The Infinite Banking Concept explained
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- Опубликовано: 24 авг 2024
- This video illustrates how the Infinite Banking Concept works in a simple illustrated format. If you want to control your own wealth, maintain access to your cash while earning uninterrupted compounding growth, and all with no market volatility----spend some time investigating this concept.
For more information please send in inquiry to Dave@maxperformancefinancial.com
I love how you drew this out on a piece of paper and most likely closed massive cases with this method
One of the best explanations on RUclips short simple and easy to understand.
I stopped at the 3 minute mark. This is a scam because whole-life is a scam. It was created so that life insurance salesmen can eat. It was created for the salesman, not the consumer. Term life is what people need but the commission on term life is so small, no one can afford to live by selling it. This is a scam. And that is that.
Hello I’m Mark Kennedy
Not gonna lie, i been heavily interested in this and been tryna do my research, right? So many animated long videos with edits and nonsense. Your simple, straight to the point, teaching approach allowed a person like me to soak in the information easily so i wanna thank you very much.
So a 31 year old ship fitter like myself, only have 500 saved in bank ATM. Would my first step towards this direction be to slowly save lets say, 50,000 before flirting anything else? Any companies that you recommend? 😂 i dont wanna hop in to something blindfolded.
If you read this and are able to assist further, itd be much appreciated! Peace be with you
Excellent video. Good job describing it in an easy to understand way!
This is THE MOST concise and easy to understand explanation of IBC, thank you for making this video.
Thanks Tony
@@davidbefort2139 thank you! It was becoming difficult for me to explain this to the unaware. Most ppl don't have the patience to watch longer videos.
ruclips.net/video/5Kz99fX2aBg/видео.html
This is a great explanation! I’ve had my policy for about three years now, and I don’t regret it at all! It is a great savings and banking vehicle!
What insurance company is your policy with? What does it pay interest wise tax free
@@r030245dc I have my policy with Lafayette life! The interest guaranteed is usually around 2 to 3% uninterrupted! And then with the dividend, it would be around 3 to 5% uninterrupted compound interest! And all of the costs are usually upfront for the policy! That’s the only downside! But I definitely believe it’s worth the cost!
@@r030245dc mines with Lafayette life! It is pretty well interest wise! But that’s not the point! The point is to be able to leverage money at a low cost! I’m OK with it just learning a little bit of uninterrupted compound interest!
one of the best and to the point illustration I have ever seen on this concept,
The KEY piece of information you aren’t saying is that dividends are NOT guaranteed. While many will have historic trends, you cannot guarantee a dividend is given on a whole life policy.
You are absolutely correct. Dividends are NOT guaranteed. That’s why it’s important to use a company that has a 100+ year track record of paying dividends. There are several mutual companies that have paid dividends every single year for 115 to 170 years straight. So although not guaranteed, they do have a 150 year record of being paid.
Hope that clears up that KEY piece of information Michael ;)
Additionally, even without dividends, your cash value will grow every year. Guaranteed.
David, any recommendations to companies with great track records paying out dividends?
everybody is saying the same thing as you but no one is dropping these companies names!! Or at least what Insurance company do you use??
Doesn't matter which insurance company you use, they all invest portion of your money in bonds (whether you want them to or not no control) they are all affected by historic low interest rates set by Bank of Canada. Thus with inflation, commission paid to insurance agent, loan interest, you will lose money.
You made my life so much easier!!! Now my wife has a better idea of what R. Nelson Nash was teaching before he graduated. It saved me time and energy!!! Can’t wait to pay my premium!!! Started in 2020!!! Took all my qualified plans and started a policy. I royally underfunded it!!! Will have my family open policies so I can own their policies and get my $ out of banks and into our FAMILY BANK!!!
Was it hard to create? Really time consuming?
@@paulus4443 Need to make time. Appointments with an IBC practitioner, the physical and then the policy explanation. As far as creating a policy, that’s all up to you and your goals.
I regret not paying higher premiums for a longer period of time, but for what I have, I can’t complain. Life in Hawai’i is expensive, but we manage. I’m going to call James’ office soon. But I need to MAKE time. God Bless and Aloha from the 808 🤙🏾
@@amancio2446 Love hearing about your success! And your 'regret' is very common:)
The reason why you have to pay interest to borrow this money is because it doesn't actually belong to you. It belongs to the insurance company. The reason you can't get sued and this money be taken is because it does not actually belong to you, it belongs to the insurance company
there's a reason wealthy people put all of their assets in a Trust type of format---because they still get to "control" the asset without "owning" it. Therefore it's protected.
@David so does the loan you take have interest? And roughly how long do u have to have the policy before u can barrow?
@@disruptoracademy2541 until you have cash value could be as soon as you deposit the money could be up to 5 years depends on how much you initially invest
@@disruptoracademy2541 Yes. And it takes about 2 weeks until your cash value shows up, at which point you can leverage it for a loan
What whole life plan do you use?
🧠Thanks for the very informative & simple explanation!
LOVE IT! I'm a huge "Banking" fan and an agent. I copied and pasted this to my fb page and added your name in the comments. I pray that you have great success David! God Bless!
Thank you Chris! Keep spreading the good word :)
So, in my case... I have 200,000 dollars sitting on my checking account right now, and these are real figures... and I make 15K a month thru my work, which I really dont use cause I live with the properties I rent out (13 condos). If I do this and I place 200K into one of these accounts, plus let's say the 15K coming for the next 12 months from my work (180K total) into this... that's a total of 380K, right? At the bank, I can take those 380K in a year from now, at anytime, and do whatever I want. I dont know, buy a fancy car or another property. This works the same way? I could take the 100% of the funds at anytime?
You won't have 100% liquidity in the first several years because you are building your system. Don't forget you are also purchasing permanent life insurance to the tunes of millions of dollars (if you put $380k in the first year). Life insurance isn't free, so of course you won't have all $380k available to use in the first year. But you will have a large majority of that amount liquid to borrow against right away. And every year that percentage of liquidity will grow until it starts to outpace what you've ever paid in, meaning you will have much more to borrow from than you ever paid in. And all those gains will be accessible tax-free
This concept is amazing! AND on top of all of this, receive dividends?! My goodness…I see why they don’t teach this in schools. My only question is what broker? And exactly what questions do I ask to structure this policy for infinite banking with dividend payout and access to high cash value immediately??
@@CocoBoldI am a licensed agents and I can help you with it!
@@CocoBoldyes, what questions should I ask?
@@ty6390@cocobold
I set up my first policy 3 years ago but before I made the jump, I spent 3-4 months reading, studying, talking to agents, etc to really get my arms around this concept because it was so different/challenging.
Here are a few questions to ask to get the ball rolling
1) how long have you been personally owned these policies and in what ways have you used them ?
2) do you design policies with mutually owned dividend paying whole life companies with a long track record of paying dividends that are advantageous to policy loans ?
3) why are you in this business ?
4) what are the top 3 hurdles with implementing this concept ?
5) can you provide a case study of someone who has gone down this road already and how this has impacted their financial situation/mindset ? Could I speak to them directly to learn more ?
6) what type of person/situation would you recommend holding off on starting a policy ? (If they say everyone should be doing this regardless of their situation, big red flag IMO)
7) what problem is this going to solve ? (The answer shouldn’t be death benefit solely.)
Would love to see actual examples of this in use.
An actual example is called an illustration. The illustration is based on the proposed insured’s age, premium amount, death benefit and cash accumulation.
I would be more than happy to provide one for you if you’d like.
I borrowed $ from my whole life when the stock market crashed in 2020 and bought bunch of Tesla stocks.. Sold some of them when the market bounced back and paid back the loans.. Now I still own the rest of the stocks but no more loans. That's my real life example :)
I'm late to the party, but IBCGlobalinc has 1000's of real life spreadsheets (actual clients from Corporations, Banks and Wealthy). IBC or forms of it have been around for 200 years. He also does a case study of a $2400 annual policy.
@@spdleeya bro that’s sweet! Love it
@@spdlee that is awesome! That’s the best way to do it! And then you get to keep the stocks also! And you can do that with just about anything!
Excellent explanation. I have been helping clients with this same method!
Thank you very much.
There are people selling seminars for this and acting as if it's top secret information.
I would love more information/education.
It’s because it’s a borderline scam.
@@Davefitz04what part is a scam?
@@ty6390 The IRS has stated that the reason the dividends for this life insurance are untaxed, is because its considered a refund for overpayment of life insurance. Yes, your money technically grows in one of these accounts, but you might make 2-4% on your money, where just in a decent index fund youre getting 8-11 percent, and the money is all yours and you dont have to get a stupid loan in order to access your money. ZERO wealthy people do this. Talk to some millionaires and see how many did this stupid stuff. ZERO
@@Davefitz04 Keep giving the banks your money then... They love suckers! 😻
@@online247365 oh the irony
This didn’t explains crap. It looked like a infomercial for a scam.
Thanks for the feedback. I feel terrible for disappointing you, I'll do better next time...
This is the best explanation that I've seen. Thanks for simplifying brother.👊🏾
My pleasure, thanks for the compliment!
am all for this, it somewhat say you can save how much you like without any taxes from the irs or cra us/cad. my only dilemma is , when you say have 45 dollars cash value, 1. what is the interest rate for the loan 2. any fees for taking the loan involved ?
If I am putting a large amount of money in this policy and able to borrow it ... where would I put my actual retirement money? I do want to retire one day. I can't always be in a state of borrowing. And if this is MY money, why do I have to pay interest when I borrow MY money? Aren't there other places where I can place my money, earn a high rate of return, and NOT have to pay interest to pull out my money?
You're not borrowing your money. When you take a loan, the insurance company is lending you money from their general fund, which means your full amount is still compounding. As for retirement money, what assets do you want to buy? That's the point of infinite banking. You take the policy loan and use that money to buy your assets. That way, you have the assets, PLUS the full compounding inside the policy.
2:01 starts the entire explanation 😁. Very nice summary. I love it very much.... well done. Thank you for sharing. It has been an eye opener for me thank you.
I'm glad it helped!
I love this explanation. Great. Thank you
Hello Miguel
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Want to get rich? Live like a miser, pay off all yours debts, then start investing. Building wealth is hard, slow & painful. Get used to doing without.
My recent realization on this approach is I’ve gone full throttle on a scarcity approach for 15 years and it’s never going to work because by the time I’ve accumulated a ton of money/assets, I won’t have the slightest clue how to enjoy it/spend it. Hence I’ve started to shift towards building cash flow instead of cash accumulation
What happens if you can’t pay the premiums on the whole and mutual life policies? For example you lose you job.
If you funded it properly, policy loans against the cash value can pay the premiums.
More likely they terminate the policy because you are no longer paying into it.
@@keithmccormack6248 again, funded properly with PUAs. It also depends on when you are needing the loans to pay premiums.
Thank you for the detailed and concise presentation. Heard about this concept while speaking to a client today. Blew my mind. Can you elaborate on what a specially designed life Insurance contact is?
I would encourage you to read the book "Becoming Your Own Banker" by Nelson Nash. It would take a lot of writing to answer that question, but in short it is a policy made up of a blend of Base and Paid Up Additions with the intent to accelerate the cash value growth inside the policy so that it can be leveraged to finance your needs (big purchases, payoff debt, real estate, investing, etc)
@@davidbefort2139
Hello, may I ask, is it applicable here in Southeast Asia?
@@PinoyBio as far as I know it is only applicable in the US and Canada
@@davidbefort2139
Thanks for the insights Brother 👌
@@PinoyBio I'm afraid it's only applicable in the US and Canada
Effing insane. I remember reading it several times, loaned money isn't taxed...🤣 Had to of been an innocent mishap. 🤣
I don’t get it, what does that mean?
@@chief5981 It's deep bro. Just keep looking up how to avoid taxes legally
To clarify, this means you take out a tax-free, interest-free loan from yourself that you repay? Isn't this the same thing as saving cash and paying for something in full? This is my biggest point of confusion.
I’ll try and explain via text. Yes, when you want to access cash, you take a loan from the insurance company. You don’t use your own money so ALL of your cash stays in your account earning dividends. Now your next question is probably “why”? The loan won’t create a taxable event, AND this is how you LEVERAGE your money giving your dollar more than 1 job. Your dollar stays in there earning dividends and your leveraging it to pay for something or get out of debt. This is the toughest part to understand. I actually built a calculator to show real life examples.
Comparing to saving cash and paying cash, you’re probably not earning anything on those dollars and once use cash to pay for something it’s no longer in your possession earning you interest or dividends (lost opportunity cost). The LEVERAGING part of this is what makes it so unique and powerful.
I wonder why you don’t mention the interest you have to pay on policy loans? Seems like an important caveat? It’s a good illustration but that’s one of the drawbacks to borrowing the money.
Different companies will have different rates. You would rather take a policy loan than a traditional bank loan though.
What people aren’t told is that it will take upwards of 10+ years before any significant cash value to build!
Not if it's designed correctly. Significant cash value can be available in the first month of starting the policy. Problem is, most people in the insurance business have no idea how to design these policies so that cash value is available to leverage immediately.
@@davidbefort2139 hi David which policy are you referring to id love to get more details
Not true. You can break even very early and after, say, year 3 it's all gravy after that.
Ask any Agent selling you one of these to disclose in writing his/her commission on this. They will refuse.
@@davidbefort2139 You say most in the industry “have no idea how to design these policies so that cash value is available to leverage immediately.”
Questions-
1. Is that a training issue or is that at the agents discretion to “design” it?
2. Why wouldn’t the insurance company design the policy to default to one that immediately builds cash value? After all, that’s what their agents are marketing/selling to the consumer right?
Love this illustration, thanks for sharing!
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In the policies that I have I have never been given the choice of payback of my loans. They really me exactly how much my payment is. My dividend statements show I receive interest on my entire cash value, not my cash value minus my loan amount.
I can't speak for your policies, but I find that odd that the company would require you to pay back the loan on a certain timeline of their choosing. What most companies do is send you a letter in the mail with a "proposed" repayment plan, but I've never seen one that is mandatory. I suggest you call the home office and ask about it.
Your company sounds like a "non-direct recognition" company, meaning they do not recognize the outstanding loans you have when they pay dividends and therefore pay dividends on the entire cash value amount.
Shawn, you have what's called a non direct recognition policy. That means they account interest on the entire cash. Direct Recognition companies will account for the loans. So you lucked out and got it with a NDR.
@@hotran4394 just like Michael Jordan lucked out, it was designed that way.
@@subjectmatteramateur16 yeah... so many ppl don't like the life insurance industry because they just happen to choose the wrong. It's like people complain they get unhealthy because they eating fast food and wonder what happened.
Where do I find the right “Family banking”
This is a really great short description of IBC.
Just finished reading BYOB and I’m about to start Case For IBC right now!
Shaun I'm really happy for you brother! Prepare for a paradigm change, one from which you will never return, haha. Please please make sure you work with an IBC authorized practitioner so you get your policy set up correctly. I am one and am happy to help guide you if you don't know any other practitioners at the moment. Dave@maxperformancefinancial.com
David Befort I’m past the point of no return for sure. As I’m Canadian, I’m not sure you’d have been able to help me anyway - but in fact I’m already hooked up. I completed three policy applications on Monday night. Thanks though!
@@NiagaraBTC Outstanding!
@@davidbefort2139 fill me in guys?
you prolly dont give a damn but does anyone know of a method to log back into an Instagram account??
I was dumb lost the login password. I love any tips you can give me!
I live in the UK and I am looking to start a whole life insurance. What are the must questions I must ask them, if you can help please. Great video thank you
The only question you need to ask is this: "do you have one of these policies?" If they say no, go find someone else.
If you’d like to spend 15-20mins on zoom my partner & can help you find the answers to your questions!
But you are still making. Monthly payments to capitalize the life policy. Then you want to repay the loan you are making two payments now?
Awesome! Thanks for sharing..looking for where to park a lump sum of money I have instead of a savings account:)
Thanks, very informative 👍
Im starting to research the concept, but I would like to know how long would I have to pay my premiums before I can take out a loan?
Glenn, you can access your loanable cash value typically within the first 2-4 weeks of funding your first premium with most companies.
Jus seen an example… say u pay $5000/yr for ur policy.. after 3 yrs u put in 15k… but u can only borrow 12k.
M1 Finance operates their Borrow loan in a similar fashion, once you hit the minimum number of dollars invested you can borrow up to 35% of your portfolio value, at 2-5% interest. So with a 100k invested, you can borrow 35k (the loan backed by your owned securities), and the loan can be used for whatever you please and can even be transferred out to another bank.
Most policies actually keep your money for the first 1-4 years. Please read your contract no loan on no money 🤷🏾♀️
@@andreakirven9169 that’s highly dependent on which company, plan, and agent you have. Check out Chris Naugle and his team. You can access your cash value in less than 30 days and they don’t take a huge commission up front. Food for thought
I think this infinite banking is starting to make sense after all the videos I have watched on it. Still many questions
So are you loaning from your company to your individual self? Then collateralizing from your cash value?
Correct. You collateralize the cash value in your policy. The insurance company loans you money from their general fund. When done like this, you still have access to capital, but your cash still compounds in the policy.
Whole Life Insurance is the old name for the product The name it goes by from most, if not all, insurance companies is Universal Life Insurance.
There are many options when it comes to a UL. An IUL could be the most lucrative for you but it depends on the company and the policies they offer.
Whole life insurance and Universal life insurance are two completely different things.
@@davidbefort2139 Yes, I know. However, many in the general population confuse the two.
@@tpsu129 So why bring it up and make a mess? It’s not what he’s talking about or it would have been in the video!
@@tpsu129 "Many confuse the two."
That's true, but you're also confusing terms. You said whole life is the old name of the product. Infinite banking is not a product. It's a process. Whole life is the product we use to make the process work.
This Is Amazing and So Informative . I’ve watched it like 10 times .
Glad it helps!
AKA a whole life policy. Which I don't suggest. Always term.
Is that your professional opinion or personal opinion?
Is this correct? You pay a certain amount of money per month to the insurance company. And a percentage of that payment goes to cash value?
Great video man. Make more
A great way to separate people from their money.
Why do you say that?
@@jahmezis45 Listen to anyone other than the person selling you the policy and you will see why I said that. Also, you can talk to any actuary who develops such policies and they will tell you the facts about these policies. They were not designed for the purpose people sell them for. These sellers think they have found a loop hole. What they really found is a way to confuse clients and MAKE LOTS OF MONEY in fees and commissions.
@@rajbeekie7124 sure pal
Do you have proof that insurance salesmen are making huge commissions or are you echoing thoughts from financial gurus? I mean some insurance salesmen do make lots of money off of commissions, but not all! 🤔
@@rajbeekie7124 Raj you have absolutely zero idea what you are talking about. A properly structured policy will accrue MORE cash value than the premiums paid in. How is that a bad investment? Plus, a person can borrow against the cash value at any time. It’s completely liquid.
So essentially you're lending yourself your cash value from the whole life policy? What are the tax implications penalty implications?
When used properly, you will be able to access all of your gains tax-free while you are alive, and your death benefit transfers income-tax free to your heirs upon your death
Zero taxes. It's considered a loan so zero taxes baby!
@@davidbefort2139 Aren't the deferred taxes for the interest-generated gains deducted from the death benefit before the balance is given to the heirs?
Why do some sites say to stay away from Universal Life and/or Index Universal Life for Infinite Banking?
Mostly due to risk factors involved with UL policies. As the insured gets older, the cost of insurance rises which means the annual premiums get larger. The cash value is canibalized to pay for the increasing cost of insurance each year and, unless the policy has performed very well and the returns have been very good, the policy could run out of cash to pay for the premium. When this happens the policy lapses and leaves the insured with no cash value and no life insurance.
Whole life insurance, on the other hand, has a level or decreasing premium over the life of the policy.
Thank you for a very detailed, clear and excellent explanation.
You're very welcome!
ruclips.net/video/5Kz99fX2aBg/видео.html
wow thank you for this video 🙏🏼🙏🏼I recently heard about this concept, & doing my research. Out of all the videos I’ve watched this was very easy to grasp.
Thank you sir 🙏
Hey I'm also doing the research on the same
@@jeelpatel4124 r u on your way to being rich from investing in whole life insurance now?
Great video and illustration!!. Golden nugget in 5 minutes!!
which is better to get this whole life insurance.. provider?
Can someone correct me if I'm wrong: I'm giving the insurance company money just to be able to borrow less than that same money I put in. Sounds very circular if this is the case...
Until you hit your breakeven year, when you have more money in the policy than what you've paid in.
Why would I pay someone to borrow my own money? The life insurance company is going to take my money and invest it into Stocks, And other Asset classes. Why wouldn't I just do that myself? Before you say tax benefits. I can achieve that though Real Estate and other retirement accounts Roth IRA, etc...
You aren't borrowing your own money, you are borrowing the insurance company's money. Your money is sitting inside the policy earning uninterrupted compound returns for the rest of your life while at the same time you are leveraging it to borrow someone else's money. Once you understand the power of using OPM (other people's money), you will begin to understand the power of becoming your own banker.
@@davidbefort2139 also, Roth IRA has penalties if you withdraw before 59.5. Money you withdraw isn't compounding because you took it out. When the market goes down, so does your money, thus slower growth.
And moving forward, now that the ins companies have lobbied congress to lower their guarantees, you'll only "earn" 2% on that cash value...which by the way, belongs to the insurance company!! You will never get that back! The only way to access that money is to BORROW it or DIE!
@@theforce5191 the only two things in our history that have outpaced inflation are real estate and the market (net of costs). YES, qualified money is for the long term...put short-term money into municipal bonds!
@@IllinoisShortSales you do know that there was higher dividend payouts over 6% a few decades ago right? So you're wrong when it comes to "only two things to outpace inflation ". Also where you get this info on 2%?
great video. i am willing to buy a house for investment in a different country and would not want that my bank know about that (private credit) and also don't want to pay interest on that sum of money, which is around 2000 euros for a credit of 20.000 euros.
ruclips.net/video/5Kz99fX2aBg/видео.html
what company/ agency do i use for this need help
I have mine through Penn Mutual, but the big thing is to use a mutually owned company, not a stock company. Also, ensure they have been paying a dividend for a minimum of 100 years.
Guardian and NYLIFE are also great for this concept.
This is a quote from Whitecoatinvestor in their post titled "Why is whole life insurance a bad idea most of the time."
REGRETTED BY MOST PURCHASERS
Rather than hold a whole life policy for their entire life (as it is designed) four out of five surrender it early. In fact, over one third surrender it within five years of purchase. Once people realize and understand what they have bought, they no longer want it and have few options, none good.
If i borrow from my policy, i pay the insurance company 5% SIMPLE interest. Meanwhile that money is making 4% COMPOUNDING interest. I still end up making money on the 1% difference, because i am making COMPOUNDING vs borrowing SIMPLE. can you do a illustration of this on 1 of your videos?
Travis, you have the right idea from a high level perspective. I created a video on my channel that describes this exact situation (although not using life insurance as the example case). Check it out here: ruclips.net/video/NmDwAnU05DI/видео.html
That’s incorrect. If you borrow at 5% simple interest and the policy pays 4% compound interest you incurred in a net loss. A simple math calculation will show that.
In a 10k loan for example, you would have to pay back 500 in interest while the 4% compound interest will generate you 400 dollars. You actually lose 100 dollars a year.
@@alainnaranjo7700 You're only accounting for 1 year. That's not compounding interest. Compounding interest takes time which is why you need to look at the long term.
correct Barbara, also the coumpounding of 4% net internal rate interest happens on the total policy amount of $100k for example....even though you take out 10k loan at 5% simple interest. So you can still come out ahead since they calculate things this way....
To my knowledge the SIMPLE interest only remains SIMPLE if it’s paid back within the calendar year. If not it becomes COMPOUND interest as well. Either way as long as you only remove 80% of the cash value you’ll still break even, and technically with dividends you’d go a bit ahead. It’s just a strategy that requires discipline like anything else.
It sounds like any other investment.
Good morning can you explain this to me personally?
BEST NO FLUFF EXPLANATION 👏🏻👏🏻👏🏻👏🏻 please make more videos like this!!
Scam...and you know it is a scam...
Yep
Sad
Is it not true that the “cash” account is gone when you die? So your putting a majority of your payments into an account that you can never take out and when you die you can’t give that to your inherits? It sounded like a great idea u til I heard that.
Great question to a commonly misunderstood aspect. In short, when you die, your beneficiaries will receive the death benefit, not the cash value. The death benefit will always be higher than the cash value.
Allow me to explain how this works: your life insurance contract consists of two parts, the "asset" (aka Death Benefit) and the "equity" (aka Cash Value). If you own a house this will make sense---in this case your house is the "asset" and the amount value of the house minus what you owe on the principle amount is the "equity." When you sell your house, you do not get to keep the full amount the asset sold for AND the equity, correct? It is the same way with whole life insurance: when you die, your beneficiaries get to keep the value of the "asset" (death benefit), but not ALSO the cash value.
The part about this that most people (even life insurance "professionals") don't realize is that the value of the asset (death benefit) APPRECIATES in value every single year along with the value of the equity (cash value). Because of the special way these policies are designed, as cash value increases, the death benefit also increases. For example, I started a policy 6 years ago that had a death benefit of $500,000. Today, that death benefit is $1 million. And if I live to be 85 years old, God willing, that death benefit may end up being $3 million or more.
In summary, the cash value merely represents the "present day" value of the future death benefit. In other words, the cash value is what the insurance company would pay you to walk away from the contract and remove the liability of the death benefit from their books. Which is why it will always be lower (and typically significantly lower) than the death benefit.
I hope this explanation helps!
@David Befort Even with the aspect of the escalating price of the death value, what if say one comes across a great sum of money and they say, have an extra 5 million to invest & they dump that into a policy with a death value of $500k. Even if policy appreciate to 1-2 million, what about the instance of one placing much more into it than the price of death benefit?
@@mdotbeedot That's not possible. You can never have more cash value in a policy than the death benefit. The situation you describe is not even a possibility in the life insurance world.
You could, however, dump $5M into the stock market and watch it turn into $2M. That is completely allowable and legal.
You can get a cash value rider and get your death benefit paid in full, plus the cash value. You can get an accelerated death benefit rider and use 75% of the death benefit as well, if you are diagnosed with a dreaded disease.
@@davidbefort2139 Yes the cash value equals the death benefit in certain policies, and you can get the cash value payed to your beneficiary as well
So, you use a lot of buzz words here like “you own it” and “it is guaranteed to go up” and “it’s safe”.
I own my brokerage account and yes it goes down, but it also can go up 30% YoY on big years, with the average rate of return being 11%. I believe the rate of return on life is 3% or so? Judging by how both are long term plays mathematically there is no play where it makes sense to go whole life over investing. You get less and you pay more…
Where do you start and how much-needed?
You start by talking to someone like me who can run illustrations for you and show you how the policy would work for you specifically. You determine how much you need to start and how much you will pay monthly. Like the video says so well, you have complete control of your money. You dictate the terms of what you want to pay.
You start by reading the book I showed at the end of the video. Education is step #1. Then reach out to me to have a discussion and get questions answered.
Lol. None of these guys ever talk about the expensive monthly payments for whole life insurance.
My lowest premiums are about $300.00 a month some agents do lower.
No insurance agent will give you a policy that pays out more than they earn. This is a scam.
Term life insurance is just throwing money away take the money and invest it instead live the life you got
@@Justthemowterm life is insurance, it’s just that. Wealth building is separate. Merging the two is a scam. Ignore every whole life agent.
OP has the correct answer. I'm not sure what shyster is pumping this BS. But the non scam version is "borrow buy die"; loans against highly appreciated assets and your beneficiaries get the basis stepped up. The trick is you usually need to be very rich from equities to pull it off, though real estate and a trust can do similar things
Also, you don't have to pay it back because you're paying interest on that money ... the insurance company is collecting fees + your interest and so they are coming out on top .... You don't pay it back ... no more death benefit. You lose your life insurance policy.
Even if they do pay it back the company doesn't pay out the cash value to the beneficiaries, they only get the death benefit.
@@galloe Which is higher than the cash value anyway, so who cares?
Could someone tell me whether this(or something similar) is available in Europe???
Anyone reading this, could you hint me what a 'family bank' is? I cant wrap my head around the whole concept due to thinking about the family bank
This is so enlightening! Thank you so much for posting. I'd love to learn more about it and the business side of selling Life Insurance sometime. Thanks again!
Hi Jan
If you’d like to be put on calendar for a zoom we can give more information on how to become your own bank plus what are living benefits !
@@mgrpeterbehn9541That would be great!
@@mgrpeterbehn9541 Lets do it. Send me a calendal link to schedule it when you get a sec.
@@janalberti5567 Hi Jan I will add the link separately
I apologize for the slow response .. just flew back from vacation..look forward to meeting you on Zoom
If you just buy term and invest the difference you make out a whole lot better.
Do you get all the same benefits he outlined in the video by buying term and investing the difference?
One question, who is the bank, is it a company I have to make or is it a bank like Wells Fargo? I’m confused
It’s not a “bank” in the commercial sense. The “bank” I speak of is the insurance policy cash value you have built up inside the policy with the insurance company.
Ive been watching all these videos about how people can make some extra money and i realize that if you dont have any to begin with you're screwed. I have no money to lose so to risk it in a scam is non sequitur. I listen to all these wealthy people talk about how to make more money or not pay taxes and realize it's not going to happen. I've consigned myself to believe I'm going to die on the floor of my job and have nothing to pass on at all.
how depressing.
Sounds like something Bernie Madoff would have approved of.
Based on taking loans from an insurance company and using leverage? Get a clue.
Lol, and that mustache in your profile picture looks like something John Holmes would approve of...
@@davidbefort2139 thats a picture of john lennon lmao. U gonna make fun of my haircut next?
🤣
He knew this before he was 10. 😆
Lets address each of the "benefits" having your money in this "specially designed " whole life insurance policy.
You own it -- No you don't. When you die 100% of it is taken away.
Guaranteed to go up -- Yeah right. It takes 7 years just to break even due to all the commissions and fees. A regular savings account breaks even on day 1.
No required repayment -- But you will have compounding interest charges against your remaining surrender value and policy could lapse.
Dividends -- These are, according to the IRS simply a return of excess premium charges. Thus there is no tax..
Privacy -- Yes, useful for those who want to stick it to debt collectors.
Control -- No, you have virtually no control over your cash value. How it's invested - no. Interest rate of growth or to pay on loans -no. Control when you die -NO! You can only take loans up to a certain percentage of it.
Tax free growth -- Who cares if a fund that you don't own or control experiences tax-free growth.
Leverage (money at work in more than one place at a time) -- Not really. You borrow generally to make a purchase, not to reinvest your loan and then pay interest on the loan. Also, your cash value continues to grow very slowly but who cares? Remember, you don't really own or control it.
Death benefit -- Yes, you get a death benefit. But if that is important to you you can get a term policy at about 1/15 the cost of whole life.
Market volatility -- Yes, the growth of "your" cash value is guaranteed. But it is also guaranteed to be pathetic. Once again, who cares when you don't own or control it.
Opportunity to make investments or large purchases -- If an opportunity appears, you have the option to take out a LOAN ?!?! Had you saved all those premiums instead of sending them to an insurance company you'd have the money in cash to take advantage of that opportunity.
Every one of these misleading talking points is designed to separate you from your money so the insurance company and its salespeople can get their fat commissions and fees. Stay away from whole life insurance. If you need life insurance, get a term policy. If you want your money to grow, then put your money into an investment like an index fund or high yield savings.
“100% taken away”???? 🤦♂️🤦♂️🤦♂️🤦♂️🤦♂️Did you feel like your equity was taken away when you sold your house? No? Why not??same concept ding dong
No answer? Turns out your talking points are nonsense.
If there is a husband and wife, both of whom are making good money, which person should be insured in the "family bank?"
Good question. Why wouldn’t you both want to be insured if your family depends on both incomes?
So your saying the money sits in your own policy but where is the acutaully money going ? If you own the account (like the phscail form)?
That was a simplification. Cash value is merely the amount of the death benefit that you can access today. Your premium payments go to the insurance company and are used to run the company, invest, payout death benefit claims, and to loan out to policy owners.
Did anyone else catch the ongoing scam here? So your money is locked up & can't Be Taken Out in the 'Specialize Design Life Insurance Contract' & if you need to access your money to buy a car or whatever reason why you need money they lend out to you as a 'LOAN' with interest. LMFAO, why would I pay interest to spend my money.
You always are paying interest even if your paying cash
Your money is not “locked up”, as you put it. It is optimally liquid and in your control.
To your question about paying interest, maybe think of it this way: the interest you would pay to the life insurance company is allowing you to account for the opportunity cost of spending money. This cost exists at all times, you probably just didn’t see it before because it doesn’t show up as an expense like groceries or gas. This strategy allows you to eliminate the opportunity cost of your money while you use it to do the things you were going to do anyway. The profitability of this over your lifetime is staggering.
In addition, this strategy speaks to a deeper problem than strictly numbers. It also addresses the ease of access to capital and control over your cash flow over the long-term. When you borrow from a bank, you need to apply, have them check your credit score, give them all your documentation, and they MIGHT give you a loan. Even if they do, you MUST pay on a certain schedule, or you’re going to hear from them incessantly until you’re current.
So what if an opportunity comes up that would earn you xx% annual return and you need to stop making payments to divert cash toward that? This strategy gives you the flexibility to do that.
The future is unknown. Therefore, it’s best to have optimal control over capital.
@@BryanWCrute You're making this more complicated than it is in order to make it sound better than it is.
If you did *not* plan on buying life insurance anyway, then this is a horrible plan. Because in addition to paying interest to access your own money, you are also paying a monthly "cost of insurance" to keep up the policy which grants you access to this whole scheme.
And the "cost of insurance" is not fixed. Every year it rises. It is constantly updating according to the actuarial tables of the insurance company.
If, at the age of 30 your monthly cost of life insurance is $50, by 60 years old it could be $500.
So yeah, this is a nice way to get a cheap loan if you were planning to spend a whole bunch of money on life insurance anyway. But if you weren't going to buy life insurance anyway, then this is a terrible scheme to enter into just for the borrowing power.
Hahahaha this is crazy, just open any introductions to finance or economics book and you learn that nothing is like this guys is talking about, there is no gain without risk, nor 100% guaranteed. This is crazy. Please be careful on what you see online. Go back to the fundamentals when you want to invest.
Also, let’s talk about the tax: do you know why the IRS does not charge you money? Is because the IRS does not consider this dividend income. The main reason why is because this so call dividends are not income because you are the owner and the customer. For that reason the IRS considers the dividend as “overcharge refunds” and no overcharge is taxable. You can look it up on the IRS web. Also, you pay interest on you own money, why do you want to take a loan on you money? That is just so bad that financially ignorant people take on this. Please people if you want to invest get a financial advisor (certified) not an insurance salesman. They do not have the same responsibilities nor duties by law.
💯
That's why I am reading comments 😂
What do you think of mass mutual for this strategy. I’ve had have a policy with them for a few years. Been finding about $30k a year.
Funding*
It works with them if you use the right policy
you take out a loan on your own money then repay it back to the insurance company .so will you ever get all your money out or does it just stay there?
it stays there earning uninterrupted compound interest, while at the same time creating an equivalent line of credit from the insurance company. You are giving each dollar multiple jobs instead of just one. Of course you can withdraw your cash value at any time but it would be much less advantageous to do so versus keeping it in there and taking a loan against the ever-increasing amount.
Sounds like a scam
Nope. Just basic math using accounts that have been around hundreds of years.
It’s no a scam! My friends are doing it and I finally realized and understood this incredible tool! I’ll use for my real estate investments.
Because it is
@@ProfessorOfLogic81 it’s math.
100k earning 5% in 5 years is 128k
100k loan at 5% paid in 5 years costs 113k. Last I checked that’s plus 15k. Yep, definitely a scam……🤦♂️
@@ProfessorOfLogic81 you know how math works right? It’s not that hard.
Holy crap, a total con job. DON'T DO THIS!!!
Correct lol
Excellent!!!
Question I heard that we can do the Family Bank with 401k and or IRA'S it's true?
You can bank with anything. But why would you ever want to bank with something that has zero guarantees? 401ks are one of the worst financial instruments in existence.
So with a heloc I can borrow against my equity, spend it as I please and stay in a perpetual state of indebtedness to a bank? And this whole life policy offers me the same benefit? That’s exciting.
You won't lose your house doing policy loans though.
Gotcha. Take out a whole life insurance policy (which has crappy returns and does have a chance of losing money so it's not "locked down" btw), build it up (which takes years), and use it as a bank account for collateral, for taking a loan from another insurance company, incurring risk, so you can spend that money. This is honestly the dumbest thing I've ever heard. I am saddened you are advertising this as good financial advice. Please do yourself a favor and listen to Dave Ramsey.
I have listened to Dave Ramsey. He's got great information on getting out of debt and establishing a budget. But his advice to pay cash for everything (to include your house) is an extremely inefficient use of money and he doesn't take into account lost opportunity cost for those dollars. Also, with just a little research you will find that putting all of your investment nest egg into mutual funds will absolutely not give you a 10-12% return over your lifetime. That's absurd. And don't forget about the compound taxes you will pay when you take that money out. Btw, life insurance is not an investment and shouldn't ever be considered one. It's a savings and cash flow system. I've got respect for Dave, but please realize he is marketing to the masses, i.e the "average" Joe. Nothing wrong with remaining average if that's all you expect out of life. But if you want to create real, multi generational wealth, it may be worth your time to explore some financial strategies that have been used by banks and wealthy families for hundreds of years---strategies you won't hear from the mainstream. The choice is yours.
David Befort well said sir.
First of all, it's not an investment but it's a savings vehicle on steroids. Inside the policy, you should be able to get approx between 3-5% but that's just inside what does it help you do outside the policy especially with Real Estate. Dave Ramsey is correct about life insurance accept if you turn the policy upside down. That's why investors business owners and major companies buy it they aren't buying it for the death benefit that's why they minimize it. As far as using the cash you can start using it right away. It takes a couple of years to break even but it's just like starting a business or filling up a brand new apartment building. The key is when you are getting a loan from the insurance company your money compounded uninterrupted. Even Dave Ramsey's debt snowball works better with this policy and it's not even debatable.
@@samsciascia4004 Sounds like you've done your homework Sam. Do you use this concept in your life and/or business?
@@davidbefort2139 I'm actually an agent. I used to hate the concept until a saw one of my clients is a real estate investor use it which opened my eyes.
How do I know if this would make sense for my situation?
I'm confused at the last 2 steps ...can you explain more ?
The policy loan using your cash value/death benefit as collateral?
Where can i get that life insurance has that a produkt name or smthg i asked ma insurance guy and he didn't know what i was talking about and if it is possible every one would do that
I want to see what you can come up with for my family.
Good morning, there is an equivalent of this product in Spain or in Europe? Thank you very much I am reading the book!
Not that I am familiar with, unfortunately. It's a North America product only as far as I know.
Watch your video 5th times and still I don’t get it.
Could you please make a video with exempel $1M in the bank and I borrow $50K for a car and $450K for house. I’m very curious what the outcome is and how the money flows.
Please update me if you like this idea.
Excelent explantion, thank you very much
ruclips.net/video/5Kz99fX2aBg/видео.html
I haven't read the book so maybe this is explained with more specific numbers, but I don't really understand the math here: you're locking cash in a box as collateral for loans, but you have to pay interest on the loans, why not just... keep all that cash liquid?
Because you are earning uninterrupted compounded growth on the "cash in a box" as you call it, while at the same time being able to leverage that cash (via loans) to use for investing, major expenses, or whatever you want to use it for. The book will give you a thorough understanding, I highly recommend spending the 3 hours to read it.
Thank you!
i don't understand the collateralized a loan with cash value 3:45 . Please help, im really interested!
Your cash value creates what you can think of as a line of credit with the insurance company. If you have $1,000 in cash value, the insurance company will allow you to borrow $1,000 from them while your money continues to sit in the account earning interest and possibly dividends
If you die,what happens to the money in “your bank?” It dies with you right?
Sorry if I'm a little slow, but do people do it in real life? What is the contract for the WLI like? What are the risks associated, if any, as compared to traditional banking
Next to none.
The risks are enormous and you are guaranteed to lose lose money compared to the alternatives. About 80% of whole life policy holders surrender their policies before they die. Watch the video by Rich on Money called "Whole Life Scam." Pay no attention to the sycophantic comments on this video. They are almost all by other whole life salesmen looking to make a sale and rake in those commissions.
What is the benefit of this over traditional lending methods if you have excellent credit and are able to dollar cost average?
You can do both. But this isn't an investment, it's simply a place to store and grow your capital, earn uninterrupted compound growth, and leverage it to put each dollar to work in more than one place at the same time.
Too funny I found your video after I bought the book!
ruclips.net/video/5Kz99fX2aBg/видео.html
What happens to the money you put when you die? Do you recommend also having a term life as well?
Your family gets the asset: the tax-free death benefit payout. Keep in mind that the death benefit (aka the "asset") grows bigger every single year just like the cash value does. The cash value merely represents the amount of equity you've built in this appreciating asset. When you die, you get the full value of the asset.
Also, yes I definitely believe there is a place for term insurance. I carry a hefty amount of "convertible" term insurance to supplement what I don't have in whole life insurance at the moment. But because my term insurance is "convertible", I have a guarantee to be able to convert the death benefit to a whole life policy anytime I want to without having to prove I am healthy enough to be insured. So if I develop cancer or become disabled, I will still be able to convert the term insurance to whole life so that I can keep life insurance in place for the rest of my life.
My plan is to convert all of my term insurance over to whole life insurance over the next 10 years.
What happens when you pay off your mortgage on your house? You get the asset. You don't get the asset and your mortgage payments back. For this the asset is your cash value.
@@Jekyll_Island_Creatures Perfect analogy. Thank you.