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What To Look For Before Choosing A Term Life Insurance Policy

Are you shopping around for a term life insurance policy and looking for the best rate? Here’s a secret – there are no deals and life insurance. Today we’re going to go over exactly what you need to be looking for while shopping for a term policy and it’s not only the price. 

Fundamentally, insurance is a transfer of risk from the insured to the insurance company. You’ll hear us say that with term insurance, there’s really only one benefit, and that’s the death benefit. You’re paying the premium and if you die within the term, the insurance company will pay the death benefit to the beneficiary. But there are some ancillary benefits when it comes to term insurance that you need to consider so you can make the best decision for your situation. 

There are three main benefits or ancillary benefits that you should be looking for when looking for a low-cost term policy:

    1. First is a Terminal Illness Rider. Basically what that means is if you become terminally ill while you own the policy, the insurance company will allow you to tap into the death benefit on a tax-free basis to allow you to pay for those terminal illness-related expenses. 
    2. The second is a Disability Waiver of Premium. This is important because should you become totally disabled, the insurance company will continue to pay the premium for you. But with some companies, it’s even better what they allow you to do while it’s a term policy and you’re totally disabled, they will allow you to convert that policy to a whole life policy and waive that premium. A very important benefit.
    3. Probably the most important ancillary or extra benefit is the ability to convert that policy somewhere down the road to a Cash Value or Whole-Life Policy. 

So you may be wondering, what does it mean to have a convertible term policy? Once you get that term policy, your insurability is locked in and you could convert that policy from a temporary term policy to a permanent cash value life insurance policy with no underwriting required. It’s a contractual guarantee for a set amount of time determined in your contract to make that switch from term to perm. 

The key here is that whatever underwriting requirements the insurance company uses to determine your eligibility for the term policy follows directly through to the conversion. So you don’t have to take another exam even if your health changes. 

Health changes are one consideration, but the next consideration is cash flow changes. As we go through life we all know that cash flow needs are always changing. So right now your cash flow may be pinched and you may need that death benefit for a loan or to protect your family should you die prematurely. But down the road, you may be cash flush and say, “Hey, I really want to put this policy to work for me and my situation, my business, and my family, let’s convert a piece of this.” The application is so simple, you just basically fill it out, sign it, and then send it in and you get the policy in the mail.

So keep in mind, that you’re not asking permission or approval to get the policy you’re literally giving the insurance company an order to change it from term to permanent or cash value insurance. 

This brings us to our next point. It’s important to choose a strong insurance company when you’re getting this term policy so you’ll have a strong dividend-paying life insurance policy when you choose to convert it down the road. This takes us back to our main points or key criteria when choosing a life insurance company.

    1. First and foremost, it should be a Mutual Insurance Company. Why? As a policyholder with a mutual insurance company, you are literally the owner of the company as it relates to your policy. Therefore any profits that the insurance company makes are funneled back to you in the form of tax-free dividends.
    2. Secondly, we want that company to be Non-Direct Recognition. Why? Because if you intend on borrowing against your policy, you don’t want to be penalized by getting a lower dividend from some companies. And believe it or not, some companies do that.
    3. Third, you want the company to be licensed and preferably domiciled in the state of New York. Why is that important? Because the state of New York has the highest level of regulatory protection for the policy owner.
    4. Fourth, you want that company to have a significant track record of paying dividends over 125 consecutive years. Think about it, if your company has paid dividends for over 125 consecutive years, they’ve paid it through world wars, depressions, recessions, you name it. They’ve weathered the storm and still have delivered profits back to the owners of the company, their policyholders.

Now, the temptation could still be there to think short-term and with life insurance, it’s a long-term play. Whether you realize it now or not. Maybe you’re about to have your first child and now you need a death benefit to protect your family. Or maybe you are in the process of obtaining a loan and need some death benefit to collateralize against the loan for the bank to approve it. But the key is to think long term so you could be in the best financial decision going forward. 

We have seen over the past 37 years, so many times when people bought the lowest cost term policy and their health changed and they wanted to change that policy because their cash flow was better and their needs were now permanent. Unfortunately, the company they placed their insurance with originally doesn’t have a whole-life policy or is a stock-owned company, which means the profits go to the stockholders, not the policyholders. These are issues that need to be addressed upfront. Like we said in the beginning, there are no deals in life insurance. 

Keep this in mind: our health is precious. We all know it could be there one day and the next day you could be uninsurable. And we’ve seen this, unfortunately, so many times. People who are considering life insurance and then not acting on it and then two weeks later, something happens and they’re no longer insurable. That’s the last thing we want to see. Our health is our most valuable asset. Without it, nothing else matters. And we know this now more than ever. Keep in mind, when we buy life insurance, we pay for the policy with dollars to pay the premium, but we qualify with our health. 

If you are looking for a quality life insurance policy that will carry you from now into the future, be sure to visit our website at tier1capital.com to schedule your free strategy session today.  

Remember, it’s not how much money you make, it’s how much money you keep that really matters.

The Secret Behind Policy Loans

On a daily basis, it seems as though we talk to one of two people. The first is a young person who sees no need for cash-value life insurance, and the second is a person in their forties, fifties, or sixties who is saying, “Man, I wish I had this information and acted on it 20 years ago.”  Here’s the secret: cash value life insurance is a timeless asset. 

So how is whole life insurance designed for cash accumulation a timeless asset? For every milestone in life, there is an opportunity to take a policy loan to finance that cost. 

For example, maybe you just graduated college and you have some student loans. You could take a policy loan to repay those student loans and then pay yourself back. And maybe you want to get married. You could take a policy loan and then pay yourself back. And then maybe you have a kid and you want to send them to a private school so they could get a good education. You could finance that expense through your life insurance policy and not have to worry about being pinched for cash flow in all these places throughout your life. 

Perhaps you want to borrow against your cash value to buy rental real estate. You can borrow against the cash value for the down payment, take a conventional mortgage for the balance, and have your tenant pay back both of those loans for you. And then when the policy loan’s paid off, guess what? Now you can buy another piece of property using the same process. 

Maybe you’re feeling entrepreneurial and you’re ready to start your own business. Guess what? Your policy cash value is available and you could take a policy loan to self-finance that start-up. 

Or, what if you’re already a business owner? You can borrow against your cash value to expand your business, purchase inventory, or make a new hire. 

The point is this: you start out with a policy here at the beginning of your life and at some point you pass away. In between, there are multiple opportunities for you to have these milestones in life, and you can self-finance those. Borrow, pay back, borrow, pay back, borrow, pay back. Then you retire, use the dividends to supplement your retirement income, and pass away. Then, the death benefit goes to your family income tax-free. 

So think about this: From the time you graduate from college, let’s say from age 21 all the way until the time you die, you have complete liquidity use and control of that cash to finance all of the milestones in life. And then you have a legacy built in for your family or charity of choice. 

If you’d like to get started with this timeless asset of cash value life insurance designed for cash accumulation, please visit our website at tier1capital.com to get started today. Feel free to schedule your free strategy session or take a look at our web course where we go into detail about how we put this process to work for our clients.

And remember, it’s not how much money you make, it’s how much money you keep that really matters.

Infinite Banking Concept: Repaying Your Loans

Why is it important to repay your policy loans? You may have understood or heard that policy loans are unstructured, which basically means there’s no coupon booklet or payment process. You’re in control of the process, which means you determine if, when, and how quickly those loans are paid. But now the question becomes, why is it important to pay back those loans? 

Oftentimes, when people are thinking about the infinite banking concept, they’ll take a policy loan and then question, “Why do I have to pay this back? It’s my money.” Well, they don’t fully understand the process. 

You see, when you borrow against your cash value in a life insurance policy, you’re getting a separate loan from the insurance company’s general account. The money in your policy stays in your policy and it continues to earn uninterrupted compounding of interest. The second part is the loan that you get, which is literally a loan against the equity of your policy. The life insurance company calculates the equity and calculates how much they can loan you based on that amount of equity. So you are taking a loan from the insurance company. And the importance of paying it back is that the faster you pay it back, the less interest you pay the insurance company and the more equity that’s available for you to loan or borrow again. This is the concept of turning over your money so that the velocity of money can benefit you. 

Keep this in mind. Every purchase you make is financed whether you pay cash, go through the traditional financing method, or take a life insurance policy loan. Only with traditional financing do you get a coupon book that says you need to pay this amount back at this rate. And with the traditional savings account or the life insurance policy loan, it’s a double-edged sword in that you don’t have to pay it back and you don’t have to pay it back. But keep in mind, we always say it’s not what you buy. It’s how you pay for it that matters. And when you’re in control of the banking function, you get to control the terms and conditions. But that doesn’t mean that you shouldn’t pay it back. 

One of Nelson Nash’s cardinal rules, (he had four cardinal rules), number three was “Don’t Steal the Peas.” And what did he mean by that? He meant that if you borrow money against your life insurance policy, you should pay it back. Why? Because you’re going to need money again in the future. And if the money’s not back in the policy, then you’re going to have to go back to the traditional way of borrowing with a bank. And now you’re not in control. 

So you may be wondering what happens if I don’t pay my policy alone? And that’s simple. Sometimes people have this policy loan, and, especially if it’s a large policy loan, the policy loan will continue to accrue interest. Meaning, that if you don’t pay back at least the loan interest, that loan interest will get tacked on as loan principal and tie up more of your policy’s equity year after year. 

And that can put you in a position where it becomes so insurmountable that you have to either walk away from the policy or reduce the face amount of the policy in order to eliminate a large portion or maybe even all of the loan. But keep in mind, that can also trigger a taxable event, and that full taxable event will happen in the year of surrender, meaning anything that’s surrendered over the premiums you paid is going to be fully taxable as ordinary income. So that’s not really a position you want to put yourself in. 

So the next question becomes: if I have to pay interest back to the insurance company and have the risk of a taxable gain, what is even the benefit of taking this policy loan? 

Well, that’s simple. The benefit is that you’re in control. We have many clients who take loans and pay them back. We have many clients who take loans, start a repayment process, and have to suspend or reduce the amount they’re paying back because of a temporary cash flow situation. That’s the beauty of being in control of the process. You set the terms and conditions of the loans and you could pay it back, stop, reduce, whatever. Again. That’s the issue of control. But what we’re talking about also is that if there’s a long-term situation where the cash flow isn’t there to pay back a large, perhaps insurmountable loan, you do have options. And that’s where we can help you. 

If you’d like to get started with a specially designed whole life insurance policy designed for cash accumulation to put this process to work for you. Or if you currently have a life insurance policy loan or are thinking about taking one, please visit our website at tier1capital.com and schedule a free strategy session today. We’d be happy to discuss the options with you. 

And remember, it’s not how much money you make, it’s how much money you keep that really matters.

Become Your Own Bank With a Life Insurance Policy

You’ve heard us say it before and we’ll say it again: Whoever controls your cash flow controls your life. Today, we’re going to talk about why it’s important to control the banking function in your life. 

We’ve often said it’s important for you to be in control of the banking function in your life. Why is that important? Well, let’s take a look at the cast of characters in the play that we call banking. 

  • First, there’s a depositor. Nothing can happen without a depositor. 
  • Next is the borrower. The borrower pays for everything.  
  • And in the middle is the banker. The banker matches up depositors and borrowers and collects a fee in order to do it. 

But keep in mind that the banker in the middle controls everything. And that’s why it’s crucial for you to be in control of the banking function in your life. The process of banking. 

So let’s take a look at what it looks like when you’re not in control of the banking function in your life. There are two times you’re giving up control of that cash flow. 

The first is when you’re paying cash for purchases, and the second is when you’re financing through a bank or credit company.

So let’s take a look at that first option of paying cash for a purchase. 

  1. The first step is to save. Capitalize that bank account so you have enough money to afford the item you want to buy. 
  2. Step number two is to “Drain the Tank”. And once you drain that tank and make that purchase, you have given up control of all of that money. And you’ll never see the interest you don’t earn. 

Like Nelson Nash used to say: “You’ve abdicated your responsibility as a steward of that money.” 

 

The second way you could give up control of your money is by making purchases and using the bank to finance those purchases. 

With this method, you’re borrowing from the bank and paying them a fee for the privilege of using their money. And actually, it’s not their money. It’s the depositor’s money. Remember, they’re linking everyone up. With this option, you’re literally obligating a portion of your income to the bank. And as Nelson said, you’ve abdicated your responsibility as a steward of that future cash flow. So what’s the solution? How do you control the banking function in your life? Well, let’s talk about that. 

If the recipe for being in the banking business is to have depositors and borrowers, then think of it, on a daily basis, what are you, your family, and your business? Aren’t you depositors and borrowers? So if the recipe is depositors and borrowers, you can literally be a bank. But how do you do it? That’s the process that you need to control, and that’s where we could help you. 

So here’s what normal borrowing looks like. You deposit money in the bank and the bank matches you up with the borrower. The borrower takes the money and pays the bank back in increments. The bank collects a fee for that and then pays a tiny little bit to you, the depositor. Now, this is where the magic of banking happens after you make that first payment back to the bank. They’re able to turn that over and lend it out again. And when you make your second month’s payment, they lend that out again. And this is the velocity of banking. 

You see the basis of any business – whether it’s a car dealership, whether it’s a McDonald’s franchise, or whether it’s banking – the cornerstone of that business is turning over its inventory. It doesn’t matter if your inventory is used or new automobiles, McDonald’s hamburgers, or money. It just so happens that in banking, their inventory is depositors’ money. So the quicker they could turn that over, the faster they’re able to earn more profit. 

Let’s see what it looks like when you’re in control of the banking function. You see, you’re the depositor, you’re the bank, and you are the borrower. So let’s assume that your business wants to buy a vehicle and the vehicle is going to cost $20,000. You go to your reserve of money, a specially designed life insurance policy, and you loan it to the bank (you). And then you turn around and loan that money to your business. Now your business makes a payment back to the bank (you), and the bank (you) pays the depositor (you) a portion of that interest. The excess interest in between is the profit of the bank. 

But the key to the infinite banking process is that you are still earning interest on your deposit because you collateralize a loan against your life insurance policy. Rule number one: Never Drain the Tank.

 

So again, this is where the magic of banking happens for you this time. Because you are the bank, you get to constantly loan money out to you and then recapitalize that bank. So you get to benefit from the velocity of banking. Keep in mind the profits of banking and the principle of velocity banking is going to happen with or without you being in control. The question is, do you want to be in control and earn the profits or do you want to abdicate that control to the bank and let them make the profits? 

If you’d like to get started with a specially designed whole life insurance policy designed for cash accumulation so you can put this process to work for you and your family. Be sure to visit our website at tier1capital.com. Feel free to schedule your free strategy session or check out our free web course to learn in detail how we take people through this process.

And remember, it’s not how much money you make. It’s how much money you keep that really matters.

How Do I Get Out of Debt?

Are you dreaming of the day when you finally get to ring the “debt-free bell”? If that sounds like you, stick around to the end of this blog because we are going to do a deep dive on whether it’s better to be debt-free or to own your own debt.

There are many “financial gurus” out there advising people on getting out of debt and, certainly, for a segment of the population, that is an ideal goal. Many people are buried in debt and they need to get out of it. We are not arguing that point, but there’s another segment of the population who makes a really good income and has some debt. And, unfortunately, this advice is being pushed on them as well. And those people are literally living a life of hell getting out of debt or trying to be debt-free. 

And the problem with this advice is that by putting all of your free cash flow towards your debts, you’re not able to save. And a lot of times the advice is for you to save in a qualified retirement account where you can’t access that money. So, what happens is you get out of debt, but you still have no access to cash. And so what happens? You have to go back into debt. 

The solution to this is to start saving in a place where you have complete liquidity, use, and control of your money. That way you no longer have to depend on banks and credit cards when you need to go make your next major capital purchase, invest in your business, or take advantage of an opportunity that comes up. 

And here’s the issue: if you’re building your own cash that you can borrow against and utilize to pay off some other debt or to make purchases, now you are actually owning your debt. And looking at what Nelson Nash said, that’s what banks do. A bank for us. When we borrow money from a bank, it’s a liability to us. It’s an asset to the bank. If you’re the banker, you now own an asset. And sure, you have the debt. But now you can control the terms and conditions. You can control when and if those payments are made. You are in control. And that’s the point. 

Here’s the perfect example. Let’s say you have $5,000 in your bank account today and you also have a balance on your credit card of $5,000. And tomorrow you decide, “Hey, I need to get out of debt. I’m going to take this $5,000 and I’m going to apply it towards my credit card.” Today, you have a net worth of zero. And tomorrow, after you pay off that credit card, you have a net worth of zero. But what’s the difference? Today, you own and control that $5,000 in your bank account. As soon as you give it to the credit card company, you no longer have liquidity use or control over that money. And your net worth hasn’t changed at all. You’ve abdicated your responsibility as a steward of that $5,000. 

You see, when the money is in your control, you have the opportunity to invest it, earn money on it, and do basically whatever you want with it. But as soon as you hand it over to the credit card company, you’re giving them that control and the opportunity that comes with it. 

 

That’s why we recommend borrowing against your own money and using that to pay off the credit card. And now that you own that debt, you could redirect the payment. You were sending Visa, MasterCard, or Citibank back to your policy. Now you own the debt. It’s an asset to you and you’re earning interest on that money. 

We always say “Never Drain the Tank”. Always allow that money to continuously compound interest. And that’s what we do with specially designed whole life insurance policies designed for cash accumulation. We’re allowed to own our debt and repay ourselves, so we never stop that compounding. 

If you’d like to learn more about how to get started with a whole life insurance policy designed for cash accumulation, be sure to visit our website at tier1capital.com to schedule your free strategy session today. Or if you’re interested in learning more about how we use this process, check out our free web course. It’s about an hour and it goes into a deep dive of how we do this.

And remember, it’s not how much money you made. It’s how much money you keep that really matters.

Infinite Banking 101: What Policy Should I Use?

Are you looking to get started with the infinite banking concept? But you’re wondering what the best type of policy is, whether it’s universal life, index universal life, variable universal life, or whole life insurance? Well, if that sounds like you, stick around to the end of this blog because today we’re going to do a deep dive on what the best type of policy is for you and your situation.

The infinite banking concept uses life insurance as a vehicle to implement the process. But let’s take a step back and think about what exactly is insurance fundamentally. 

Life insurance or any insurance, for that matter, is technically a transfer of risk from you to the insurance company. And the cost of doing that is a premium that the insurance company charges. 

 

Now, let’s take a look at the various types of cash value life insurance and the characteristics of each. 

Fundamentally, life insurance, or any insurance for that matter, whether it’s homeowners or car insurance, is a transfer of risk from you to the insurance company. Basically, you’re saying, “I have this risk. I don’t choose to accept it. I need to transfer it.” The insurance company raises its hand and says, “Hey, we’ll charge you a premium for that risk.” And they’re working with the law of large numbers. They’re working on thousands of people who are in the same situation that you’re in. 

But now let’s look specifically at life insurance. Let’s say you have a $100,000 risk that you don’t want to accept. You transfer it to the insurance company. With a whole life policy, it’s all bundled together. It’s a neat little package, and it’s guaranteed to have more cash value next year than it did this year. That’s because the insurance company is making two promises:

  1. They’ll pay the death claim whenever you die. 
  2. When you reach the age of maturity, let’s say age 121, they’ll have the face amount of the policy available for you in cash should you want it. 

Now, let’s take a look at some other types of policies. There’s universal life, there’s indexed universal life, and there’s variable universal life. 

But the chassis is universal life. And what that basically means is: the technical term for universal life is flexible premium adjustable life. If you want to have the flexibility of making various or not making payments, you can do that. Here’s the problem: that variability creates some additional unwanted risk that most insureds don’t understand. Quite frankly, most insurance agents don’t understand it. Now, there are three variables that the insurance company needs to consider as it relates to a life insurance policy. 

  1. Mortality. Are more people going to die than expected? 
  2. The cost of running the company. Is it going to cost more than we anticipated? 
  3. Investment returns. Are we going to earn enough like we anticipated as it relates to this policy?

Now, with a whole life insurance policy, the insurance company assumes all three of those risks. Basically, what they’re saying is: “If more people die sooner than later, we can’t change the deal. If it costs more to run the company due to things like cybersecurity, we can’t change the deal. And if we don’t earn enough interest on our reserves, we can’t change the deal. We own it. You’re off the hook.” 

Life insurance policy contracts are unilateral contracts, meaning that the owner of the policy has one responsibility, and that’s to pay the premiums and pay the premiums on time so the policy doesn’t lapse. All of the other risks are completely on the insurance company. They have to deliver on everything else that’s listed in that contract. 

Here’s the issue as it relates to universal life, variable universal life, or equity indexed universal life: the insurance company gave itself an escape clause. They allowed themselves to transfer the investment risk back to the insured. The insurer doesn’t know it or realize it, and I guarantee you the agent never explained it to the insured in that way. 

But, basically, what it says is: If mortality is greater than expected, if expenses are greater than expected, and if our investment return isn’t what we expected, we reserve the right to change the deal. 

 

How do they do that? How can they do that? Well, it’s real simple. Run an inforce illustration, run a sales projection, and you’ll see that some of these policies start to fall apart in your late sixties or in your seventies.  And what does that mean? Basically, it means that the policy expires before you do. 

Now, think about it. Life insurance is the fundamental vehicle for infinite banking. And yet some people are recommending a product that won’t be around as long as you may be around. In other words, you have to die to win. 

Another thing to consider is if you allow the policy to lapse and there’s a gain on that policy, meaning you don’t want to pay any more premiums because it’s cost prohibitive. What you could end up with is a huge tax bill because there’s so much gain within the policy and all of the gain is taxable as ordinary income. 

Here’s the thing with these universal life policies. In your later years, the cost of insurance could get very expensive. And it will. So you’re left with the choice of paying an astronomical amount of premium and then having to pay the premium again at a higher amount the following year, or just allowing the policy to lapse. Now, if you let the policy lapse and you’ve used it for infinite banking purposes, there’s a high probability that you’ll have a taxable gain, and that taxable gain is going to be fully taxable at ordinary income rates. 

In Nelson Nash’s bestselling book, Becoming Your Own Banker, on page 39, he clearly expresses his thoughts on universal life. Universal life came into play in the early 1980s. It was created by a company called E.F. Hutton, a stock brokerage firm. And in Nelson’s opinion, they knew nothing about life insurance. For those of you old enough to remember the commercial, you remember when E.F. Hutton spoke. Everybody listened. 

Have you heard ‘em lately? They don’t exist. 

Universal life is nothing more than one-year term insurance with a side fund. And if you remember, back in the early eighties, interest rates were 15-16%. And those policies didn’t work then. So could you imagine, under today’s interest rate environment, how faulty and how much risk you’re accepting as far as the interest rate is concerned? 

Universal life was an attempt to unbundle the savings and the insurance components of life insurance, which, if you understand whole life insurance, it can’t be done. You can’t unbundle the whole life contract. Here’s the thing with the universal life contract, the flexibility you’re getting cannot be duplicated with the whole life policy. However, it can come close and at the end of the day, the risk that the insurance company is pushing back to the owner of the contract is not worth the flexibility. 

This takes us to the policy illustration. When you’re choosing insurance companies or you’re choosing insurance policies, generally an agent will show you an illustration or a projection of how the policy might perform. And it is very tempting to look for the highest yielding illustration. But that is such a slippery slope. There are so many variables that the insurance company can manipulate to create that better-looking illustration, and it is not worth the time of day when you look at those illustrations. If you’re judging whether or not you should purchase a policy based on an illustration, stop the process – you’re off the rails.  

The issue is how are you going to use that policy? And what Nelson Nash proved to us in his bestselling book, Becoming Your Own Banker, you will have the greatest impact on the performance of that policy. You will have the greatest impact on how that policy serves you. 

Some of our clients use these policy loans to get out of debt faster, take advantage of investment opportunities, start their own business, or send their children to college.

The point is: how are you going to utilize this policy to move you toward your financial goals? And what is that worth? 

 

With these policies designed for cash accumulation, you have the opportunity to take advantage of the internal rate of return as well as an external rate of return. So it really comes down to how you are going to move forward using these policies and taking advantage of the continuously compounding interest that happens within your contract. And that’s the importance of the infinite banking concept when you’re trying to regain control of your money. 

The key with infinite banking is you are in control, and because you’re in control, you can’t change the deal. Or you can. It’s up to you. 

If you’d like to get started with a specially designed, whole life insurance policy designed for the infinite banking concept to help achieve your financial goals. Be sure to visit our website at tier1apital.com to schedule your free strategy session today. Or if you’d like to learn more about how our process works, take a look at our free web course listed right on our homepage. 

And remember, it’s not how much money you make, it’s how much money you keep that really matters.

Tips for Insuring Your Most Valuable Asset

Have you considered insuring your most valuable asset? And you may be wondering: what is your most valuable asset? It’s your ability to work and earn income! But, what would happen if you woke up tomorrow and were no longer able to work? What would happen to your family? What would happen to your lifestyle? If you haven’t considered this, stick around to the end of this blog because today we’re going to do a deep dive on how to insure your income. 

It’s often been said that insuring your greatest asset, your ability to earn income, is the equivalent of insuring the goose that lays the golden eggs. Many employers offer short-term disability insurance as part of their benefits package, but that could last anywhere from 90 days up to two years. So, what happens after that benefit period? If you’re still not able to work and earn income, then what? What happens to your lifestyle? What happens to your family? How do you support the things that you’ve become accustomed to when you’re not able to work any longer? 

There are other situations where your employer doesn’t offer those benefits or you’re self-employed and you don’t have that luxury. And those cases, it’s especially important to have set aside 3 to 6 months of income as a safety net or emergency fund in case you’re unable to work. 

Disability insurance is sort of like having a safety net as you’re ascending this ladder in life. The higher you climb up these stairs or this ladder, the higher you want that safety net. 

With a long-term disability policy, you’re transferring the risk of becoming unable to work to the insurance company. So, basically, you pay a premium every month, and if you become unable to work, the insurance company will continue your income. So, now, you have a steady stream all the way into retirement. 

Typically, an insurance company will insure 50 to 60% of your income, which is the equivalent of your net pay after taxes. Disability insurance is a cornerstone of any financial plan. Imagine what would happen if you were no longer able to work into retirement. How would that impact your retirement? How would that impact your family? How would that impact your ability to maintain your lifestyle? These are all questions that a properly designed disability insurance policy will answer for you. 

Here’s an example: 

A couple of days ago, we were working with a young attorney who makes about $150,000 per year. And he said, “Should I get disability insurance?” 

I said, “Well, it’s basically the choice of two jobs. Job A pays you $150,000. But if you get sick or injured and cannot work, you and your family get nothing coming in. Job B will pay you $147,000 per year. But if you get sick or injured and can no longer work, you’ll have $120,000 coming into your family tax-free. Which job would you choose?” 

He said, “Oh my God, that’s a no-brainer, Job B.”

If you’re looking to add a safety net to your financial plan by adding long-term disability insurance to your portfolio be sure to visit our website at tier1capital.com to get started today. We’d be happy to go over the specifics of your situation with you. 

And remember, it’s not how much money you make, it’s how much money you keep that really matters.

How to Use Whole Life Insurance to Achieve Financial Freedom

Are you rich on paper but feel financially stuck and frustrated? Take a look at your net worth statement. Identify which assets are stagnating assets, meaning that some other financial institution or some other entity is in control of that asset. 

It’s been said that money needs to flow. It’s a simple law of nature, just like water has to flow through us or we die. Blood has to flow through us, or we die. If we’re out in nature and we’re thirsty, we never drink stagnant water. We always drink running water. And it’s the same with our money. 

But what conventional wisdom teaches us to do with our money is to park it, leave it there as long as possible, and then get it back someday. We are trained to do things with our money that we would never do with the things that money buys. 

Here’s an example: 

  • You would never buy a loaf of bread, put it away, and say you’re going to eat it in 40 years. Yet we do that with our money. 
  • You would never buy a car and put it away and say, I’m going to drive it in 40 years. Yet we do that with our money.

And there are so many other decisions that we are trained to do with our money that we would never do with the things that money buys. 

So the question becomes: how do we achieve the returns we get by parking our money while still allowing our money to flow so that we could have complete liquidity use and control of that money to take advantage of opportunities or emergencies that come about? 

This is step three in our process. It’s a specially designed whole life insurance policy for cash accumulation that allows you complete liquidity use and control so you can take advantage of financial opportunities or business opportunities, or bail yourself out of a financial or medical emergency. This allows your money to flow and still receive or attain the returns that you would get by parking your money. You get the best of both worlds. You get a reasonable rate of return, plus you get liquidity use and control of your money so your money flows. 

If you’d like to get started with a specially designed whole life insurance policy for cash accumulation, so your money is no longer stagnant. Be sure to visit our website at tier1apital.com and feel free to schedule your free strategy session today. 

Remember, it’s not how much money you make, it’s how much money you keep that really matters.

5 Ways You’re Unknowingly Giving Up Control Of Your Money

Do you make a good income but still find yourself living paycheck to paycheck? If that sounds like you, stick around to the end of this blog. Today we’re going to show you why it’s not how much money you make, it’s how much money you keep that really matters. 

Many people will come to us already earning a good income. In fact, they’re earning more income than they thought was ever possible. But they still have that feeling that they’re living paycheck to paycheck. And, clearly, that’s not an income problem. If it was, they wouldn’t have any problems. The issue is their money and their cash flow are not working efficiently. 

If you don’t correct how you’re using your money, the problems will continue to compound as your income grows.

We’ve found that there are five major areas where people are giving up control of their money unknowingly and unnecessarily. Unknowingly, meaning they don’t realize they’re doing it, and unnecessarily meaning they could stop whenever they want to. 

The five areas are:

The first step is to take a look at your finances and find out where you’re giving up control of your money. 

The second step is to “simply” stop doing those things that are taking control away from you. “Simply” is in quotations because these are things that you’ve been doing all your life; things that conventional wisdom, your family, or your mentors may have suggested you do to get ahead financially. But what’s happening is you’re giving up control of your monthly cash flow to other institutions. And when you’re doing that, it’s impossible for you to move ahead financially. 

Step three is to save your money in a place that you own and control so that only you, your family, or your business can access that money. 

And step four is where the magic happens. It’s where you borrow from yourself and pay interest back to yourself or that account that you own and control. And when you do that, you are now in control of the borrowing process. Money never leaves your control, and you are what we refer to as cash fluent. 

Think of the impact it would have if you had complete liquidity use and control of the financial function in your life where you’re building cash flow for yourself, using it to achieve your financial goals, and rebuilding it so you could repeat the process. And an added bonus not stated in there is the fact that now you’ve liberated yourself from the banks and finance companies. 

Clearly, it’s not your income that’s holding you back. If that were the case, all of your problems would have been solved three raises ago. It’s how you’re using your money. If you’re finally ready to regain control of your money and start saving for your financial goals, be sure to visit our website at tier1capital.com. 

We have a free web course where we do a deep dive into the four steps. Or, if you’re ready to get started and get on a call, feel free to schedule your free strategy session to get on our calendar today. Also, if you know someone who needs this information in their life, be sure to share this blog with them!

And remember, it’s not how much money you make, it’s how much money you keep that really matters.

Plan For Retirement Without Losing Control of Your Money

If you’ve been reading our blog for a while, you know that we’re constantly preaching about controlling your cash flow. And you may be wondering, why do I need to control my cash flow and why is that even important? Well, if that sounds like you stick around to the end of this blog because today we’re going to cover why controlling your cash flow is so important and how to regain control of your money.

So, you graduate from college, you get your first real job, and you start saving for retirement in the company 401k, 403b, or other company-type retirement plans. You’re moving yourself forward, or so you think, because you’re saving for retirement. It seems to be the responsible thing to do. Unfortunately, that literally separates us from our money when we need it most, obligates our cash flow towards that retirement, and holds us back. But how does it hold us back? 

Let’s say from the time you start working to the time you retire, you’ve accumulated over $1,000,000. Well, think about this. When you started saving in your twenties, a dollar bought you a dollar of goods and services. But when you retire, it’s not the same dollar. That dollar is worth much less, probably closer to $0.69. So now your million dollars doesn’t have $1,000,000 of buying power, it only has $690,000 of buying power. But it gets worse because now when you take money out of that account, you’re taking it out on the million and you’re taxed on the million. So let’s say you’re in a 25% tax bracket. Poof, there goes another $250,000 of the million dollars. Now you’re down to $440,000. And when you do the math, you might have a net rate of return, net of taxes, and purchasing power of about 1.5 to 2%. Now, what you don’t realize is that in order to get a 6 or 7% rate of return in your retirement account, you had to put your money at risk every single day for over 40 years. 

So let’s summarize or recap exactly what happened. You made the responsible decision to save for retirement in a government-qualified retirement plan. But what you didn’t realize is:

  1. Your money was exposed to the risk of Wall Street. 
  2. Inflation ate away at the buying power of your money.
  3. The government is going to take a big chunk of the money when you take it out in retirement. 

So you’ve separated yourself from your money, from your cash flow. And under the idea that you’re going to move yourself forward. But there are so many forces pulling you back that you don’t see that it’s almost impossible to get ahead financially.

Now, let’s just take a step back. We’re not saying you shouldn’t be saving for retirement. In fact, you should be saving for retirement. But what we’re suggesting is that you save in a place where you have complete liquidity use and control of that money everywhere along the way so that you could reach your financial goals, not just in retirement, but everywhere along the way, because we have to live along the way. And we want you to do that without being dependent on banks and credit cards for access to money or the government rules to access your money or Wall Street to grow your money efficiently. 

When it comes to your monthly cash flow, every decision you make has a ripple effect. So you chose to save for retirement in a qualified plan, but you don’t have access to that money. So what happens when you want to go on vacation, send your kids to private school, do a home improvement, or buy a new car? You’re forced once again to go borrow. And what does that do? It further pinches your cash flow. That’s the ripple effect. And with every ripple you make in your monthly cash flow, it gets harder and harder to save in a place where you have liquidity, use, and control of your money. 

So let’s start with answering the question: Why is controlling your cash flow so important? And to answer that, let’s take a look at all of the ways that the government, Wall Street, and banks systematically get their hands in our checkbook every single month. Oftentimes, they’re in there so much so that we’re not saving for ourselves, for our future, for our families. It’s really simple when you think about it. Financial institutions, large corporations, the government – they have rules. And those rules are really simple:

  1. They want to get our money. 
  2. They want to get our money on a systematic basis. Think about all the monthly subscriptions, the auto pays, etc. that you have where you freely let people in or institutions into your checking account.
  3. They want to keep our money as long as possible. 
  4. When it comes time to give us our money back, pay it back to us over as long a period as possible.

    Those four rules are cardinal to their financial success, and that’s what we say: If it’s important enough for them to implement those rules, then it should be that much more important     or us to follow those rules to benefit ourselves.

Think about the impact it would have on your life and your family if you were to implement those four rules for yourself instead of having them serve the government, banks, Wall Street, everyone else. They could be serving you and you could finally be in control of your cash flow. And that’s why it doesn’t matter how much money you make. It doesn’t matter if you make over $1,000,000 a year or if you make $50,000 a year. If you’re not in control of your cash flow, you’re not in control of your life. It’s really simple. 

The government, financial institutions, Wall Street, and banks, they want to, they need to, separate us from our money. And they do it by convincing us that it’s actually moving us forward. And in the process, they get to control our cash flow, they get to control our money, and ultimately they control our lives. Because one day you wake up and you’ve got retirement deposits, you’ve got car payments, credit card payments, mortgages, home equity loans, you name it. And the next thing you know, your cash flow is pinched and you feel out of control. A lot of times people come to us and they think, “If only I earned more money, I could finally reach all my financial goals. I could finally get some cash flow relief.” But that’s not true unless you start making your money and your cash flow more efficient. The problems are going to continue to compound as your income grows. It’s sort of like you have a bucket filled with holes and in order to fill that bucket with water, you have to first plug the holes. And that’s where we can help you regain control of your money. It’s money that’s literally hiding in plain sight. It’s in your cash flow. You think it’s moving you ahead, and it’s actually holding you back. 

If you’re finally ready to regain control of your cash flow and stop being at the mercy of government banks and Wall Street, be sure to visit our website at tier1capital.com. There’s a free web course that goes through our exact process, step by step. Or if you’re ready to get started, click the Schedule a free Strategy Session button to get on our calendar today. 

And remember, it’s not how much money you make, it’s how much money you keep that really matters.