou’re Not Ready for Infinite Banking If…Book A Strategy Call
Is Buying Life Insurance a Big Life Decision?
[4:05] “I would say this is a medium life decision. And the reason I say that is, obviously, there’s nothing more important than your family.”
By this, Bruce means that choices that affect your family and your income are probably “bigger” life decisions. However, buying life insurance isn’t a small decision by any means. Having a death benefit in place gives you the freedom to live your life a little bit differently. It’s like car insurance. You’re going to drive much differently if you don’t have car insurance. So, it’s generally a good idea to have it.
Life insurance helps you to live life without reservations. It also acts as a great place to store and build your cash reserves so you can enjoy your money.
[4:45] “You’re not living your life to the maximum unless you know that your lifetime income is protected for your family.”
Is Life Insurance a Good Investment?
[7:20] “If you’re looking at this as an investment, it’s not a good investment. Because the internal rate of return on [whole life insurance] is not going to be great when you consider external rates of return on [actual investments].”
The thing is, life insurance isn’t an investment, and we encourage you not to think of it like one. On top of being an insurance product, it’s also an efficient savings tool—that’s it. And when you apply the principles of the Infinite Banking Concept, you create a pool of capital that works harder than a typical bank account.
Cash value of life insurance is not an investment. It’s not going to make you a high rate of return. However, it can protect your wealth, your family, and make it easier for you to invest in cash-flowing investments down the line.
How to Make Good Decisions
Life insurance can be a big decision. You must consider the costs of having insurance, the costs of not having insurance, and a dozen other small decisions in between to find the right fit for you and your family. It’s not a simple decision to be made overnight.
To make the best decision possible, it’s wise to consider the logical aspect AND the emotional aspect. The logistics are all about what type of policy, how much you’re going to fund the policy, if it’s a good fit for your family, how you’re going to make payments, etc. You also want to compare it to other places you can store your cash, and ask: is this the best place to store it? Thinking from a logical standpoint is going to help you decide if whole life insurance is something you can commit to fully.
On the other hand, the emotional side is determining how it’s going to help or hinder your peace of mind, whether it will make you feel more secure, etc. You want to feel good about the decision you’re making emotionally too.
Once you’ve weighed these details, you should come to a decision with full commitment. This is a lifelong decision if you choose to buy whole life insurance. And while you might not pay on it for your whole life, depending on how it’s structured, it’s something you’re going to keep using forever. Don’t go into the decision with a contingency plan, or you’re not truly making a full commitment.
The Advantages of Infinite Banking
If you’re putting in the work to research and consider infinite banking, and you have a decent savings capability, there’s a good chance you’re ready for infinite banking. We encourage anyone who is interested in implementing the concept to consider doing it as soon as you can. For starters, the sooner you have that protection in place, the sooner you can have that peace of mind.
Secondly, if you’re looking for the most efficient place to accumulate and use cash, whole life insurance is your best bet. And the sooner you start saving into a whole life policy, the sooner you can benefit from and use that money. In particular, you can benefit from a better growth rate than what you’ll get at the banks, though it takes some time to get rolling.
[36:45] “We see between 3 and 5 percent historical growth on a long-term basis if you’re looking about 30 years plus, in a policy. What that means is, if you look at the ending cash value amount, and you consider all of the premium that has been paid in, it would have required that growth rate in order to reach that cash value amount.”
What’s really interesting is that this is considered a “net” rate. In other words, this 3-5% is after you’ve factored in all the costs of the policy. Additionally, this account isn’t a typical investment, and therefore, that growth isn’t taxable (unless withdrawn).
The Right Mindset to Be Ready for Infinite Banking
[40:23] “The mindset that you need to be able to [get started with Infinite Banking]...is not one of fear, but one of abundance. Not thinking ‘I’m afraid of the outcome, the consequences, I’m not sure if I’m making a good decision.’ That is operating in scarcity. And ultimately, what you need is to be thinking and operating in a position of abundance. And I don’t just mean having a lot of money.”
[41:00] ‘Abundance thinking is thinking of the world as an infinitely amazing place that has infinite possibility. And if we really want to break it down all the way to what money truly is, it shows you that money is the result of you exchanging value with another human being. Which means you have infinite ability to increase the value you provide to others, so you have infinite earning potential.”
You’re Not Ready for Infinite Banking If…
If you don’t yet have good savings habits or don’t have savings built up, you probably aren’t ready. You wouldn’t skip kindergarten to go to college. We encourage you not to skip the process of creating a savings habit on your own. Working on these habits with a regular savings account will make the process of having whole life insurance much easier in the future.
If you still want insurance in the meantime, consider getting convertible term insurance, so you can get coverage now. Then, as you’re ready, you can convert that term insurance into whole life insurance without needing to get a physical exam again.
If you have a small income or only have a small savings capacity, but you’re a consistent saver, you're ready! You might think it's better to wait until you're capable of more. However, you can always buy another policy later. What you can't do is recover your lost time (or dollars). So if you're a good saver, it's a good time to go for it. Your first policy might not be as much as you’d like. But you’ll be glad you got started. Any step you can take today is going to be so helpful.
Book A Strategy Call
Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We can help! Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/, and find out how Privatized Banking, alternative investments, or cash flow strategies can help you accomplish your goals better and faster. That being said, if you want to find out more about how Privatized Banking gives you the most safety, liquidity, and growth… plus boosts your investment returns, and guarantees a legacy, go to https://privatizedbankingsecrets.com/freeguide to learn more.
51 min
December 12, 2022 8 Keys to Success, with Ruchi Koval
Want to be more successful in your life and business, gain more recognition and respect, create more impact, accomplish your goals, reach financial targets, increase your income, and raise happy kids? Then it’s time you found a secret hidden in the timeless Jewish practice of Mussar, as shared by Ruchi Koval.
https://www.youtube.com/watch?v=BQcMsQdidDQ
It’s not where we usually start. We look for strategies, scripts, tools, and tricks to beat the odds and get there faster. But today, motivational speaker, coach, and author of Soul Construction, Ruchi Koval shares the real keys to success that are found much deeper... by developing character.
So, if you want to become financially successful, then be prepared for a challenging, growing conversation that will help you have the right relationship with money… tune in now!
Table of contentsWhat is Mussar?Why Does Character Development Matter?Money Doesn’t Define YouCharacter Development is a Lifelong ProcessConnect with Ruchi Koval About Ruchi KovalBook A Strategy Call
What is Mussar?
[5:12] “I was basically raised on the precepts of Mussar, from the time I was little enough to speak. So Musar is a concept of ethical character development… Throughout the generations, people have been asking themselves, ‘How can we make faith relevant to the next generation?’ One of the answers that came forth in the 1800s was this concept of Mussar, which had been in existence, but kind of latent—that a primary path to spirituality could be focusing on our character traits.”
Before this, there were other popular schools of thought about how to achieve spirituality in the Jewish faith. It was Rabbi Yisroel Salanter who really brought this thinking to the forefront and inspired the Mussar movement. The Rabbi who founded the school that Ruchi attended was the son of a Mussar master.
The character traits in question include things such as patience, kindness, joy, and humility. Ruchi also highlights that it’s also important to work on controlling your anger or allowing people to have their way.
[6:38] “That was as Jewish as charity and traveling to Israel and, you know, observing the Sabbath.”
Why Does Character Development Matter?
[8:43] “I believe that ancient Jewish wisdom is universal. That means that it can apply to anyone. That’s why this book that I wrote—Soul Construction—is not just targeted for Jews. It’s targeted for anybody, because I do believe that it’s universal wisdom. The point of Mussar is really self-transformation, but it definitely affects everybody around us.”
Part of Mussar that Ruchi shares is to have your character traits in balance. Anything to an extreme, on either end of the spectrum, is unhealthy. For example, you must have generosity in balance. You want to tithe and be generous, but you also want to keep some of that money so you can do more with it and better your family. Ambition, too, can be a good thing, unless taken too far. Then, it becomes greed.
Keeping your character traits in balance not only allows you to be more spiritual, but it can also help you in your pursuit of certain things, like abundance.
[11:55] “If I can get my character traits in balance, then my pursuit of money could be something that is fulfilling for me and my family, and will create harmony and not discord.
Money Doesn’t Define You
[17:10] “So ancient Jewish wisdom actually teaches that money doesn’t define you… How much you have of it doesn’t define you at all.”
In fact, Judaism recognizes wealth as a blessing from God. So earning a certain dollar amount cannot define you. It’s your attitude toward what you have and what you choose to do with it that defines you. If you’re generous, humble, and grateful, that speaks volumes no matter your income. It also speaks volumes if you’re miserly, snobbish, and conceited.
If you’re concerned about having entitled children because you’re leaving an inheritance, it’s critical to raise them not to be that way. Their character isn’t defined by what you leave to them. It depends on how you raise them to understand money, and how to treat other people. And parents must be clear and communicative with children.
[23:12] “The most important thing we want to give to the next generation is values. And that can all be undone because of a messy will.”
Character Development is a Lifelong Process
[41:56] “That’s the concept of Mussar, truly, is that it’s a lifelong process. Because anything that is of value takes time. And this is just as applicable to money, right? I mean I tell this to my kids: if there’s some get-rich-quick scheme, it’s probably a scheme. Because real money takes time to build and grow and invest and earn.”
Furthermore, in order to keep earning an income, you have to keep offering a quality product or service. There’s no real point at which you’re done—if you build a business or have an income, you’re always going to have to work at it. The same is for character development. You are always going to have to work for it. You’ll stumble, have to apologize, and need to build relationships back up.
Connect with Ruchi Koval
Soul Construction
[email protected]
About Ruchi Koval
Ruchi Koval is the co-founder and Associate Director of Congregation JFX, an innovative community in Cleveland, Ohio. She has been a Jewish educator for two decades, leading self-development groups for adults and teens, and mentoring educators around the world. Ruchi is a certified parenting coach, motivational speaker, musician, author, and mother.
She is a Trip Leader for Momentum, inspiring hundreds of women on their journeys in Israel. She is also a columnist for the Cleveland Jewish News, and the author of two books: Conversations with God, and Soul Construction. Find Ruchi on Facebook and Instagram, on her blog at outoftheorthobox.com, and on her podcasts on iTunes or Spotify. Download her free Ruchi Koval app to listen to many of her lectures online.
Book A Strategy Call
Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We can help! Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/, and find out how Privatized Banking, alternative investments, or cash flow strategies can help you accomplish your goals better and faster. That being said, if you want to find out more about how Privatized Banking gives you the most safety, liquidity, and growth… plus boosts your investment returns, and guarantees a legacy, go to https://privatizedbankingsecrets.com/freeguide to learn more.
55 min
December 05, 2022 What is Infinite Banking? Part 10: What Makes Infinite Banking Infinite?
Have you heard about Infinite Banking, and you want to learn more? Or maybe you’re already using Infinite Banking, but would like to explain it better to your family and friends. In past installments of the series, we've discussed how IBC works, and what it is. Today, we're unpacking what makes infinite banking "infinite".
https://youtu.be/VgA7PaXvvF0
So if you're ready to learn how to increase your opportunities and create wealth that lasts beyond your lifetime... tune in now.
Table of contentsThe Multigenerational Benefit of Infinite BankingHow to Create a Succession Plan for Infinite BankingWhat Makes Infinite Banking Infinite?Examples of the Infinite PossibilitiesVelocity of MoneyInternal and External ReturnsBook A Strategy Call
The Multigenerational Benefit of Infinite Banking
There are many ways one might consider the Infinite Banking Concept to be “infinite.” One of these ways is the multigenerational capacity of infinite banking. By establishing a liquid savings vehicle like whole life insurance, you’re creating a system of wealth that not only can be leveraged for investments and opportunities but can be passed on to the next generation via the death benefit.
That money can then be reinserted into a new life insurance policy that creates new opportunities for your children. And by extension, it creates opportunities for their children. As long as each generation is properly prepared to receive your legacy, and has the required knowledge to be a good steward of that wealth, it can last for generations.
This is a key reason that having a succession plan is critical. That way, your heirs are prepared to continue the family legacy that you’ve established. There should be some guidelines and procedures for how the wealth transfer is handled, and how the family can best maintain the wealth.
How to Create a Succession Plan for Infinite Banking
[9:08] “The first thing is, you have to communicate within your family. The second thing is you need to work with an organization that has a succession plan that’s going to continue these thoughts within the agency itself so that it can become infinite along the way.”
The goal of a truly infinite IBC strategy is to involve your family. This means starting young: educating your children, involving them in your family culture, creating family values, and more can help your children get a sense of your family mission.
By involving your children each step of the way, you’re including them in creating this legacy. Inclusion can inspire your children to take responsibility for their role in the family banking system. It also enables them to be good stewards of wealth in the future. This is further aided by having a support system of financial experts who can be your strategic partners. That way, you can create more wealth and freedom. This is how you keep a family banking system alive.
What Makes Infinite Banking Infinite?
To understand the full scope of this conversation, it’s important to get clarity on why infinite banking has its name. And, why infinite banking is such an excellent strategy for multigenerational wealth.
One key is certainty, as Les McGuire discusses in his article, The Economic Value of Certainty. Whole life insurance is a product that creates certainty because it protects your wealth even in death. This certainty gives you the security and peace of mind to make decisions you might not make in scarcity mode. And being able to operate from this mindset makes the possibilities quite literally infinite.
Examples of the Infinite Possibilities
Using an IBC strategy with whole life insurance allows you to create a pool of liquid cash with certainty. That certainty is locked in by a few different variables:
The death benefit gives you the certainty that your family is protected, your legacy can continue, and the family bank can be replenished
The cash value is not correlated to the stock market, which gives you the certainty that your account will continue to grow
The policy loan provision gives you the certainty that you can finance opportunities that are fully collateralized by the cash value (though you should still repay your loans)
It’s this financing portion of IBC that helps make it infinite. What whole life insurance enables you to do is create a pool of money so that you can finance your own investments. The cash flow from those investments can contribute to repaying the loans. Once the loan is repaid, that cash flow can be enjoyed.
You can also finance other opportunities that aren’t investments. You can use your cash value to finance your child’s first car. That way your teenager can buy their first car, even without credit, and learn to make responsible payments. You could finance college with a whole life policy, or a family retreat, or anything you want.
Velocity of Money
Another reason IBC is infinite is that you can use and reuse your cash value an infinite number of times. You do so by borrowing against your cash value, rather than withdrawing it. Then, as you pay down the loan, you’re able to use that money again for something else. All the while, your cash value continues to earn interest and dividends because you haven’t withdrawn it.
This is called the “velocity of money,” which means the frequency at which you can use a dollar. Since you can continually use and replenish your access to your pool of money without it shrinking (and in fact, while it grows), your velocity is infinite.
This, of course, depends on you being a good steward of that account. In other words, paying your premiums and repaying your loans. The money is not “free,” it’s simply a financing option that you have control over. Of course, when you see how valuable it is to repay your loans and pay your premiums, you’ll want to have good habits.
Internal and External Returns
We should also note that, depending on how you choose to use your IBC policy, you can create “infinite” sources of return. Internally, your policy is guaranteed to increase each year. You can count on the money in your policy growing, even if you leverage it for other opportunities.
What’s amazing is that depending on how you leverage your cash value, you can create an external return, too. So investing in assets with monthly cash flow, like real estate, can give you an external rate of return. This return enables you to grow your wealth. Then, you can invest in more assets that grow your wealth even more.
[29:43] “So you’re not only continuing to grow money inside the life insurance policy while you have this loan outstanding because dividends and interest are continuing to grow on the life insurance money. In addition to that internal return, you’re also getting this external return on this outside investment at the same time. That provides infinite opportunity because you’re not just getting one return on your money, you’re getting two returns on the same money at the same time. And the second idea is that you are able to do this as many times as you want, that’s called velocity of money.”
Book A Strategy Call
Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We can help! Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/, and find out how Privatized Banking, alternative investments, or cash flow strategies can help you accomplish your goals better and faster. That being said, if you want to find out more about how Privatized Banking gives you the most safety, liquidity, and growth… plus boosts your investment returns, and guarantees a legacy, go to https://privatizedbankingsecrets.com/freeguide to learn more.
46 min
November 28, 2022 The Multigenerational Family Business, with Dr. Dennis Jaffe
For an intended multigenerational family business to last past the first generation, the family must become a successful team.
https://www.youtube.com/watch?v=CuQR8NBc2JY
Professor, organizational consultant, family therapist, and family business consultant Dr. Dennis Jaffe joins us today. He has helped families overcome challenges that impede successfully transferring businesses, wealth, value, commitments, and legacies across generations.
So, if you want to create a multigenerational family enterprise… tune in now!
Table of contentsWhy Should Families Think Multi-Generationally?What Can History Teach Us About the Multigenerational Family Business?When Do You Bring Kids Into the Family Business?The Challenge of First-Generation WealthWhat is the Best Way to Create a Multigenerational Family Business?Connect with Dr. Dennis JaffeAbout Dr. Dennis JaffeBook A Strategy Call
Why Should Families Think Multi-Generationally?
[3:40] “There’s no ‘should’ about it. This is what families are concerned about—they’ve created wealth, been successful, they’ve providing for their family, they’re creating more wealth than they can use on a day-to-day basis, and they have young people growing up. And they begin to say, ‘Well, what’s going to be my legacy?’ And they begin to ask the question—not how do I get more wealth—-but what is the purpose of our wealth? What do we want to do with it?”
Dr. Jaffe has noticed that as families build wealth, they think more seriously about what that wealth will do beyond them. And this consideration is critical because it’s how wealth lasts for generations. You can’t simply build up wealth, you also have to create systems, educate your kids and grandkids, and pass on your values so that the generations beyond you will know how to be good stewards of your money.
What Can History Teach Us About the Multigenerational Family Business?
Dr. Dennis Jaffe has been in the field of family business and wealth since the early 80s. And over time, this industry has really evolved to include family meetings, family constitutions, and much more beyond just getting advice from a financial advisor. What Dr. Jaffe has done is interview and compile information from wealthy and successful families.
A successful family, as Dr. Jaffe defines it, is a family that has kept and maintained its wealth for at least three generations. After all, these are the families who have done a good job of educating the next generation on how to build and keep wealth. Successful families are also families who spend time together and have a sense of connection.
[12:10] “What I found is that these hundred-year families had a great sense of their legacy and history. They could look back for the fifth generation and say, ‘Well, you know, grandpa did this.’ Or, ‘One of the things that grandpa did that really made a difference for us is this…’”
This research proves helpful because it doesn’t suggest a singular path to wealth. Instead, it illustrates many paths and options for building and sustaining wealth. And behind it all is a sense of family history—that each generation can learn from the ones before.
When Do You Bring Kids Into the Family Business?
As important as it is to look to the past for guidance on sustaining wealth, it’s just as important to keep tabs on the future. After all, your children and your children’s children are the future of your legacy. They’re the ones who will carry the torch, so it’s important to prepare them to inherit the family’s wealth and continue that legacy.
[19:11] “So, one of the first things that I learned is that the older generation has to really listen to the next generation because they have a very unclear and unrealistic idea about the future. Because they see it from their own eyes and their own experience. They don't really understand the experience of their kids, the people that their kids marry, and their kid’s kids. And all those people have to have a voice, and I think a lot of elder generation people don't bring the family members in soon enough… I think it creates a problem for the family if they don't know how to work together. They don't talk about things. Then all of a sudden the elder is gone.”
Some parents grapple with knowing when to bring their children into the conversation and the multigenerational family business because they don’t want the children to be exposed to the more complex side of things. Yet that education and training can be critical in helping the next generation be better stewards of wealth in the future.
The Challenge of First-Generation Wealth
In particular, families with first-generation wealth have a challenge, depending on their mindset. Many of the people Dr. Jaffe’s encountered who have worked hard for their money—rather than being born to it—are independent. They pulled themselves up from the bottom, and want their children to do the same.
The issue with this is that their children are often born into wealth. They spend their whole lives benefiting from that wealth. Their clothes, their hobbies, where they attend school, who they know—all of those factors are affected by wealth. Rather than cutting them off at some point and expecting them to start from scratch, there’s an opportunity to teach them about wealth building and invite them to be a part of the family business. That way it’s practically guaranteed that your legacy can continue for more than one generation.
This is also important because it’s critical that your children and other family members know how to work together. Because eventually, the family is going to grow into different households. Your kids will branch off into their own families, and so on. They must be well-equipped to work together.
Money is a tool, like anything. And when you have it, you can use it to help your family learn to be good stewards of it for generations to come. They don’t have to reinvent the wheel in order to be successful. You just have to be thinking in terms of legacy and family wealth, as opposed to personal wealth.
What is the Best Way to Create a Multigenerational Family Business?
[29:18] “The idea is you want to create a long-term family [as opposed to a long-term business]. You want the family not to say, ‘Okay, let’s all go off. We’re all rich, let’s all have a good life [separately].’ You want there to be connection.”
Dr. Jaffe may have studied successful multigenerational family businesses, but he was not studying the businesses themselves. He was studying the families, and what they did to stay connected. Interestingly, of the successful families, many of them had sold their business by the third generation, or had pulled in a third party to lead the business. But the families themselves were still connected and were making decisions that complimented the family. In other words, what makes a multigenerational family business successful is not the business model, it's the family model.
Connect with Dr. Dennis Jaffe
DennisJaffe.com
[email protected]
1-415-819-9489
About Dr. Dennis Jaffe
Dr. Jaffe, a San Francisco-based advisor to families about family business, governance, wealth, and philanthropy, is Senior Research Fellow at Banyan Global Family Business Advisors.
He is the author of:
Borrowed from Your Grandchildren: The Evolution of 100-Year Family Enterprises;
Finding Her Voice and Leaving a Legacy;
Cross Cultures: How Global Families Negotiate Change Across Generations;
Stewardship in your Family Enterprise: Developing Responsible Family Leadership Across Generations and Working with the Ones You Love.
His global insights have led to teaching or consulting engagements in Asia, Europe, the Middle East, and Latin America. The Family Firm Institute awarded him the 2017 International Award for service, and in 2005, he received the Beckhard Award for service to the field. In 2020, he was awarded a special commendation as an individual thought leader in the field of wealth management by the Family Wealth Report. He has a BA degree in Philosophy, an MA in Management, and a Ph.D. in sociology, all from Yale University, and professor emeritus of organizational systems and psychology at Saybrook University in San Francisco.
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52 min
November 21, 2022 What is the Infinite Banking Concept? Part 9: What Infinite Banking is NOT
Have you heard about Nelson Nash, Infinite Banking, and Becoming Your Own Banker ... and want to learn more? Or maybe you’re already using Infinite Banking but would like to be able to explain it better to your spouse, parents, children, business partner, or friends.
https://www.youtube.com/watch?v=ZoKCkrLgSMs
Today, we're unpacking the fundamentals of the Infinite Banking Concept and discussing what Infinite Banking ISN'T.
Table of contentsInfinite Banking is NOT: MagicInfinite Banking IS: A Long-Term Habit, Skill, and SystemThe Importance of Long-Term ThinkingInfinite Banking is NOT: A Get Rich Quick SchemeHow Should You Split Your Premium?Can You Pay Premiums with Cash Value?Book A Strategy Call
Infinite Banking is NOT: Magic
Sometimes, what gets lost in translation when talking about IBC is HOW it works. While it is a powerful tool when structured properly, it is definitely not magic. Unfortunately, the way some people talk about IBC can make it seem that way, which is a disservice to how well it works from a logical and contractual standpoint.
Life insurance is a contract. Whole life insurance, in particular, tends to be a very beneficial contract. Since it’s permanent insurance, it offers a lot of living benefits. The loan provision, for example, is one such benefit. However, the loan provision is valuable because of the financial principles you can apply, NOT because you’re getting “free money,” nor even necessarily “tax-free” money.
In reality, the loan provision works like any other loan. It just has the added advantage of flexibility, because it’s 100% collateralized by your cash value. Every other seemingly “magic” or “too good to be true” feature of life insurance has a similar explanation. It’s a product that is highly efficient and works well, but it has checks and balances like any other financial product.
[6:50] “This is what Nelson [Nash] knew: that human conditions get in the way… If you don’t have good money habits to begin with… you’re not going to be a good saver either. And that is what the Infinite Banking system is. It’s a place to store or save money. It’s not an investment.”
Infinite Banking IS: A Long-Term Habit, Skill, and System
In reality, Infinite Banking is a long-term strategy to employ by way of whole life insurance. To put that in different terms, whole life insurance is a savings vehicle. Infinite Banking is the strategy for saving and using your money.
The reason IBC works so well is that it rewards good habits. The first habit is one of saving: by paying premiums, you increase your equity in your insurance policy. This equity is called cash value.
The next good habit is paying down your debt. When you leverage your policy to make a purchase, you benefit by making regular loan payments. You free up capital to use, and you can even apply some of that loan payment as PUAs that increase your cash value. All the while, you continue earning interest and dividends because you’re using a system that puts you in control.
Your whole life insurance policy is the place you put your cash until you have somewhere to deploy it. It’s a system that makes your savings more efficient, but you have to have those good habits already. That way, you can access and use your capital.
The Importance of Long-Term Thinking
The tether that ties the entire system together is long-term thinking. To truly reap the benefits of an IBC policy, you have to set your sites on the long game. That means considering how your actions today can affect your future self in 30 to 40 years or more. Saving, paying loans, and creating a wealth system can all have positive impacts. Not doing those things can leave major holes in your personal economy. And more importantly, if you don’t adopt long-term thinking in your use of an IBC policy, you may struggle to see the results you want.
The policy you have can only work as well as you are able to manage it. That means making choices with the long-term in mind.
[19:40] “What we really want you to focus on is the long-term growth of the policy, and what it’s going to do over your lifetime, not just what it’s going to do tomorrow in terms of early cash build-up.”
Infinite Banking is NOT: A Get Rich Quick Scheme
[28:00] “Anything in the world that is worth achieving, and that you will make yourself proud of for doing, does not come [without hard work]. Not marketing, not building a successful business, not raising children, not having a good marriage, not having a healthy body., None of those things come by magic bullets.”
Infinite banking is not a get-rich-quick scheme. It’s a process that requires discipline. And if you’re looking for a “magic bullet,” IBC is probably not for you. It requires work, dedication, and good habits.
How Should You Split Your Premium?
When talking about IBC, it’s common to hear the terms “10/90 split” or “40/60 split.” These are referring to how the premium is structured. There’s base premium and there are PUAs. The base premium is money that you apply to the face amount of your death benefit. On the other hand, PUAs (paid-up additions) are like micro-insurance policies that are added to your base policy. They’re considered “fully paid-up,” and therefore increase your cash value AND your death benefit.
The split refers to how much base premium you pay vs. how much PUA. Commonly, IBC policies are a 10/90 split, because it boosts your early cash value. Since a PUA buys a small amount of death benefit, you get that equity right away, rather than over time, like your base premium. Generally, a 40/60 split prioritizes early death benefit, because you can get a higher initial death benefit with a higher base premium.
This is a general rule of thumb, however, because it will depend on your personal economy, your age, and your health, among other factors.
Can You Pay Premiums with Cash Value?
The short answer is, yes, you can. However, this shouldn’t be your “plan.” This type of structure won’t magically hack your policy to create free money. Instead, this can be considered an option when all other options have been exhausted, but you’d like to keep your insurance intact.
The reason it doesn’t work is primarily that in order to leverage that cash value for premiums, you’d either have to take a loan or withdraw the funds. If you take a loan, you’re obviously accumulating an interest cost over time. If you withdraw the funds, you lost the advantage of uninterrupted compounding interest.
Ultimately, you want to have good money habits. By paying premiums, you set yourself up to have good long-term habits first.
[45:00] "I will guarantee you that if you move forward with wisdom, and with good insight, and with somebody who knows what they're doing you will—in 10 years or 20 years—look back and say thank you to yourself today."
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52 min

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The Money Advantage® Podcast helps successful, legacy-minded families turn wealth into stewardship, unity, and multigenerational impact through the Infinite Banking Concept, Family Banking, legacy…