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

https://www.youtube.com/watch?v=bK6cj5VH4_k

Most people miss the advantages of whole life insurance because they view it as strictly an insurance product that doesn’t do anything else. But it’s that perspective, not the product, that has the limitations.Do you need to get the highest-quality life insurance you can count on, but you feel like life insurance agents are conspiring against you and sabotaging your success? Do you have questions about the advantages of whole life insurance, or maybe you need some tools to help you?

Well, look no further because this article will explain the various whole life insurance advantages, without you having to compartmentalize it as just buying death benefit, separate from the rest of your financial life.

Best of all, these seven benefits of whole life insurance will put you on the fast track to success with your life insurance right now.

Table of contentsWhere Do the Advantages of Whole Life Insurance Policies Fit in the Cash Flow System?Advantage of Whole Life Insurance #1: Vault-Like SafetyBuilt-In Strength: Reserves and ReliabilityAdvantage of Whole Life Insurance #2: Competitive Growth on Cash ValueWhy Results Vary From Policy to PolicyAdvantage #4: Tax SavingsAvoiding the MEC TrapAdvantage #5: Gateway to Income-Boosting StrategiesSpend More, Worry Less in RetirementAdvantage #6: Privacy from Creditors and LawsuitsAdvantage #7: Legacy PreserverPros and Cons of Whole LifeFind out MoreFAQs About Whole Life Insurance AdvantagesWhat are the main advantages of whole life insurance?How do the benefits of whole life insurance compare to term life insurance?Can the cash value be used while I’m still alive?Are there tax advantages with whole life insurance?Is whole life insurance worth the higher premiums?

Where Do the Advantages of Whole Life Insurance Policies Fit in the Cash Flow System?

Life insurance coverage in itself is just one small part of the bigger journey to time and money freedom.

That’s why we’ve developed the 3-step Business Owner’s Cash Flow System. It’s your roadmap to go from just surviving to a life of significance, purpose, and financial freedom. 

The first stage is the foundation.  You first keep more of the money you make by fixing money leaks, becoming more efficient and profitable. 

Then, you protect your money with insurance, legal protection, and Privatized Banking. 

Finally, you put your money to work, increasing your income with cash-flowing assets.

That being said, whole life insurance designed for early cash value AND long-term growth fits the protection layer of creating wealth. At the same time, the Infinite Banking Concept improves every other area of your financial life.

Advantage of Whole Life Insurance #1: Vault-Like Safety

A whole life insurance policy is a savings vehicle, not an investment product. You can compare it to other savings tools, like checking accounts, savings accounts, money market accounts, and CDs.

Similarly, a whole life policy’s cash value is safe because it won’t drop in value.

This matters because your cash value is impervious to market crashes and corrections. It won’t drop in value unless you take the money out.

And if you take a peek behind the curtain to compare whole life insurance companies to banks, you’ll be impressed here, too.

Built-In Strength: Reserves and Reliability

Life insurance companies can make these profound guarantees mainly because of their long-term conservative investment strategy and their strong reserves. While many banks are required to keep only 10% in reserves, life insurance companies have more than 100% in reserves.

Notably, banks failed 27 times more than insurance companies during the years between 2005 and 2017. During those 12 years, there were 523 bank failures, while only 19 life insurance companies became insolvent. And those companies were small, poorly rated companies. The highly rated companies have stood strong for well over 100 years, through multiple economic crises.

Like the FDIC, which insures bank deposits up to $250,000, each state has a Guaranty Insurance Fund (GIF) that insures insurance. This level of long-term security is one of the practical advantages of whole life insurance — especially when compared with traditional savings tools.

Top that off with ensuring you’re working with the highest-rated, best life insurance companies. Then, you can be doubly, triply sure that whole life cash value is a savings tool that will guarantee your dollars will be there for you.

Advantage of Whole Life Insurance #2: Competitive Growth on Cash Value

A properly designed whole life insurance policy doesn’t scrimp on returns. In fact, when compared to other savings-type accounts, its guaranteed cash value benefits can often outperform traditional options over the long term.

But most people wouldn’t know that, because typical advisors don’t usually design insurance as savings tools.

In fact, when comparing premium payments with your resulting cash values in, say, year 20, whole life insurance policies typically yield an internal rate of return between 3% and 5%. That means that it would have required a consistent, positive, compounded growth rate every single year to turn the cash outlay into that account value.

Why Results Vary From Policy to Policy

Now, exact cash value growth, in terms of rates, can vary from whole life policy to whole life policy based on age, gender, and habits. But here’s what does matter: the return is after taxes and fees, and it’s in today’s low dividend-rate environment. Historical returns on whole life have been even higher.

Let’s put this in perspective. If you could get a 3% internal return in whole life insurance, compared to a 0.25% return in a cash savings account, that’s a full 12x higher return. Not too shabby!

And bonus points for whole life insurance: when you access your cash value through policy loans, all of your money keeps growing at compound interest, even while you use your money at the same time. 

That kind of uninterrupted growth and flexibility is one of the overlooked advantages of whole life insurance — especially when compared to low-yield savings accounts or taxable investments.

So, not only is the whole life’s internal return competitive with other savings tools, but it’s also tax-advantaged and uninterrupted!

Advantage #3: Unlimited Access for Your Lifetime Cash Needs

If I’m going to stash my cash somewhere that’s safe and growing, I want to be able to access it so I can use it as well.

The great thing about cash value is that it is very liquid. You can use your cash value through loans or withdrawals, and in either case, the life insurance company has a contractual obligation to give you the cash.

Here’s how paying back a policy loan works.

If you have $50K of cash value, you can request a $50K loan. Then they’ll give you $50K of their money, secured against your cash value.

The best thing about this is that a whole life insurance policy loan doesn’t have any stipulations or requirements for what you’ll use it for, or whether you deserve it, or how and when you’ll repay. This means you can take a loan at any time, for any reason, without a cumbersome, time-consuming qualification process. And while it does accrue interest, you can pay it back over any period of time.

Freedom to Borrow on Your Terms

All in all, that means unlimited access to your cash needs throughout your lifetime. This is important because you can literally use the same money over and over again to pay for college, buy a house, purchase an investment, or anything else you might need through a process of taking and repaying policy loans.

And, you can also take your money out directly through withdrawals. In that case, you wouldn’t be able to put the money back, and you would pay tax on anything you withdraw above the amount you’ve paid in.

Advantage #4: Tax Savings

Tax is such a crucial piece of any financial tool because if you’re not careful, gains can be eaten up by taxes, especially in taxable accounts.

One of the distinct benefits of whole life insurance is that it’s one of the only tools where you pay tax once, and never again.

We call this the triple tax advantage.

Here’s how it works.

First, I pay tax on my income before I put it into my whole life policy. Then, I pay premiums. My money grows in a life policy tax-deferred. This simply means that I don’t have to pay tax every year on the growth of my cash value component or death benefit. 

It implies I’ll have to pay someday … but if I utilize the policy correctly, I’ll never have to pay tax on that amount of money again. That’s because one of the advantages of whole life insurance policy loans is that they are tax-free.

And if I withdraw cash, as long as I don’t take out more than what I paid in, I won’t pay tax on the withdrawal. Then, when my beneficiaries – in my case, my family’s trust – get my death benefit, it’s income-tax free.

Avoiding the MEC Trap

One other thing. To get this triple-tax advantage, you need to make sure your life policy does not become a Modified Endowment Contract (MEC) by having too much premium and too low a death benefit. It’s one of the few technical areas that can affect the long-term advantages of whole life insurance. You would want to make sure your life insurance is designed to keep your policy on the straight and narrow, not veering into MEC territory. 

A policy that becomes a MEC loses the tax-advantaged treatment and would be taxable anyway you access and use your money. That’s why this remains one of the most overlooked benefits of whole life insurance — you pay tax on the seed, and not on the harvest.

Advantage #5: Gateway to Income-Boosting Strategies

Whole life isn’t just an all-star player; it’s like a magic sauce that elevates the rest of the team as well.

https://www.youtube.com/watch?v=aQ1aApSPch8

Ready to invest in real estate, but don't know where to start?  In this episode, Jeff Schechter "Shecky" and Jack Gibson discuss buying your first investment property - a turnkey rental.

So if you want to springboard into asset-based cashflow, be fully prepared, and buy the right property so you can replace your income with a real estate portfolio, tune in now!

Where Does Investing Fit in the Cash Flow System?

Investing is just one step in the path to time and money freedom.

That’s why we have created the 3-step Business Owner’s Cash Flow System.  It’s your roadmap to take you from just surviving, to a life of significance, purpose, and financial freedom.

The first step is keeping more of the money you make by fixing money leaks, becoming more efficient and profitable.  Then, you’ll protect your money with insurance and legal protection, and Privatized Banking.  

Finally, you’ll put your money to work, increasing your income with cash-flowing assets.

Today’s conversation will help you take the plunge into your first investment property.

Who is Jeff Schechter "Shecky"?

Jeff Schechter "Shecky" and Jack Gibson are the owners and operators of High Return Real Estate.  We interviewed Jack Gibson about his background and the High Return Real Estate investment opportunity here. 

Shecky’s accomplishments include:

Started first business right out of collegeDeveloped sales and marketing strategies that have worked well across many industriesNumerous businesses venturesBegan flipping personal residences in the 1980sBought and sold many propertiesActive investorPrivate consulting practice, coaching hundreds of business owners, and thrive on helping people realize their full potential, not just in business, but in all aspects of life!

In This Interview with Jeff Schechter, You'll Discover:

Once you have the cash, pick a property that makes sense, then pull the trigger.Have a holistic approach - more important than analyzing the numbers, know who you are doing business with and the reputation of the person you are buying from.Price and numbers don't tell the whole story - there is always variance from the numbers on the pro forma.Work with someone who has the wisdom of experience, who can buy in volume and get better deals.A great turnkey provider will provide full transparency, before and after pictures, the scope of work, current condition with third-party inspection, and checklists of what was done.Cash-on-cash returns are a benchmark, but they don't tell the whole story - instead, recognize the five areas of asset build-up that make real estate an IDEAL investment: Income, Depreciation, Equity build-up, Appreciation, Leverage.Take responsibility for your self-education.Revel in the experience and accept it as a learning experience - there is no better teacher than experience, don't judge every nuance as good or bad.With the experience under your belt, don't stop. Look for ways to scale and develop a performing portfolio to create financial independence.  Replicate good investments.  Put together your cash for the next investment. Never stop learning.If you're looking for perfection, don't get into real estate investment.Most importantly, stay in your lane - if you're a professional or entrepreneur, stay hyper-focused on scaling your business. Then, take your profits, find out how to leverage the professional and invest with them.  That’s how you cut the steep learning curve as you start on your investing journey.

Find Out Your Next Right Step to Time and Money Freedom

If you are ready to personally implement Infinite Banking, alternative investments, or cash flow strategies to keep more of the money you make, book your strategy call with The Money Advantage advisors today.

Turnkey Real Estate Links & Mentions From This Episode:

Learn more about how you can improve your results with turnkey real estate with Jeff Schechter, Jack Gibson and High Returns Real Estate: https://highreturnrealestate.com.

Get High Return Real Estate's deals.

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Thanks for listening!

If you’re ready to get the best life insurance for the best price, then I’ve got a secret here about the cost of whole life insurance you need to learn about FAST.

Everyone asks, "How much does whole life insurance cost?" But that's the wrong question.

A quick secret for success in getting the best life insurance policy: a properly structured whole life insurance policy creates cash value that is an ideal place to store cash.

Note: We aren't talking about your typical, off-the-shelf whole life product. Rather this is whole life custom-designed for Privatized Banking, with maximum early cash value and long-term growth.

https://youtu.be/H1Pz7bX8Nug

The point of this secret is: whole life insurance is tough and enduring insurance, PLUS a knockout savings tool on steroids.

It starts out the gate with high cash value. But you won't have access to as much as you've put in right away. Once you overcome the minor lack of liquidity in the very first years, you reach a crossover point where you have more cash available than you've put in. 

Starting at that point, there's no more cost to you, and every year afterward for the rest of your life is growth.  Yes, there are internal costs to the policy, and we'll discuss those in a minute, but what matters is how it impacts you.

As a wealth creator, here's what this really means: as soon as you switch your lens from a short-term to a long-term - dare I say multigenerational life-time focus - whole life insurance becomes the most robust and extravagant savings tool imaginable.

Table of contentsWhere Whole Life Insurance Fits in the Cash Flow SystemWhat Do People Mean by 'Cost'?Breaking Down the Real Value of Whole LifeCash Value Growth: Your Money on SteroidsLiquidity and Access: Using Your Money While It GrowsGuaranteed Benefits: What You Can Count OnCost Comparison: Whole Life vs. Term + Invest the DifferenceWhat Actually Happens Over 30 YearsThe Reality of Term InsuranceWhy Whole Life Wins Long-TermTax and Estate Planning BenefitsTax-Advantaged GrowthTax-Free AccessLegacy Planning AdvantagesWhy Framing Matters: Expense vs. AssetThe Bottom Line on Whole Life Insurance Cost

Where Whole Life Insurance Fits in the Cash Flow System

Life insurance is great, but it's not the one and only thing for financial success. Rather, it's one step in your journey to time and money freedom.

That’s why we’ve developed the 3-step Business Owner’s Cash Flow System as your roadmap to go from just surviving, to a life of significance, purpose, and financial freedom. 

The first stage is the foundation.  You first keep more of the money you make by fixing money leaks, becoming more efficient and profitable. 

Then, you protect your money with insurance, legal protection, and Privatized Banking.

Finally, you put your money to work, increasing your income with cash-flowing assets.

What Do People Mean by 'Cost'?

When people say whole life insurance is "expensive," what exactly do they mean? Usually, they're talking about the average cost of whole life insurance premiums. That's the amount you pay each year to keep your policy going.

And honestly, I get why whole life premiums seem high at first. When people see the premium amount, their first reaction is often, "Whole life is too expensive."

But here's where most people make a complete mistake. They focus on the premium without understanding what that premium is actually buying.

The word "cost" implies you're paying money and getting nothing back. Like when you pay for gas, that money is gone forever.

But that’s not what's happening with whole life insurance. Because when you understand what's included in that premium, the whole conversation changes.

Breaking Down the Real Value of Whole Life

Cash Value Growth: Your Money on Steroids

Compared with other savings tools, specially designed whole life insurance gets better growth with a 3 – 5% internal rate of return over a 20+ year timeline.

Plus, you don't pay taxes on the growth, as long as you use the policy correctly, and your heirs won't pay income tax on the proceeds.

Liquidity and Access: Using Your Money While It Grows

As the cash value accelerates, the gap between paid-in premiums and available cash value shrinks. It then closes altogether about year 5 – 9 at your break-even point.

That's the first year that you have more cash value than what you've paid in premiums. Every year afterward, you'll always have more cash value than what you've paid in, so the felt impact to you is that the insurance no longer has a cost.

And, on top of that, you can use your money at any time along the way.

Guaranteed Benefits: What You Can Count On

Meanwhile, you have a death benefit that's many multiples over what you put in, so you have a built-in legacy, plus increased income in the future.

And whole life guarantees you'll have a death benefit payout that is much higher than the premiums you've paid in.

Cost Comparison: Whole Life vs. Term + Invest the Difference

Let's get real about this comparison everyone loves to make.

The "buy term and invest the difference" crowd will tell you to get cheap term insurance and invest what you would have spent on whole life premiums. Sounds logical, right?

What Actually Happens Over 30 Years

Here's a scenario of what is actually more likely to happen over 30 years.

Let's say you're 35 years old. A 30-year term policy might cost you $500 a year, while a whole life policy costs $5,000 a year. So you "invest the difference" of $4,500 annually.

After 30 years, if everything goes perfectly - and I mean perfectly - you might have built a decent investment account. 

But here's what they don't tell you - your term insurance just expired. At 65, if you want life insurance, you're starting over with sky-high premiums or no coverage at all.

The Reality of Term Insurance

Term life insurance rarely pays out because most people outlive their term life policies.

And because term life insurance is priced for the block of years you have the policy, younger starting ages, and shorter-term lengths it appears the cost is relatively little. However, if you continued to renew a term life policy throughout your lifetime, you could easily pay more in premiums than you'd get out in death benefit.

Once your term runs out, the policy becomes annually renewable, meaning the cost of insurance rises every year, and every year, you pay an increased premium to cover it.

Here's the math that destroys the 'term is cheaper' myth: Our 35-year-old pays $15,000 total for their 30-year term. 

But to keep that same coverage from 65 to 85? They're looking at $300,000-500,000 in premiums - if they can even qualify. Meanwhile, the whole life buyer pays $250,000 total for the same 50 years of coverage, and the policy eventually pays for itself through dividends.

The term buyer loses not just their investment game but also their insurance game. They pay more for coverage that disappears exactly when it’s needed the most.

Why Whole Life Wins Long-Term

Meanwhile, your whole life policy? Still there. Still growing. Still providing death benefit protection.

All forms of universal and variable life insurance are built on this annually renewable term life insurance model, with an annually increasing cost of insurance. That's why the cost becomes a critical, focal point because in the later years, the costs can become substantial, even to the point of surpassing the growth of the policy and collapsing the policy.

On the other hand, whole life's level internal cost, guaranteed growth, ownership benefit of dividends, and guaranteed payout create the stability you need to be the lowest true cost to you for the highest quality life insurance product.

For an equal amount of death benefit, you could say that whole life requires the highest premiums. But when you buy whole life, you're getting a lot more than insurance. Committing to whole life insurance is committing to a savings program – the single, basic fundamental that underlies and facilitates every other component of wealth creation.

Tax and Estate Planning Benefits

When people talk about the cost of whole life insurance, they often forget about one of its biggest advantages: the tax benefits.

You don't pay taxes on the growth, as long as you use the policy correctly, and your heirs won't pay income tax on the proceeds.

Tax-Advantaged Growth

While your money sits in taxable accounts, getting hit with taxes every year, your whole-life cash value grows without Uncle Sam taking a cut.

Whole life cash value grows tax-deferred—meaning no taxes are due as it accumulates. And when structured and used properly, you can access that cash value tax-free.

Tax-Free Access

When you take a policy loan, you're borrowing from the insurance company using your cash value as collateral. Since it's a loan—not income—the IRS doesn’t tax it.

Compare that to withdrawing from an IRA, where every dollar is taxed as income.

Legacy Planning Advantages

Your death benefit passes to your heirs income tax-free. No matter how much your policy has grown, your beneficiaries get the full amount without paying income taxes on it.

For families building generational wealth, it's a way to transfer wealth to the next generation efficiently and tax-advantaged.

If the policy is utilized correctly, you'll never pay tax on the growth and distributions. The policy is tax-free via loans and withdrawals as long as the policy stays in force and does not become a Modified Endowment Contract.

Read our article on Is Infinite Banking Tax Free to learn more about maximizing these tax benefits

Why Framing Matters: Expense vs. Asset

When you buy whole life insurance, you're not spending money – you're moving money from your checking account into an asset that grows, provides access,

https://www.youtube.com/watch?v=Q31siMqC7is

Rod Khleif has transformed from losing $50 Million to living a spectacular life and achieving everything he's dreamed of. Rod is a passionate real estate investor who has personally owned and managed over 2000 properties. As one of the country’s top real estate, business, and peak performance luminaries, Rod has also built over 23 businesses in his 40-year business career.Rod khleif is also the author of How to Create Lifetime Cashflow through Multifamily Properties, coach and mentor for multi-family investors, and host of the top-ranked Lifetime Cashflow through Real Estate Investing podcast.

Where Investing Fits into the Cash Flow System

Here at The Money Advantage, we are a community of wealth creators taking control of our lives and financial destiny. 

It’s not enough to make a high income.  You have to keep more, protect that money, and finally, increase and make more through the right investing decisions.

That’s why we have created the 3-step Business Owner’s Cash Flow System.  It’s your roadmap to take you from just surviving, to a life of significance, purpose, and financial freedom.

The first step is keeping more of the money you make by fixing money leaks, becoming more efficient and profitable.  Then, you’ll protect your money with insurance and legal protection, and Privatized Banking.  Finally, you’ll put your money to work, increasing your income with cash-flowing assets.

Today’s conversation will expand your education and paradigm of investing.

Who is Rod Khleif?

A compelling rags-to-riches-to-rags-to-riches story, Khleif soared from humble beginnings as a young, impoverished Dutch immigrant to incredible success. Rod’s experience involves both remarkable triumphs and spectacular failures, which he affectionately calls “seminars.” Rod brings incredible authenticity and insight to his approach to business, success and life.

Rod loves training and coaching the “psychology of success” to aspiring real estate investors and entrepreneurs. He can train and coach on virtually any business or success related topic in great depth, contributing incredible first-hand, technical, and motivational knowledge and skills.

Rod Khleif has combined his passion for real estate investing with his personal philosophy of goal setting, envisioning, and manifesting success to become one of America’s top real estate investment and high-performance life coaches.

As an accomplished entrepreneur and business owner, Rod has built several successful multi-million dollar businesses. But ask him what he is most proud of, and he will tell you about his work as a community philanthropist.

Giving back to the community is a major passion for Rod. He is the founder and long-serving president of the Tiny Hands Foundation, a children’s charitable foundation that leads several annual community charitable initiatives including: Back-to-School Backpack Brigade; provides thousands of new backpacks filled with school supplies to community school children in need. Teddy Bear Brigade; provides thousands of Teddy Bears for community police department patrol cars to be given out by police officers to comfort children in distress. Holiday Basket Brigade; provides thousands of Holiday Gift Baskets filled with food and Christmas toys to community children and families in need. Over the past 14 years, Rod’s work has benefitted more than 75,000 underprivileged community children.

Rod Khleif's Goal Setting Exercise to Get Everything You Want Out of Life

Set aside one hour of uninterrupted time. Write down everything you want out of life. Outline the stuff you want to do, the things you want to learn, and who you want to help.

Put a time limit on each goal

Pick your #1 priority that you'll focus on right now.

Write down your top three 1 year goals on another sheet of paper, leaving space between them.

For each of your one-year goals, write down 2 - 3 sentences for why this goal is an absolute must for you.

For each one-year goal, write down the pain you're avoiding by accomplishing your goal.

Set aside one minute per day to visualize these goals, experience them, and express gratitude for having them.

Find out More About Rod Khleif

Get the Multifamily Due Diligence Checklist by texting Rod to 41-411.

Find out about available multifamily investments by texting Partner to 41-411.

Connect with the Multifamily Real Estate Investing Facebook Group.

Access more multifamily investing resources at RodKhleif.com.

Get Financial Clarity Today

If you would like to implement Privatized Banking, cash flow strategies, or alternative investments, so you can accelerate time and money freedom, we can help.  We’ll review your situation to help you decide what moves are best for you.

To start the conversation, book a call with our advisor team.

Success leaves clues.  Model the successful few, not the crowd, and build a life and business you love.

https://www.youtube.com/watch?v=Z6gZz7IIEzQ

Waiver of premium is like having insurance on your insurance. So, if you are a wealth creator who wants to make sure your life insurance will be the cornerstone of your wealth and take care of your family no matter what, here are 3 quick questions to ask to make sure you get a bulletproof policy.

But first ...

Table of contentsWhere Does Waiver of Premium fit into the Cash Flow System?Waiver of Premium Question #1: How Would My Life Insurance Be Impacted If I Became Disabled? Financial PressureImpacts on Your Life Insurance PolicyReasons to Maximize Your Life Insurance if You're DisabledYour Life Insurance Becomes The Savior ... Of ItselfWaiver of Premium Question #2: How Common Is Disability? Waiver of Premium Question #3: What Puts Me In The Best Position In The Widest Range Of Circumstances? Maximum Policy Performance, No Matter What HappensBottom line? Share the Love!

Where Does Waiver of Premium fit into the Cash Flow System?

The waiver of premium rider is an add-on to a life insurance policy, an integral part of your financial life. But life insurance in itself is just one small part of the bigger journey to time and money freedom.

That’s why we’ve developed the 3-step Business Owner’s Cash Flow System. It's your roadmap to go from just surviving, to a life of significance, purpose, and financial freedom. 

The first stage is the foundation.  You first keep more of the money you make by fixing money leaks, becoming more efficient and profitable. 

Then, you protect your money with insurance and legal protection and Privatized Banking. 

Finally, you put your money to work, increasing your income with cash-flowing assets.

The Waiver of premium benefit is a life insurance upgrade feature in the protection component of your cash flow system.

Waiver of Premium Question #1: How Would My Life Insurance Be Impacted If I Became Disabled?

This simple question means you must understand a key idea. What if disability prevented you from continuing working in your current profession, at your current level of income? And what if that limited your finances so that you couldn't continue to pay premiums for a life insurance policy? And what if you had wanted that policy to be your access to cash and the legacy for your family?

Financial Pressure

You need to know the answer to this question because a life-altering event that causes a disability could not only cause physical challenges, but it could heap on financial strain in compounding ways as well.

If disability were due to an illness or injury, there could be extended medical expenses and recovery time.  You may want or need your spouse close to assist you.  Neither of you may be able to work during this time.

The reason this matters is that if you lose the ability to keep working the way you always have, your primary source of income could become tenuous, or be lost altogether. And that means life would force difficult decisions about what expenses you have to cut out. With medical bills and basic needs requiring top priority, there may not be enough to pay life insurance premiums.

Impacts on Your Life Insurance Policy

With a term life insurance policy, that could mean having to walk away from a policy. In this case, you'd give up the death benefit AND the dollars you've paid in premium up to this point.

With a whole life policy, that could mean canceling your policy or choosing another funding method. Options include paying base premium only, paying from policy values, using policy loans, or reduced paying up. You'd have to accept that these options will reduce your cash value and/or survivor benefit, constricting the policy.

Reasons to Maximize Your Life Insurance if You're Disabled

But rather than limiting your policy, you'd have far more options if you maximize your cash value and life insurance coverage instead.

The cash value could be an additional source of financial support and peace of mind during this time.

Your survivor benefit could reimburse costs and take care of your family if you are gone too soon.

But how would you pay the premiums going forward to make sure you maximize policy values as much as possible? 

Your Life Insurance Becomes The Savior ... Of Itself

Waiver of premium transfers the risk of funding your policy from you to the insurance company. If a disability makes premium payment infeasible, the life insurance company itself becomes the hero that rides in on a white horse.

They pick up the tab and pay your premiums for you so that your policy continues to serve you just as you had imagined when you first put it in place. You wouldn't even have to think twice about it. That would be one less thing consuming your attention and causing stress during a very stressful period in your life.

With waiver of premium, your insurance policy becomes self-completing, to the greatest degree possible.

To trigger the waiver of premium rider, you would usually need to be fully disabled and unable to do any work for a full six months. And typically, the rider would pay for the base premiums, not optional riders like the Paid Up Additions Rider.

The result?  The maximum continued cash value and death benefit growth, considering the circumstances.  That means you can use your cash to cover other bills, and the policy's cash value and death benefit will still be there to take care of you and your family.

If you have a term policy, waiver of premium is equally important, because it may allow the option to upgrade your policy by converting to a permanent policy that builds cash value AND gives you a guaranteed death benefit.

So the thing for you to do here is to recognize that a loss of income from a disability could impact your life insurance policy.

Waiver of Premium Question #2: How Common Is Disability?

The big a-ha for you with this is that there's often an underlying motivation to analyze how much of a gamble it would be to beat the odds. 

That's like running through your neighborhood naked in the middle of the night, forgoing the protection of proper clothing, just because there's a low probability of being spotted.

As a wealth creator, here's what this really means: disability is far more common than we would like to think.  And for those impacted, there is a 100% chance that it would be a life-changing event.

25% of 20-year-olds entering the workforce will suffer some income-interrupting disability during their careers (Council for Disability Awareness in a 2014 Consumer Disability Awareness Study)One in 8 workers will be disabled for 5 years or more during their working careers (National Association of Insurance Commissioner’s' Disability Insurance Tables A and C, assuming equal weights by gender and occupation)65% of American workers could not cover their normal living expenses for a year if they couldn't work (Life Happens Disability Survey, conducted by Kelton Research, April 2012)12% of Americans, which is more than 37 million people, are classified as disabled (US Census Bureau, American Community Survey, 2011)

Disability results from many circumstances, most of which are not even on our radar. These include back pain, paralysis, heart disease, cancer, mental illness, accidents, and even pregnancy, infections, or nutritional diseases.

You can't neglect this because losing your life insurance policy due to disability is probable, but it's also preventable.

To put this into action you should be aware of the risk of disability.

Waiver of Premium Question #3: What Puts Me In The Best Position In The Widest Range Of Circumstances?

The big idea with this question is that while we don't want to dwell on potential bad things happening in our life, it's best to be prepared for anything that could happen.

Wealth creators need to understand this question means that in the event of disability, waiver of premium gives you a guarantee that your life insurance premium wouldn't be a bill you'd have to forgo. That means that your policy performs best, no matter what life throws at you.

This question spells the difference between success and failure for wealth creators. That's because planning only for the most likely situation doesn't prepare you to weather the storm if life turns out differently than you'd expected. 

Instead, recognize that certainty has an economic value to you. Bolster your certainty by maximizing your protection, so that you'll have the best outcome, no matter what. 

Live your best life by preventing a worst-case-scenario from knocking you off the rails. 

Maximum Policy Performance, No Matter What Happens

One of the main reasons many people forgo waiver of premium is that they think they have to give up the goldmine of early cash value. While it has a cost, it is not as much as some would think.

Regardless, all the early cash value and long-term growth a Privatized Banking policy can give you in a best case scenario where you continue premium payments as planned, won't be worth it if you end up having to modify your premium payments and significantly reduce your planned cash value and death benefit because of a disability if you didn't have the foresight to see the value of waiver of premium.

Paying for waiver of premium is a small cost to get a self-completing policy.

That means one less thing that you have to think about losing. And that means your life insurance will be there for you when you absolutely need it the most.

Bottom line?

You should make sure that your life insurance policy includes a waiver of premium rider.  This way, your policy will do the MOST for you in the widest range of circumstances, even if disability is part of the equation. 

Your policy will literally be "from this day forward, for better, for worse, for richer, for poorer, in sickness and in health,

https://www.youtube.com/watch?v=T8YrxVLGUO8

In this episode, we interview Jorge Newberry, CEO of American Homeowner Preservation, about how to invest in distressed mortgages with as little as $100.

So if you want to get between 7 - 12% annual cash returns paid out monthly, understand your investment, and make a huge difference in families, neighborhoods, and communities, starting with a small investment, without having to be an accredited investor with a $50K minimum, tune in now!

Where Investing Fits into the Cash Flow System

Here at The Money Advantage, we are a community of entrepreneurially-minded wealth creators who are taking control of our lives and financial destiny. 

It’s not enough to just make a great income.  You have to figure out how to keep more, protect that money, and finally, increase and make more through the right investing decisions.

That’s why we have created the 3-step Business Owner’s Cash Flow System.  It’s your roadmap to take you from just surviving, to a life of significance, purpose, and financial freedom.

The first step is keeping more of the money you make by fixing money leaks, becoming more efficient and profitable.  Then, you’ll protect your money with insurance and legal protection, and Privatized Banking. 

Finally, you’ll put your money to work, increasing your income with cash-flowing assets.

Today’s conversation will give you a fresh perspective on an investing opportunity for big returns with a small investment.

Jorge Newberry Conversation Highlights

In this episode, you'll discover:

What led Jorge Newberry to found AHP 12 years agoThe purpose and mission of AHPThe prevalence of defaulted mortgages today, 10-years after the housing crisisHow AHP helps homeowners stay in their homes How AHP offers a minimum investment of only $100The returns, payout, and liquidity investors can expect when investing with AHPThe current investment opportunity with AHP's fund re-openingWhat a potential upcoming housing downturn will mean for AHP and distressed mortgage note investors

About Jorge Newberry:

Jorge is an expert in investing in mortgage notes whose accomplishments include:

Jorge Newbery is an author, entrepreneur, CEO and investor. He is the Chairman and CEO of AHP Servicing LLC, which crowdfunds the purchase of non-performing mortgages from banks at big discounts, and then shares the discounts with struggling homeowners. Jorge is the Founder and Partner of Activist Legal, LLP, a DC-based law firm that facilitates default legal services, and the Founder and CEO of DebtCleanse Group Legal Services, a nationwide legal plan to help consumers and small businesses get out of debt without filing bankruptcy. A 2004 natural disaster triggered the financial collapse of Newbery's former business, leaving him with $26 million in debts he could not pay. Newbery rebuilt himself through AHP, sharing what he learned from his challenges to help families at risk of foreclosure stay in their homes. Jorge is also the author of Burn Zones: Playing Life's Bad Hands; Debt Cleanse: How To Settle Your Unaffordable Debts For Pennies On The Dollar (And Not Pay Some At All); and Stories of the Indebted.

Get Financial Clarity Today

If you would like to implement Privatized Banking, cash flow strategies, or alternative investments, so you can accelerate time and money freedom, we can help.  We’ll review your situation to help you decide what moves are best for you.

To start the conversation, book a call with The Money Advantage advisors now.

Investing In Mortgage Notes Links & Mentions From This Episode:

American Homeowner PreservationBurn Zones: Playing Life's Bad Hands, by Jorge NewberryDebt Cleanse: How To Settle Your Unaffordable Debts For Pennies On The Dollar (And Not Pay Some At All), by Jorge NewberryStories of the Indebted, by Jorge Newberry

Thanks for Tuning In!

Thanks so much for being with us this week. Have some feedback you'd like to share? Please leave a note in the comments section below!

If you enjoyed this episode on how to invest in distressed mortgages with as little as $100, please share it with your friends by using the social media buttons you see at the bottom of the post.

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Please leave a review right now.

Thanks for listening!

Success leaves clues.  Model the successful few, not the crowd, and build a life and business you love.

https://youtu.be/ivNjgBZM19Q

If you want to get your money to do the most, learn these essential keys to be your own bank. (NOTE: “Be your own bank and the Infinite Banking Concept” does not mean that you are literally a bank or creating a bank; rather, we mean emulating the idea of banking.)

Instead of being a saver who’s a star-student customer of the bank, this is how you supercharge your savings to control capital, earn interest, and increase your cash flow as you model the banking system – the most profitable business model in the world – and start becoming your own banker.

So if you want to keep your money at your disposal and earn maximum returns at the same time (without having to take on more risk), check out the podcast episode right now!

In this podcast episode, you’ll discover the three simple steps to be your own bank:

1: Keep cash reserves

2: Own the reservoir

3: Master the art of arbitrage

Table of ContentsWhere Does Being Your Own Bank Fit into the Cash Flow System?Why the Traditional Banking Model Works Against YouBe Your Own Bank Step #1 – Keep Cash ReservesBe Your Own Bank Step #2 – Own The ReservoirYour Money That’s Not In a Reservoir You OwnThe Ideal Reservoir You Own: Whole Life Insurance Cash ValueBe Your Own Banker Step #3 – Master The Art Of ArbitrageHow To Be Your Own Bank Through Life Insurance?How Becoming Your Own Banker Changes the OutcomeMisconceptions of Being Your Own BankThe Bottom Line for Every SaverShare the Love!

Where Does Being Your Own Bank Fit into the Cash Flow System?

Being your own bank is a process of managing your cash flow so that you keep and control as much of your money as possible. This system, better known as Infinite Banking, is one step in your journey to time and money freedom.

That’s why we’ve developed the 3-step Business Owner’s Cash Flow System as your roadmap to go from ‘just surviving’ to a life of significance, purpose, and financial freedom.

The first stage is the foundation. You first keep more of the money you make by fixing money leaks, becoming more efficient, and profitable.

Then, you protect yourself with insurance, legal protection, and Privatized Banking.

Finally, you put your money to work, increasing your income with cash-flowing assets.

Why the Traditional Banking Model Works Against You

Most people grow up trusting the banking system without ever questioning it. We’re taught that saving in a bank is the safest way to secure our future. But when you take a closer look, you’ll see that traditional banks are built to serve their own profits, not yours.

When you deposit money into a bank, you lose control. The bank puts your cash to work for its benefit by lending it out at much higher rates while paying you a fraction of a percent in interest. They use your capital to build their wealth, while you carry all the risk of inflation and opportunity cost.

Meanwhile, your savings are exposed to devaluation, fees, and banking policies you can't control. Traditional banking systems are not designed to protect or grow your wealth; they're designed to profit from it.

Choosing to be your own bank is about reclaiming that control. Instead of allowing traditional banks to leverage your hard-earned dollars, you create a privatized banking system where your money works for your family, not for someone else’s bottom line.

Be Your Own Bank Step #1 – Keep Cash Reserves

Why do we model the bank? What do we want it to do for us?

As a customer of the bank, you put your money in the bank for safekeeping, between uses.

If you shift your lens and look at banking from the bank’s perspective, you’ll quickly learn why they’re the most profitable business model in the world.

The banker stores your cash and pays you for the use of that cash.

Because the banker stores cash, that capital offers opportunities to offer financing that will be repaid at interest. This means that because the bank has capital reserves, they have opportunities to put its money to work.

Check out our article on modeling the bank to see all the benefits the bank gets.

So, how can you store capital, so you can be your own bank and get the banker’s benefits?

You have to start by keeping capital in your control. The way to accomplish this is to pay yourself first.

True savings is capital that you control.

What do we mean by control? This leads us to step #2.

Be Your Own Bank Step #2 – Own The Reservoir

The easiest way to see if you are holding your cash where you have control is to ask who is getting the most use of that capital? Who gets the guarantees, earns the interest and cash flow, and has access to use that money? Spoiler alert: usually, it’s another person, bank, or financial institution.

You can think of all the money you earn flowing into your own reservoir. But, most often, it doesn’t stay in your own reservoir for long.

When you spend it, either through your lifestyle, by making loan payments, taxes, or even saving where someone other than you has control of your money, your dollars flow out of your reservoir into someone else’s.

Your Money That’s Not In a Reservoir You Own

For example, when you make your mortgage payment, that check leaves your reservoir and enters the mortgage company’s reservoir. They can now use that capital. Even if you think of the principal payment as going into your equity, with an outstanding mortgage, the bank owns your home, even though you have the keys. You’d still need their permission to use that capital, so it’s not in a reservoir you control.

When you pay the grocer, you transfer your cash to their ownership, and they now get to use that cash.

Paying taxes puts your dollars in the reservoir of the IRS, who now gets the most use out of that capital.

And when you invest your dollars, most often, you put them in the control of a financial institution.

Even savings are not exempt. If you save in the bank, the bank now has the use of that capital to earn a return on that cash.

The only way to own the reservoir and be your own bank is to have ownership rights to get to use it. That means you have it at your disposal and still earn a maximum return at the same time, while maintaining value without loss.

In other words, you’re in control when you have maximum safety, liquidity, and growth.

The Ideal Reservoir You Own: Whole Life Insurance Cash Value

You can be your own bank with life insurance and own the reservoir. This is known as the Infinite Banking Concept, a strategy of using a whole life insurance policy with a mutual company.

Nelson Nash, author of Becoming Your Own Banker, recognized the power of a high cash value life insurance policy, created the Infinite Banking Concept, and taught others how to design policies to maximize high cash value and long-term growth.

So, how do you own the reservoir with a participating whole life policy?

The premiums you put into whole life insurance policies are like cash deposits into your own banking system. The cash value is a store of capital that won’t drop in value. Safety, check.

You can access your cash value by taking a loan against your policy, so you maintain use and control. Liquidity, check.

As a whole life insurance policyholder, you’re an owner of the life insurance company and participate in the earnings through dividends. Because of dividends, plus guaranteed interest growth, your long-term internal rate of return is far more competitive than any other tool to store your reserves.

Whole life insurance policies give you the most safety, liquidity, and growth compared to other places to store your savings.

And, on top of that, your reserves continue earning uninterrupted compound interest, even while you use that same money outside your life policies to earn a secondary, external rate of return. Competitive, uninterrupted growth, a big, hearty CHECK.

All these benefits mean that your policy is indeed a reservoir you control.

But just putting your money into a whole life insurance policy won’t get you the banker’s benefits. You have to use your cash value, not just hold it. The way to put your cash value to work is by mastering the art of arbitrage.

Be Your Own Banker Step #3 – Master The Art Of Arbitrage

Banks don’t just take your deposits, hold them forever, and wait around for you to come take your money out. For them, that would be a losing proposition. After all, remember, they are paying you interest to store your capital in their vault.

The engine of banking really comes from their mastery of arbitrage.

Simply stated, banks acquire capital at a low cost and deploy it to earn more than their cost of capital.

If the bank pays 1% on deposits, it turns around and creates loans at 5%. (Because of fractional reserve banking, this is an even sweeter deal, because they can hold one dollar in reserves, and create nine more dollars to lend out.)

If it costs the bank one cent to make five cents, that’s a 400% return! (Profit/cost = $0.04/$0.01 = 400%)

Now think about this. Banks lend out money that’s highly likely to be repaid. They make loans and extend credit for businesses, mortgages, and cars to financially stable people. That’s how they lower their risk and increase their returns.

How To Be Your Own Bank Through Life Insurance?

To model the bank and use arbitrage, you want to put your money to work earning more than your cost of capital.

Find profitable investments you know and control, with a high likelihood of payment.

If a whole life insurance policy loan costs you 5% interest, and you can earn 12% in a real estate investment, your arbitrage is 140%. And this is the external RoR, on top of the internal return you're already earning inside the whole life insurance policy itself.

How Becoming Your Own Banker Changes the Outcome

https://www.youtube.com/watch?v=fJ-twP5XEkM

In today’s show, we’re interviewing Michael Cobb, Chief Executive Officer and Co-Founder of ECI Development. This real estate development company is building and financing inspired residences for adventurous souls in Belize, Panama, Nicaragua, Costa Rica.  Prepare to expand your investor’s paradigm to consider diversifying your asset portfolio outside the US.  Think resort-style living for the middle class, including private villas, tiny homes, vineyards, private islands, and agricultural land with timber.

Whether you’re interested in expatriation or expanding your investments, you'll gain a bigger worldview, and longer-term perspective of wealth creation.

Where Investing Fits into the Cash Flow System

Here at The Money Advantage, we are a community of wealth creators who are entrepreneurially-minded business owners taking control of our lives and financial destiny. 

It’s not enough to make a high income.  You have to keep more, protect that money, and finally, increase and make more through the right investing decisions.

That’s why we have created the 3-step Business Owner’s Cash Flow System.  It’s your roadmap to take you from just surviving, to a life of significance, purpose, and financial freedom.

The first step is keeping more of the money you make by fixing money leaks, becoming more efficient and profitable.  Then, you’ll protect your money with insurance and legal protection, and Privatized Banking.  Finally, you’ll put your money to work, increasing your income with cash-flowing assets.

Today’s conversation will expand your education and paradigm of investing.

Who Is Michael K Cobb?

At the height of a successful career in the computer industry, Mr. Cobb left to pursue more pioneering opportunities in the emerging real estate markets of Central America. In 1996, he and his business partner formed a company, Exotic Caye International, to provide loans to North Americans purchasing properties in Belize, Honduras, and throughout the region.

As the need for capital outstripped the supply, the mortgage company was converted to an international bank under the jurisdiction of Belize. It continues to provide mortgage services, but has expanded its services to encompass the full realm of financial products.

Mr. Cobb also saw the need for a regional real estate company that would serve the Baby Boomer consumer with a North American standard product for the next two decades. He led the group into real estate development and created a holding company for several properties, including a resort on Ambergris Caye, Belize. In August of 2000, Exotic Caye purchased 3.5 miles of Pacific Beachfront property due west of Managua, Nicaragua. This master-planned community hosts world-class infrastructure, homes, and condominium units. In February of 2006, the ECI Development group acquired 1100 acres and 3km of coastline in Costa Rica, setting the stage for expansion into this popular market. Most recently, they merged their Belize property with a much larger parcel and have begun to develop 200 condominiums units on Ambergris Caye, Belize.

Additionally, Michael has spoken at hundreds of international conferences about real estate financing and development. He has acted as a consultant to The Oxford Club and gives counsel to various real estate projects throughout Central America.

Conversation Highlights

Investing internationally to diversify your portfolio geographically.The demographics of who is buying property through ECI development: 30% lifestyle, 30% pre-use buyers, and 40% investors.What you need to know about the buyer beware environment of investing outside a nanny-state.Investing in Latin America is like a time machine. You want to be in the path of progress.Long-cycle cash flow with teak timber creates generational wealth that pays out every 25 years.

Connect with Michael Cobb

This conversation barely touched the tip of the iceberg on international real estate.  ECI offers a Consumer Resource Guide for an introduction to investing overseas, a 115-question survey to find out your ideal place to live abroad, and country handbooks to learn more about specific Latin American localities. To get these resources or start a conversation about international's investing, email [email protected] or visit ecidevelopment.com. 

Get Financial Clarity Today

If you would like to implement Privatized Banking, cash flow strategies, or alternative investments, so you can accelerate time and money freedom, we can help.  We’ll review your situation to help you decide what moves are best for you.

To start the conversation, book a call with our advisor team.

Success leaves clues.  Model the successful few, not the crowd, and build a life and business you love.

https://www.youtube.com/watch?v=RnzDMisQ5go

Infinite Banking has the edge over other funding methods because of the strategic use of whole life policy loans.If you’re new to the concept, let’s rewind to make sure we’re on the same page. Infinite Banking is a strategy of building up cash value inside of a specially designed whole life insurance policy.  The cash value is a place to store cash that provides safety (your cash value won’t drop in value), growth (with guaranteed interest, plus non-guaranteed dividends), and liquidity (contractual access to use your money.) 

When you want to access your cash value, rather than depleting your cash value by using it directly, you convert it to cash by borrowing against it.  That means you don’t use your cash value; you collateralize it and use OPM (other people’s money) instead.

So, all of your cash value continues growing and compounding, even with an outstanding loan.  This is why you can earn a return on the same money in two places at the same time.

Find out more about life insurance policy loans and why we use them here.

Today, we’ll dig into the process of how to take a life insurance loan and pay it back.  We’ll de-mystify policy loans by talking you through the steps you’d take to move capital into usable cash in your bank account.  And you’ll gain the confidence to use your policy to the fullest capacity to maximize all of your money.

Table of contentsWhere Do Whole Life Policy Loans Fit into the Cash Flow System?Whole Life Insurance’s Three Rates of ReturnThe Reason to Use a Whole Life Policy Loan: ControlThe Process of Taking and Repaying Whole Life Policy LoansHow Do You Request a Loan?What Happens to Cash Value with an Outstanding Loan?How Does Interest Accrue During a Whole Life Policy Loan?How Do You Repay a Policy Loan?What If You Don’t Pay Off a Policy Loan?Why Earning Interest Is Better Than Paying Yourself InterestStart Using Whole Life Policy Loans for Infinite Banking Today

Where Do Whole Life Policy Loans Fit into the Cash Flow System?

Loans are one small part of Privatized Banking, which is, itself, another step in a bigger journey to time and money freedom. 

That’s why we’ve developed the 3-step Business Owner's Cash Flow System as your roadmap to go from just surviving, to a life of significance, purpose, and financial freedom. 

The first stage is the foundation.  You first keep more of the money you make by fixing money leaks, becoming more efficient and profitable. 

Then, you protect your money with insurance and legal protection and Privatized Banking. 

Finally, you put your money to work, increasing your income with cash-flowing assets.

Whole Life Insurance’s Three Rates of Return

The power of whole life insurance comes from the three distinct returns it gives you: an internal return, an external return, and an eternal return.

The internal return is the growth of your money through interest and dividends inside the policy.

The external return is the growth on the outside investments when you put your cash value to work in other assets with policy loans, a process known as Infinite Banking.

And the eternal return is the death benefit that provides an ongoing legacy to your loved ones.

The Reason to Use a Whole Life Policy Loan: Control

You capitalize on the external returns by using policy loans as a funding source.

Using a whole life insurance loan boils down to one thing: control. 

You have control because you have the guaranteed privilege of accessing cash up to the amount of your available cash value.  That means you don’t need to meet any terms or qualifications.  You don’t need to prove you can repay.  There’s no credit check or scrutiny on what you’re using the money for.

So, it’s not a wait-and-see if you’ll get the money.  If you request the loan, it’s yours.

Another layer of your control comes from the contractual right to control the terms of how and when you pay back the loan.

Because of this substantial control you gain from using and repaying policy loans, we want it to be as easy as possible for you.  To do that, we’ll answer your most pressing questions about using policy loans.

The Process of Taking and Repaying Whole Life Policy Loans

How Do You Request a Loan?

You can request a loan on your own by completing the request through your carrier’s website. 

Or, for our clients, we recommend calling us to use our concierge service.  Going through your advisor ensures all the steps are completed correctly, and the process goes smoothly.

You’ll sign two documents: one to take the loan, and the second for EFT to have the loan directly deposited to your bank account.  While you can have a check physically mailed to you, EFT is quicker and requires fewer steps on your part.  

Usually, the carrier tells you to expect the deposit in about 5 – 7 days from the date of the loan request, but it can often be quicker.

When you work with your advisor to request a loan, you can also discuss and arrange the ideal repayment strategy for your situation.

What Happens to Cash Value with an Outstanding Loan?

Loans don’t use up your cash value.  Instead, they reduce the portion available to be used.

You could think of it like this: total cash value = collateralized cash value + remaining available cash value. 

With a greater loan amount, you have less remaining available cash value, but there’s no impact on your total cash value.

That’s because when you take a policy loan, the life insurance company gives you capital from their general reserve account.  They place a lien against the portion of your cash value to collateralize the loan.  That portion of cash value is now not available to be used again until you’ve paid back that portion of the loan. 

As you repay the loan, you release the lien and convert that portion back into usable cash value.

How Does Interest Accrue During a Whole Life Policy Loan?

Whole life policy loans have a cost.  That cost is the interest you pay to the life insurance company for the use of their money.

Interest on your whole life insurance loan charges at the end of the year.  

Interest will be either in advance or amortized. 

If it’s advance, the rate is usually lower, but you’ll pay all the interest for that year, even if you pay off the loan early. However, some carriers will credit you back if you pay early.

With amortizing interest, the rate on your loan will be a little higher, but you’ll only pay the prorated amount of interest for the portion of the year that you had an outstanding loan.  That means if you pay off the loan three months early, you’ll only pay interest for nine months instead of the full 12 months.

Usually, loan repayments first cover the principal.  That means that if you repay $1,000 on a loan, the payments free up the lien so that your available cash value rises instead of first covering interest only.

How Do You Repay a Policy Loan?

We recommend always having a strategic loan repayment plan, whether you set up your repayment schedule over one year, five years, or anything else.  You could make interest-only payments upfront, and then repay the balance at a later date.  Or you could pay nothing at first, and then pay it off all at once.  You could make monthly or annual payments.  And you can mail in a check, or have automatic payments drafted from your bank account.

And even after you set up your repayment plan, you have the flexibility to make changes if you want to pay more or less than planned. 

Your advisor can also talk you through the best method and timing for repaying the loan.

What If You Don’t Pay Off a Policy Loan?

Even though you set up a repayment schedule for your loan, you still have complete flexibility. 

If you decide not to make payments, interest will continue to accrue and be added to the balance of the loan.  This will further reduce your available cash value, even though your total cash value will not be impacted.

You could think of your available cash value as a bubble (portion) at the top of your cash value.

Your total cash value will continue to rise through interest and dividends.  If the interest on your outstanding loan is less than your total cash value growth, your available cash value will continue to increase.  The bubble will be pushed higher and may even expand.

However, if the loan interest on an outstanding loan is rising faster than the overall cash value growth, it could eat up all the available cash value and collapse the policy.  In this case, the bubble would shrink or even pop.  This situation would occur if you took out a maximum policy loan (almost 100% of your available cash value) and did not repay it.

Why Earning Interest Is Better Than Paying Yourself Interest

There’s a common misunderstanding when it comes to paying interest on a whole life policy loan.  Some people think that when you pay interest on the loan, you’re paying yourself interest.  That is not true.

The reason is that if you are max funding a policy, there is no room to put in additional cash to “pay yourself interest.”  The only way to put in more cash would be if you had been paying only a portion of your paid up additions and wanted to pay more PUAs.

When you repay a policy loan, you are paying interest to the life insurance company.  Now, because profits are returned to policyholders in the form of a dividend, you will indirectly reap the rewards through future dividends. However, the interest you pay is not going straight into your cash value, so you’re not paying yourself interest.

However, whole life policy loans do have a unique leverage point in that they provide you the opportunity to earn interest while you pay interest. 

Allow me to explain:

You will always pay interest to use money because all capital has a cost.  You’ll either pay interest to use someone else’s money,

https://www.youtube.com/watch?v=sOOnaH1iC-M

In today’s show, we’re interviewing Dr. Joel Wade, of Mastering Happiness.  Dr. Wade is an Author, Psychotherapist, and Life Coach who’s centered his work on happiness, and helping people live happier, better, and more effective lives.  And we’re talking about true happiness and well-being, not simply the happiness of feeling good in a lucky moment of pleasure.  Instead, happiness is a set of skills, a practice, and an attitude toward life that you can learn and apply in whatever circumstances you are in.

Where Happiness Fits into the Cash Flow System

Here at The Money Advantage, we are a community of wealth creators who are entrepreneurially-minded business owners taking control of our lives and financial destiny. 

It’s not enough to just make a great income.  You have to figure out how to keep more, protect that money, and finally, increase and make more through the right investing decisions.

That’s why we have created the 3-step Business Owner’s Cash Flow System.  It’s your roadmap to take you from just surviving, to a life of significance, purpose, and financial freedom.

The first step is keeping more of the money you make by fixing money leaks, becoming more efficient and profitable.  Then, you’ll protect your money with insurance and legal protection, and Privatized Banking.  Finally, you’ll put your money to work, increasing your income with cash-flowing assets.

Today’s conversation will help you upgrade your mindset to be able to be a producer and creator of true life wealth, flourishing in every area of your life.

Who Is Dr. Joel Wade?

Joel F. Wade, Ph.D. is Marriage and Family Therapist and Life Coach, and the author of The Virtue of Happiness, and Mastering Happiness, and creator of an in-depth online course, A Master’s Course in Happiness, all drawing from the increasingly useful research in psychology in general, and positive psychology in particular; and his nearly four decades of working with people professionally. He has written regularly for a variety of publications, including The New Individualist, The Good Men Project, and the Beyond Wealth columns for the Oxford Club.

He’s also a world-class athlete, having won multiple national and world championships in water polo.

Dr. Wade enjoys teaching clear, practical skills and ideas that can be used immediately. He inspires his readers and listeners to take effective steps toward a more rewarding, joyful, and resilient life.

As a Life Coach, he works with people around the world and can be found at www.drjoelwade.com.

Joel Wade Conversation Highlights

What Is Happiness?

Happiness doesn’t mean a temperament and personality of cheerfulness. Rather, happiness is Aristotle’s eudaimonia, which means success at being human.

Martin Seligman moved psychology away from treating symptoms, to the habits for creating a flourishing, happy, successful life. He also created the original research on learned helplessness.

When you focus on what you’re aiming for, the problems become smaller in comparison, and you have more resources to tackle the problems with.

The difference between being happy about life, vs. being happy about your circumstances. You can’t base life’s happiness on circumstances, because there’s a lot of external luck to that. Happiness is more a matter of being happy about your life and living in a way that’s congruent with your value system.

Don’t be too attached to the outcomes or the score. Instead, take control over your own focus, attention, skills, and playing my best.

Carol Dweck’s work on a fixed mindset vs. a growth mindset. With a fixed mindset, you aren’t an agent in your own success, and challenges become risks and threats.  With a growth mindset, you celebrate challenges. 

Overcoming challenges and failures makes success and happiness that much more valuable.  We need challenges that push us to expand and create more complexity in ourselves.

Happiness and Money

You need a certain amount of money to be happy. Once your basic needs are met, the impact of more money on your happiness is much less. 

What makes us most miserable is comparing what we have to what other people have. Envy causes us to see other people as things and impoverishes our sense of ability to create wealth.  Treating people as objects is the root of all evil.

The way to be happy and create money starts with gratitude for the opportunities, skills, and blessings you have, and deliberately celebrating the success of others. 

Money comes from creating value for other people, it's not just stacks of paper or numbers on a screen.

Collaboration creates abundance.

Ideally, we get to make money by doing something we're good at and enjoy. It doesn't have to be a calling or a passion, just something we can get fully absorbed in, and that challenges us to grow.

It's important to appreciate where things come from. Money is a reflection of the value that we create, and all the products, services, stores, restaurants, technology, energy, comforts, necessities - all of it has been created by other people applying themselves to the task of creating value. Imagine your favorite store, your doctor, your electricity, your car... gone. That can be helpful to do from time to time to appreciate how much we have to be grateful to literally millions of other people.

Investment and emotion don't mix. When we make decisions out of fear, or anger, or worry, that tends to get us into trouble. We sell too soon, wait too long, or try and recoup losses quickly and irrationally. Instead, we should accept a loss and plan a clear strategy to rebuild.

Happiness and Entrepreneurship

Fall in love with the value of work. Work can be play for adults.  Mihaly Csikszentmihalyi says we’re in flow when we’re totally absorbed in what we’re doing.  That’s when we’re the happiest.  Absorption requires a challenge.  If it’s too easy, we lose focus.  But if it’s too hard, we get overwhelmed.  Flow allows us to focus our energy on honing certain skills and abilities.

Maintain happiness in the midst of failure by recognizing emotions, accepting them, and moving through them by shifting into problem-solving.

Entrepreneurs have to be ok with temporary failure, and be able to shift attention to solving new and different problems every day.

Nathaniel Branden’s definition of self-esteem is the reputation you build with yourself.

Gratitude for what we’ve overcome strengthens us by reminding us that “I am a person who has done this before.”

When you’re facing something new, write a letter thanking your persistence that led you to overcome obstacles throughout your past.

Create a business culture with principles based on tangible, concrete actions that you can choose to do, not vague, abstract ideals.

Entrepreneurship is a creative act as complex as a symphony.

Find out More About Dr. Joel Wade

Books by Dr. Joel Wade:

The Virtue of Happiness

Mastering Happiness

Listen to The Mastering Happiness Podcast

Check out, A Master’s Course in Happiness, his in-depth online course

Learn more about his coaching and consulting for individuals, couples, and companies at www.drjoelwade.com

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