Life Insurance

Strategy to Accomplish a Debt Free Lifestyle

In today’s economic environment, with high interest rates and high inflation, anyone could end up with a credit card balance. But the question is, how do you get out of that debt as quickly and as efficiently as possible? And how do you do it in a way where you actually come out better off than you were before?

Whether you’re buried in debt or you’ve accumulated more debt than you’re comfortable having. You want to get out of debt as quickly as possible. But following conventional ways of getting out of debt leaves you with no money and leaves you more frustrated after the debt is paid off than you were before you started paying off your debt.

Think about it. Conventional wisdom teaches us that debt is bad and that we need to get out of debt as quickly as possible. And the way most people think about debt, that means putting all of your extra cash flow towards that debt to bring it down to a zero balance as soon as possible.

But we need to be able to enjoy life along the way, even if we have accumulated more debt. And more importantly, we also need to be able to save for the future so we don’t end up in this situation again.

That’s why it’s important to think outside the box so that you can get your debt paid off as quickly as possible and begin to save or put yourself in a position where you have access to money so you can also enjoy the benefit of having a good income. 

We were speaking with a client this week who made a great income $200, $300,000 a year, but he has $1,000,000 of debt. And he asked if is there a way I could actually manage this and still retire, because he’s 59 already.

This is our favorite part of the job. Showing people how to get out of debt more quickly than originally planned. Plus, saving for retirement.

Conventional wisdom teaches us that you need to put all your money towards debt. But if we don’t break that debt cycle by saving outside of the debt, even if he knocks out the million dollars of debt, at the end of the day, using conventional wisdom would only leave him at the zero line and no better off for retirement.

And here’s the point If he focuses all of his free cash flow to paying off his debt, he can’t begin to save until his debt is paid off. He is violating one of the key variables of compound interest. He’s giving up his time. And this is not a mutually exclusive choice. You can start to save and you can pay off your debt quicker if you do it the right way. 

You see, all you have to do is add one extra step since you already have a pretty good income. All you have to do is redirect some of those debt payments into an account that you own and control and have access to. It’s only adding one extra step, but that one extra step makes a huge difference over a lot of time.

You see, this client had 12 payments leaving his control every month, and all you need to do is to stop one of those payments from leaving your control and redirect it back into your control. And when that happens now, you can reverse the flow eventually on all 12 of those payments.

By using a specially designed whole life insurance policy designed for cash accumulation. This client is able to tackle his debt while saving simultaneously. You see, you start by redirecting one or the extra debt payments towards the policy. Start building up that cash value, that pool of cash that you own and control. And once you have enough, you pay off your smallest debt and then you have a free debt payment that you’re able to redirect into your policy to knock down that policy loan.

So now in the policy, we have the premiums building the cash value as well as the policy loan repayments, building that cash value. And what happens is exponential as we continue knocking down each and every single one of those 12 debts, we have more and more cash flow going towards our control instead of away from our control as it is now.

And that’s why you can get out of debt quicker using this method because you’re filling up your cash value with two hoses. One, your premium deposits, and two, your loan repayments.

Have you accumulated a huge sum of debt or just more debt than you’re comfortable carrying? Well, there could be a way to get out of debt faster by adding one extra step.

You see, instead of pushing all your money to outside entities, credit cards, banks, mortgage companies by adding this one extra step and paying yourself first. You could break the debt cycle in your life so you’ll be less dependent on banks, credit companies and other outside sources for access to money and instead have a pool of cash that you own and control to take back the finance function in your life.

We are not using any extra cash flow. This is all cash flow that’s built in our clients income, cash flow that’s already currently being used to repay the debt. It has actually no impact on his day to day to add this one extra step. But, what it does have an impact on is his future and his family’s future. Although we’re paying off the same amount of debt and we’re using the same cash flow, at the end of the day, we’re left with a pile of cash that the client owns and controls and is able to use. Whether it be down the line to finance future purchases, go on vacation, make an investment, or even further down the line to fund his retirement.

That’s why our process to get you out of debt quicker allows you to one, get out of debt. Two, get out of debt quicker. Three, begin to save today so you can take advantage of the magic of compound interest. And number four, we can show you how to get all those policy loans paid back so that when you go to retire, you can use that money to supplement your retirement income.

If you’d like to learn more about exactly how our process works, check out our free web course, The Four Steps to Financial Freedom. And remember, it’s not how much money you make. It’s how much money you keep that really matters.

Tax Benefits of Cash Value Life Insurance

We often talk about the living benefits associated with cash value life insurance. Wouldn’t the best way to make sure your money goes as far as possible and as as efficient as possible be by protecting it from taxes?

Before we get started, let’s address the elephant in the room. Are you able to deduct premium payments toward your life insurance policy? The answer is a big fat no. You may be wondering why. Well, let’s think of it this way.

If you were to deduct this small premium payment over here while you’re still living it would cause this huge guaranteed pile of money, the death benefit to be taxable to your named beneficiary.

One of the hallmarks of life insurance is that you could take pennies in premium and turn them into dollars in death benefit. That is maximum leverage. By getting a tax deduction on the pennies, you get a taxable bill on the dollars. That’s not a good trade off. It simply doesn’t make sense.

So although you may be looking for strategies for living tax benefits while you’re alive, it doesn’t make sense to sacrifice the tax free death benefit in the long run. Here’s another key. There are so many tax advantages to owning cash value life insurance, and we’re going to go into those right now.

First of all, tax free access to policy loans via the policy loan provision. And keep in mind, all loan proceeds are, in general tax free. Using the loan provision allows you to tap into that cash value, to use it for whatever you want to use it for. Whether it be to send your kids to school, grow your business, do a home improvement. It’s a contractual guarantee, meaning you don’t have to justify what you’re using the money for because you’re guaranteed access to those policy loans via the contract between you and the life insurance company.

Another big benefit is that the cash value does not have to be reported on the FAFSA, which is the Free Application for Federal Student Aid. Meaning when it’s time for your children to go to college, the money that’s stored in the life insurance cash value isn’t going to be reported and isn’t going to be counted against your college tuition aid. There is not even a question on the FAFSA form to disclose cash value in your life insurance.

Another tax benefit is that the policy cash value is able to grow on a tax deferred basis as long as it’s in the life insurance contract. That’s why we talk about using policy loans so much, because not only do you have access on a tax free basis via the policy loans, but you also have tax deferred growth within the contract.

So you’re able to experience continuous compound interest on that cash value even after you access it through the policy loans, for example. What that means is when you access a loan on your life insurance policy, your money continues to grow as if you hadn’t borrowed.

A life insurance policy loan is a collateralized loan. You’re not borrowing from the policy, you’re borrowing against the cash value. And the cash value is the collateral. But here’s a caveat: that only happens if your policy is what’s known as non direct recognition, meaning that the insurance company will not penalize you by giving you a lower dividend if you have a policy loan.

The companies we typically deal with are non-direct recognition, meaning the policy is going to perform the same for our policyholders, whether or not they have a life insurance policy loan outstanding or not. But it will vary from company to company.

Another tax benefit is the fact that distributions from a life insurance policy in retirement will have no federal income tax, no state income tax, no Social Security offset tax, and will not be counted towards your contribution for your Medicare premium. That’s four taxes that you will not have to pay if you access your money through your policy in the proper way.

With a life insurance policy, all of the premiums that you pay into the contract are accessible on a tax free basis. It’s basically a return of premium. Anything that grows over that contributed amount is going to be fully taxable as income, but you could get around that by accessing it through policy loans after that basis is used up.

So recapturing your cost basis is actually called FIFO. First in, first out. The first dollars you take out are considered the first dollars you put in, which would be your cost basis. Which is a huge benefit.

What are the tax benefits of life insurance? The money goes in with after tax dollars, the money grows on a tax deferred basis. You can access the money through the loan provision on a tax favored basis. When you take distributions in retirement, the first dollars out are considered the first dollars you put in, which means you can recover the money you put into the policy on a tax free basis.

Then in retirement you can over your basis, you can take money out through the loan provision and again, avoid the taxes, state income tax, federal income tax, Social Security offset tax, no increase in your Medicare premium. Then when you pass away, the death benefits pass outside of probate, in most states, and in most states pass outside of state inheritance or estate taxes.

Finally, when you die, the death benefit goes to your name beneficiary on a federal income tax free basis. And here’s the point It’s not about rate of return, although the rate of return is really strong. It’s about maximizing what the tax code allows you to take advantage of.

So let’s summarize where we are so far. You put money in a life insurance policy with after tax dollars, the money grew on a tax deferred basis. You are able to access it through the loan provision on a tax favored basis. You put the money back in, you took it back out again however often you want.

Now you go to retirement time and guess what? No state income tax, no federal income tax, no Social Security offset tax, no increase in Medicare premium. So we got you through into retirement with tax advantages and now you pass away. The death benefit passes to your name beneficiary on a tax free basis. And in most states, the death benefit is not counted towards probate and it will pass outside state inheritance or state estate taxes.

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

Optimizing Your Cash Windfall to Efficiently Boost Your Life Insurance Policy

When a life insurance contract is issued, a lot of times there isn’t a lot of built in flexibility within the contract. So when people come into windfalls, whether it’s an inheritance, a bonus at work, or a raise, and they have extra money and want to put it into the policy, you may be wondering where does it go? How do we get this money securely in our life insurance contract?

When people come to us and say, “Hey, I have a windfall of money. I got a bonus at work, an inheritance, a raise. I need to put this money somewhere and make it as efficient as possible.” We’re trained to look at things through the lens of control with full liquidity use and control of that money along the way for your upcoming financial goals, as well as your ultimate goal of retirement and leaving a legacy to your family.

If you already have a life insurance policy, you may be wondering, How do I put that money into the policy in the most efficient way possible? We call this a hierarchy of policy payments. 

First and foremost are base policy premiums. In the early years of your policy, your cash value will not increase as much as the premium you deposit into the policy. However, as time goes by, the policy becomes more efficient as far as the base premium is concerned, meaning that your cash value increase can be as much as two, three, four, five, and I’ve seen it as high as eight times the premium.

You see, these policies are designed by actuaries. These policies are required to get better and better every single year. So by funding that base policy, you’re ensuring you’re going to get the most bang for your buck over the long term. It’s not a get rich quick scheme.

The second place in order of hierarchy is to pay the paid up additions rider. This will allow you to maximize the efficiency of the policy, get you the biggest bang for your buck as far as contribution and cash value increase, as well as putting you in a position to solve your short term, mid-term and long term goals.

Now, with the paid up additions rider, it has to be issued with the contract. If you have a contract that doesn’t have a paid up additions rider or a contract that already has the paid up additions rider that’s paid up, meaning you can’t put any more in it, you’re not going to be able to get around that without additional underwriting.

Many policies that are designed specifically for the infinite banking concept or for cash value accumulation include a paid up additions rider of some sort that goes from 4, to 10, to many years beyond. However, it will be determined by the terms in your specific contract.

The third order in the hierarchy is to pay the policy loan interest, assuming you have an outstanding policy loan. If you do have this, the third place in order of hierarchy is to pay the policy loan interest. You state policy loans are unstructured, meaning there’s no repayment terms.

However, with a life insurance policy loan, typically you’ll receive a bill for the loan interest somewhere around your policy anniversary each year. Now you do have the option of paying it back. But if you don’t, it’ll accrue right onto the loan balance. Assuming there’s enough room in the policy to absorb that loan interest.

And that brings us to the fourth and final area in the hierarchy, and that is to pay the loan principal. You see, as long as you’re paying the premium and the paid up additions rider and the policy loan interest when you pay off the loan really doesn’t matter. That’s a personal issue.

You can make the repayment program fit to your cash value or to fit to your needs. And once you decide how you want to pay it back, you can change your mind as far as how you want to pay back that loan in mid-stream, so to speak, and make it a longer repayment program or a shorter repayment program based upon your cash flow.

If you recently came into money, whether it be from an inheritance, a bonus at work or a raise, you may be wondering how you should be applying that to your life insurance policy. Well, there’s a specific hierarchy, an order in which you should be applying these payments to your policy. The first is towards your policy base premium. Number two, policy paid up additions, if applicable. Number three, if you have a policy loan, you should be paying off your policy loan interest. And number four, and the final place you should be putting money is toward your policy loan principle.

Now, if you have the first three tiers of the hierarchy taking care of: the premium, the paid up additions and the loan interest, taken care of, it may make sense in your situation not to repay that policy loan and instead take out a new policy so you can have two policies working, compounding and growing for you simultaneously.

You see, when it comes to compound interest, like is experienced in these life insurance policies, there are two factors time and money. And if you have the money, we know that you could never cover the time. So the best time to start a second policy may be right now. 

If you have a windfall and you’re looking at ways to apply the windfall to your life insurance policy, schedule your Free Strategy Session today.

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

Combating High Inflation and High Interest

Small businesses are currently facing the twin challenges of high interest rates and high inflation. They’re paying more for loans and raw materials while trying to maintain a good quality of life for their employees, all while trying to grow their business.

Things are moving quickly. In November of 2020, inflation was quoted at .75, less than 1%. But let’s take a step back in time what was happening in November of 2020? Well, stimulus checks had been sent out, there was PPP money sent out to business owners. EIDL was on the rise and overall the government was pumping as much money as they can into the economy to keep inflation that low and stop us from feeling the effects of the pandemic.

But let’s take a look at the results of this government interference. In August of 2022, inflation had risen to 9.2%. By the end of December, it was down to 4.6%. But here’s the point. Inflation has increased a lot. We know that every time we go to fill up our gas tank, we know that every time we go to the grocery store, we see inflation on a daily basis. And couple that with the fact that small business owners often have to pay 2 to 3 points more on their business loans.

In February of this year, 2023, the prime interest rate rose from 3.25% percent to 7.75%. This could have a huge impact on small businesses if they’re not flush with cash and they’re forced to finance to run their business or grow their business.

In fact, the last time the prime interest rate was this high was during the Great Recession of 2008. While we have no idea what’s going to happen in the future, we can use history as a guide. During the 2008 recession. 1.8 million businesses closed their doors and 8.7 million people lost their jobs. 

During the last three recessions 91% of business owners were suffering. However, the key is that 9% thrived during those times. Success also leaves clues.

So here’s the question, how can you position your business to take advantage of all the bad news that might happen with a pending recession? Let’s face it, no one knows what’s around the corner. We could guess. We could estimate. We could say what we think. Regardless, you need to be in a position where you can thrive, having the flexibility to pivot to whatever life throws our way. 

We would argue that that comes with being in control of your cash and your cash flow, not dependent on banks not saving in places where you can’t access that money, but rather having a pool of cash that you own and control that you’re able to access for when you’re ready to grow your business, perhaps during the next recession, whenever that may be.

If you’d like to learn more about our process, we have a free business owners guide right on our homepage.

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

The Risks of Certificates of Deposit

You may have been noticing that banks have been offering relatively high interest rates on short term CDs, and that’s because of the inverted yield curve. But what risks are involved and what risks should you consider when looking into purchasing a CD.

Let’s start at the beginning. What the heck is an inverted yield curve and what effect does it have on our economy? Typically banks or investment firms will offer higher interest rates for a longer duration, whether it’s a CD or a bond.

You’re leaving your money with the bank longer, they’re going to have more time to capitalize and invest that money. You should be rewarded adequately for the commitment of leaving your money with the bank for that extended period of time.

However, with an inverted yield curve, short term rates are actually a lot higher than the long term rates. And what does that mean?

Well, it’s basically the bank saying, “Hey, we feel comfortable committing to this higher interest rate for the short period of time based on the economic outlook. However, past this amount of time down into the future, we don’t feel so sure that the interest rates are still going to be this high. We’re not going to offer you as high of a rate of return”.

But what are they actually doing? By advertising these high interest rates for short term products, they’re able to lure in the consumer to tie up their money with the bank while the interest rates are high.

Now, here’s the problem. Let’s say things are good for the next six months, but you have a nine month CD and after six months, the economy tanks. So what’s the Fed going to do? They’re going to lower interest rates. Why? Because they want to get more liquidity back into the economy.

And now here’s the problem. When you get to renew your nine month CD, let’s say the rates are half of what you’re currently getting. So you’re sort of getting tricked to tie up your money for a short period of time so that the bank doesn’t have to be stuck paying a higher interest rate for a longer period of time.

Basically, they’re saying we don’t think the economy is very stable and it’s not stable for a long period of time. We don’t know what’s around the corner and neither do we as consumers. So they’re protecting themselves. But what are you doing to protect yourselves, to make sure that your wealth isn’t dependent on the economy, whether it’s in the market or in a CD?

You see, the system is set up to benefit the banks and the financial institutions at our detriment. We as individuals or small businesses pay the price for all of the security that the financial institutions want to embed in the system for themselves. And think of the massive marketing and indoctrination that’s going on from these financial institutions that’s teaching us to do things the way that benefits them and again, to our detriment.

According to a 2022 study conducted by Northwestern Mutual, only 35% of Americans actually are working with a financial advisor. So if you are one of the 65% of Americans who aren’t and you’re doing it yourself, you could be at a severe detriment when you put all of these factors together.

The easiest way to get someone to do something that’s not in their best interest is to make them believe that it is in their best interest. And a lot of times, unfortunately, that’s what these financial institutions do.

And I’m sure you’re out there saying, “Well, come on, there’s no way. How do they do that?” Well, let me give you an example.

Let’s say you want to buy a house and the interest rate for a 30 year mortgage is six and a half percent. And you sit there and you say, “Boy, that’s a very high interest rate.” And you go to the banker and say, “You know what? Our family has been a customer of this bank for over 25 years. We deserve a better interest rate.”

And they say, “Well, Mr. Smith, here’s what we’re going to do for you. We’re going to give it to you our way. If you take a 15 year mortgage, we’re only going to charge you 6%.” And you sit there and say, “I did it. I negotiated them to a much better interest rate.” No, you did it. You gave them more and more of your monthly cash flow. And that’s what it’s all about.

You see, when you focus on being in control of your money, the decisions that you make with your money become much, much more clear and you are now in greater control of more and more of your money.

They’re able to distract us with interest rates. Is at a high interest rate. Is it a low interest rate? Can I get a better interest rate across the street? Well, that doesn’t really matter. Not too much, at least, because what really matters is how much money you’re giving up control of every single month. Because the more you give up control of your money, the less money you have to save to invest, to reach your goals with as it gets more and more tied up.

If the bank made the same amount of money on every loan, how many choices do you think you would really have? One. So the very fact that the bank offers multiple interest rates and multiple mortgages for various durations indicates that they’re making more on some mortgages and less on others.

Wouldn’t it be great information to find out where they make more money and then stay away from that choice?

So here’s the point. We talked about interest rates. We talked about an inverted yield curve. We talked about how financial institutions get us to do things that are in their best interest by making it appear that it’s actually in our best interest. 

The bottom line is this. If you want to get off the hamster wheel, if you want to stop being controlled by the financial institutions and our government, we have a solution for you. Check out our process laid out clearly in our Four Steps to Financial Freedom webinar found right on our homepage.

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

Navigating Polarized Financial Opinions and Achieving Your Goals

If you haven’t noticed, the world we live in is becoming more and more polarized. There are so many conflicting opinions out there. Are we about to go into a recession or not? And what about interest rates? Are they going to keep going up or are they going to decrease again? 

Will there be continued volatility in the market or will stability return to the market? Not to mention the ultimate question, are taxes going up or down? How do we put ourselves in control of what we can control and start saving for the future, for a sure thing, regardless of what’s happening.

Because of the polarization, because of the uncertainty that comes with this polarization, one thing is certain. We still have goals. We still have milestones. And the longer we wait to address them, the more time we lose. And the fact of the matter is this the only thing we cannot afford to lose is time.

So the question remains, what moves should you be making right now to put yourself in a better financial position tomorrow? What are you going to look back and say, “Hey, I’m glad I made that financial decision. I’m glad I didn’t stay paralyzed and I’m glad I took that next step”.

The lens we look through is control. How do you remain in as much control as you can? Control of your assets, control of your cash flow, control of when you meet your goals. And when you’re in control, you’re better positioned to take advantage of anything that the economy, the government, and the world throws at you.

Again, putting yourself in a position where you could actually take advantage of all the bad news that’s out there. You could actually be in a position where you can look at that as an opportunity rather than being victimized by whatever happens outside.

You see, we believe there’s more opportunities in avoiding the losses than picking the winners. And not only that, but have you ever heard this, buy low and sell high? What better time to have full liquidity use and control of an asset than when the world is in economic turmoil? And by being prepared, you put yourself in a position where not only can you take advantage of opportunities, but you can protect yourself from whatever happens out there.

Here’s a question we ask all of our clients. Does having money that safe, liquid, and accessible when you want, no questions asked, does that take away any options in the future?

However, you have to keep in mind that the world around us is trying to gain more and more control of our cash flow. Whether it be paying off your mortgage as soon as possible, paying cash for your cars, or even saving in our retirement plan.

All of these things take your cash flow on a monthly basis and to put it out of our control. We’re transferring money from our control, our checkbook, every single month to outside creditors where we no longer have access to that money, especially without permission or a penalty.

So the answer, in our eyes, is very simple. When you view things through the lens of you being in control of your money, that makes your decisions so much easier. Because when you look and you analyze at the outcomes of each of these strategies and you see that you’re not in control of your money, don’t do it. Search, and find, areas or strategies that will continue to keep you in control of your money so that you can pivot in any direction that’s advantageous to you.

A perfect example of how someone isn’t looking at things through the lens of control is when they get hung up on interest rates. For example, when you go to the bank for a mortgage, what’s the first thing they offer? Hey, if you get a 15 year mortgage, you’ll have a lower interest rate than if you got this 30 year mortgage. But, what happens if you take that 15 year mortgage?

Well, you’re giving up a larger chunk of your monthly cash flow. And what’s the ripple effect of that? Well, if you’re putting more money toward your mortgage, you’re locking more money up in your home equity, but you’re also not able to save as much to reach your other financial goals.

You see, the money in your home equity isn’t necessary liquid, and it’s especially not liquid if you lose your job or become disabled, there’s no bank that’s going to give you a mortgage or access to that money If you don’t have a job.

So when you step back from that decision to take a 15 year mortgage because the interest rate is lower versus a 30 year mortgage, now you’re chewing up more of your cash flow. And the ripple effect is now you can’t save as much money, but more importantly, now you have less accessible money. So, if an emergency comes around or an opportunity comes around, you can’t solve the problem created by the emergency or take advantage of the opportunity that came to you. So the key is having accessible money that positions you to take advantage of all of these situations.

Let’s face it, life always happens. And when life throws a curveball at you, don’t you want to be able to hit that ball out of the park instead of being hit in the face? I for one, I have to tell you, I hate getting hit in the face. It’s not pretty. 

If you’re ready to hit that curve ball out of the park, be sure to visit our website at Tier1Capital.com. Check out our free webinar for exactly how we put this process to work for our clients.

As we always say, it’s not how much money you make. It’s how much money you keep that really matters.

Apple’s New Launch of a High-Yield Savings Account and What it could mean for You!

Have you heard that Apple recently launched a new high-yield savings account? This type of account is a great way to earn higher interest on your savings because let’s face it,
we all need a savings account to have liquid cash readily available exactly when we need it.


Hi, I’m Olivia Kirk and I’m Tim York. We’re from Tier 1 Capital, and we’re here to show you how to regain control of your money. For the best advice on controlling your cash flow, be sure to subscribe to our channel. And don’t forget to hit that bell to be notified when we upload new videos twice every single week.


So Apple recently announced a new high-yield savings account that currently is crediting 4.15% APY. This is very competitive, especially compared to other high-yield savings accounts. And you may be wondering, “What even is a high-yield savings account and how could I leverage it? My bank is paying me point nothing on my savings and they’re charging me fees every once in a while.” Well, a high-yield savings account is a type of savings account that has some restrictions. For example, they may say, “You could only withdraw a certain amount of money or a certain number of transactions each and every single month. But in return, you’ll earn a higher rate of return on your savings.” So, this is a great tool to leverage if you’re saving in a savings account and need access to money within the very short term (you might as well be earning a higher interest if you’re saving anyway).

But how does this compare to a specially designed whole life insurance policy designed for cash accumulation? One key difference between a high-yield savings account and a specially designed life
insurance policy, in the beginning, you will definitely have more cash available in the high-yield savings account than you will in the life insurance policy and that is something you must take into consideration when choosing between the two accounts. However, it’s not necessary to choose between the accounts. It can be an “and” situation. For example, I save up for my annual premiums within a high-yield savings account. You see what the whole life insurance policy if I pay on a monthly basis, the insurance company charges me a fee. However, if I save within this high-yield savings account I’m able to earn a little bit of interest as I accumulate the funds and save on the fees when I’m contributing it to the life insurance company.

Leave us a comment down below. How are you utilizing a high-yield savings account and are you using it in conjunction with the whole life insurance policy designed for cash accumulation?

We always say that every strategy you employ from a financial position has a ripple effect on everything else you’re able to do based on that choice. The decision that Olivia made to save in a high-yield savings account, to pay her annual premiums on her life insurance policy, not only gave her a higher interest rate on her cash, but also, saved on the premium that she paid the insurance company. And another thing to consider is that I have access to the money everywhere along the way. When it’s in the savings account, I’m able to access that money if I need to. And once I contribute it to my policy, I have liquidity, use, and control of that money to use as I see fit.

And keep this in mind, there are many tax benefits of having the money in the life insurance policy that you don’t get with a high-yield savings account. So, even though I’m earning a reasonable rate of return within that high-yield savings account, all of the interest I earn is taxable as income at the end of the tax year. However, once I contribute the money to the policy and pay that premium, and have it secure in my policy, that money is able to earn uninterrupted compound interest on a tax-deferred basis, which is a huge benefit. It’s taking money from forever taxable to never taxable.

Another key consideration to think about, is this interest rate and the high-yield savings account, whether it be an Apple or another high-yield savings account, is not guaranteed. You’ll notice that every month or so these interest rates have been fluctuating -going up or down or whatnot. It’s not locked in for any set amount of time. Once the money is put into the policy. I have contractual guarantees. These policies are actuarially designed to get better and better with time.

Then there’s the issue of safety. Is your money safer in a bank account or is your money safer with the life insurance company? And that brings us to the reserve requirements of financial institutions such as banks versus life insurance companies. I’m sure you’ve heard of fractional reserve lending, but what does it actually mean? You don’t know what fractional reserve lending is? Well, it’s really simple. It means that the bank only has to set aside a fraction of their liabilities to guarantee that you’ll get your money. Fractional reserve lending means that the bank only has to put away pennies to guarantee dollars. You see, they’re basing it on the idea that not everybody is going to want their money at the same time, and that works until it doesn’t. Conversely, an insurance company needs to have over a dollar of assets for every dollar of liability. Meaning if all of the claims were submitted for every single policy that the insurance company has, they would still have extra money left over. So, the issue of safety should be paramount in your decision to put money anywhere, whether it’s in a bank, in an Apple savings account, or in a life insurance policy.


If you’d like to learn more about specially designed whole life insurance policies designed for cash accumulation, check out our website at tier1capital.com to get started today. Thanks so much for being here. And remember, it’s not how much money you make. It’s how much money you keep that really matters.

Navigating the Great Resignation

Americans are quitting their jobs in record numbers, it’s called the Great Resignation. Over the past two and a half years, over 47 million people have voluntarily left the workforce. If you’re a business owner, this could be bad news.

On average, it could cost up to 200% of that employee’s salary to replace them with a new employee. Seeing these statistics can be troubling for a business owner. However, there are some ways  to help you take advantage of the great resignation so you could be in a position of control and not a position of victimization.

According to the Society for Human Resource Management, a loss of a key employee can have particularly damaging effects for small businesses. And here’s why.

The first reason is because that key employee may be the only person in your entire area who has the skill set to perform that job. Not only that, but a lot of times in a small business, they’re the only person who has that particular skill set and knowledge. Meaning the business owner may have trained them, but that key employee may have gone on and learned other things by themselves to help progress. They take things to the next level and that’s why it’s so important to retain them.

The second point is that the loss of a key employee also damages the culture and morale of the remaining employees. For example, if Bob was a really good performer and really moving the company along and Sally sees that, she may think the business isn’t going to continue to grow and prosper because Bob had so much to do with the success of the entire business.

The third reason is because there’s a smaller pool of internal employees who can perform the tasks and the duties of the lost key person.

The fourth reason is because a small business might have less resources, cash, cashflow and contacts that can be used to replace the lost key employee.

Let’s face it, employee departures cost companies time, money and other resources that many small businesses simply don’t have. With talent scarcity on the horizon, it’s going to be harder than ever for small businesses to retain that key talent within their business.

So that’s why it’s important to plan for the future, to protect those key employees and to reward them for their hard work and what they bring to your business. But there must be a delicate balance between taking care of your key employee and not giving away equity in your business.

So what are the possible solutions?

Well, one may be setting up a special retirement plan for that key employee to make sure that they’re taken care of in the future, something comparable that they might get from a larger company. But within your company’s budget. But again, let’s face it, there’s only so much cash flow to go around. How can you take care of the business, take care of your key employee, and also take care of your cash flow?

That’s where we come in. We’ve developed a process that looks at cash flow and makes it as efficient as possible. You have the same amount of cash coming in every single month. However, it’s not how much money you make, it’s how much money you keep that really matters. It’s not the products you buy with the money. It’s how you make those purchases.

How can you make your cash flow more efficient so you’re able to get $1 to perform multiple jobs? The dollar to protect the business owner, to build the company and also to retain this key employee. Getting $1 to do multiple jobs increases your efficiency. It increases your availability or accessibility to cash and also puts you in a position to weather any storms going forward.

We specialize in helping small businesses find the money to reward their key employees without sacrificing the business owners or the business’s livelihood.

You see, the money is literally hiding in plain sight. We show you how to unlock that cash flow or that cash and put you in control of it instead of a bank, an investment firm or the government.

If you’d like to learn more about this process, check out our website at Tier1Capital.com

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

What is an Irrevocable Life Insurance Trust or ILIT?

When it comes to estate planning, a common tool to use is an irrevocable life insurance trust, commonly known as an ILIT. And sometimes you want to transfer a policy from one ILIT to another, and you may be wondering, how do you do that?

So when you’re using an ILIT, an irrevocable life insurance trust, the keyword there is irrevocable. And what does that mean? Well, that means basically the die is cast. Any assets in that trust have to stay in that trust until an event occurs.

But what happens if you have a life insurance policy owned by this ILIT?

Now, this is where things get a little interesting because there are only a few ways you can take money out of one trust and put it into another trust. Let’s say you have a life insurance policy with $310,000 of cash value. One of the ways that you can get that policy out of the trust is to exchange $310,000 of cash for the policy. So you’re just swapping assets, but now you can get the policy and the death benefit out of this trust and put it into the new trust. That’s all well and good, assuming you have $310,000 of assets. If you don’t have $310,000 of assets, what are your choices?

Well, real simply, you can freeze the policy and make it a paid up policy, which would probably reduce the death benefit. Now you can take whatever premiums you were putting towards that old policy in the old trust and put it into a new policy in the new trust. And then I would step back from that transaction and say, “am I making any progress?” Because, to me, it probably doesn’t make sense If you had a ten year old policy and now you’re going to take out a new policy in the new trust while you’re paying for a premium. When you’re ten years older, probably in your sixties or seventies, that premium is going to be significantly higher than the premium on the original policy. Again, what are you trying to accomplish?

These policies are actuarially designed to get better and better year after year, meaning the premiums are locked in. The cash value is growing, and the death benefit, assuming you earn dividends, is going to increase. If you were to transfer it to a new policy, or freeze it, or any of these other options, you’d be giving up a great deal of gain.

So let’s take a step back. What exactly is an ILIT? Well, an ILIT is a trust that lays out exactly what the grantor, the person designing the trust, wants to have happen to the assets that are going to fund it. It’s irrevocable, meaning it can’t be changed. It’s set in stone. So with that, the decisions that you make when you’re setting up this ILIT are important because in a sense they’re permanent. The control of the trust is in the hands of the trustee. 

But, because of the irrevocable nature of the trust, there are limitations as to even what the trustee can and cannot do. And that’s the point. Make sure you know what you want to have accomplished before you get into an irrevocable trust, because you’re limited, and your trustees are limited as to exactly what can happen down the road.

The trust is a blueprint of what can and can’t be done with the money and the funds within that trust.

Conventional Savings Account vs Life Insurance

Since that whole fiasco with the Silicon Valley Bank, a lot of our clients have been calling us and saying, “Hey, is my money safe with a life insurance company?”

One day everything is fine. The next day you have nothing. One day you think your bank is safe and now you’re facing uncertainty. When it comes to saving in the bank, we’re certainly not depositing our money for high interest yield returns. We’re putting it there for safety, for security, for liquidity use and control.

However, when something happens like adjusted with SVB, our faith and trust in the banking system gets rocked. Silicon Valley Bank became insolvent because there was a run on the bank, meaning that a lot of depositors wanted to withdraw their money because they saw that the bank was unsafe. The problem is, not everybody got their money. 

You see, in the old days when you wanted to do a run on the bank, you went to the bank, you asked the bank for money. They gave it to you. Or if there was none left, they would let you know. Nowadays, with online banking, we’re able to withdraw money and transfer it somewhere else without the bank even being open.

We’ve all seen those iconic pictures during the Great Depression of people standing in front of a bank waiting and hoping to be able to get their money before the bank ran out of money. Because of electronic banking, the ability to access your money should be quicker. However, when there’s a run on the bank, that liquidity disappears. 

So you may be wondering what safeguards do the banks have in place to make sure that you’re able to access your money?

First and foremost, the bank needs to put money in reserve to guarantee that you could get your deposit. Do you have any idea how much the bank needs to put aside in reserve to make sure that you can get your money?

Well, the answer is somewhere close to $0.10 for every dollar. What that means is if you deposit a dollar in the bank, the bank only needs to put aside $0.10 to guarantee that you’ll get your dollar. Now, they’re banking on the fact that not everybody is going to want their money at the same time. And for the most part, that holds true, except when it doesn’t.

So what happens when it doesn’t? Well, that’s where FDIC comes in. FDIC stands for the Federal Deposit Insurance Corporation. One of the first things people ask when they’re putting money with an insurance company is, “Hey, is this FDIC insured?” And my response is, “No, thank God.” And then they look at me with a puzzled, look and say, “What are you talking about?”

You see, the reason banks need FDIC insurance is to guarantee that you’ll get your money, because if there’s a run on the bank, they know they don’t have enough money set aside to make sure you’ll get your money. So they have to offload that risk to a separate company, the FDIC. What the FDIC does is they charge banks a premium that they use to create the deposit insurance fund. It’s called the DIF. And in that deposit insurance fund comes premiums from all the banks, small, medium and large. And there should be enough money in there, hopefully, to make sure that everybody will get their money.

Here’s the problem. As of December 31st, 2022, the FDIC held $128.5 billion in the deposit insurance fund. But consider this, It was backing $22 trillion of assets. That’s like a penny and a half for every dollar of deposits. Is your money really safe?

So let’s transition over to the reserve requirements of an insurance company, specifically a life insurance company, whether it’s with an annuity or life insurance. Life insurance companies have the highest reserve requirements of any financial institution. That means they have a higher reserve requirement than banks and investment firms. And consequently, your money is safer with a life insurance company than any of those other financial institutions.

You got to realize the reason the banking industry pushed for FDIC insurance during the Great Depression, when 9000 banks failed, was because people lost faith and trust in the banking system. And that’s why FDIC was created.

So how does this translate? Well, let’s take a look at a poorly run insurance company, a poorly run life insurance company would have a dollar and $0.04 of assets for every dollar of liability that they own, meaning they could pay all of their claims and still have money left over, not like an investment where your money is at risk, or a bank where there’s only a fraction of your deposit actually held by the institution. We believe that life insurance companies are a much safer place to store and build and accumulate your wealth.

And as we just learned, it’s not how much money you make. It’s how much money you keep that really matters.