Life Insurance

Can My Money Be More Efficient?

Are you thinking about taking the leap and expanding your business but feel hesitant in doing so? Well, one reason may be that your cash and your cash flow aren’t working as efficiently as possible.

Today, we’re going to talk about how making your money more efficient could help you take on those risks with more confidence.

First, let’s take a look at what happens when your money isn’t working at peak efficiency. Basically, what happens when your money’s not working at peak efficiency, you have less cash flow. And when you have less cash flow, you’re less likely to take risks or expand your business because you’re always thinking of, “Okay, if I take this money and put it towards expanding the business, then I won’t have the money available for operating the business”.

And this could be the case even if you have a pile of cash sitting in the bank, it’s all about cash flow because cash flow is the lifeblood of any family or business.

Furthermore, when your money isn’t working at peak efficiency, it leaves you susceptible to the past decisions that you’ve made and the success or failure of those decisions. Because think of it, if those decisions don’t work out, that puts a further pinch on your cash flow and again, makes you more hesitant to take the risk, a risk that most business owners are willing to take the risk, because it’s usually a risk that they can control.

So what happens is once your cash flow gets pinched, it makes it harder and harder to make that jump in expanding your business because once you’re stuck, you tend to stay stuck because you’re not taking on those risks for expansion and growth.

So the key is to make your cash and your cash flow as efficient as possible so that you’re able to take on these opportunities for growth and expansion with a safety net.

 

Here’s how we do it. We look at four key areas of business wealth transfer taxes, how you’re funding the retirement, how you’re making major capital purchases, and how you’re handling your debt. And when you look at those four areas, it’s really clear as to where your inefficiencies are. That’s where we’re trained and that’s how we can help you.

Our unique process helps businesses make their money and their cash flow more efficient by using specially designed whole life insurance policies designed for cash accumulation that will give you full liquidity use and control of your money while still able to access it to grow your business and earn uninterrupted compound interest on that money.

In addition to that, we’re able to answer key questions like business exit strategy, business continuation, taking care of key employees, and more importantly, what happens to the business when a key employee dies?

Each and every one of these issues could make or break a business, and it’s important to address these issues while you have the cash flow flowing through your business and the wherewithal to make these decisions. What do you want to happen? Even if you’re not here to see it happen?

If you’d like to get started with a free cash flow analysis to see where you are giving up control of your business cash flow, be sure to visit our website at Tier1Capital.com to schedule your free strategy session today. We’d be happy to help.

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

Don’t Accidentally Disinherit Your Children

Nowadays, it’s very common to have a blended family. But how do you address the question of beneficiary designation when it comes to your blended family? Are you inadvertently disinheriting your own children based on your beneficiary designation?

Life insurance inherently includes estate planning. Every single life insurance policy includes a beneficiary designation where the death benefit will be passed on to the named beneficiary of that policy when the insured dies.

Now, here’s the key. It passes outside of probate and it passes, in most states, outside of state inheritance taxes.

 

So it’s very important. But what’s also important is the fact that you should make sure that your beneficiary designations are exactly the way you want them. You want to make sure that what you want to have happen will happen, even if you’re not here to see it happen.

In the case of blended families, a lot of times the husband will have the wife as the beneficiary and vice versa. And then, if it’s a blended family, they’ll have their own children named as contingent beneficiaries. But this could pose an issue down the line.

We had this exact situation just come up. The husband named the wife is the beneficiary primarily the wife named the husband as the beneficiary primarily. And then they each named their own children as contingent beneficiaries. But what happens when one of them dies first, their death benefits are going to go to the other spouse.

And that’s where the problem lies. His death benefit goes directly to his wife since he’s no longer alive. The wife’s death benefits go to the children, along with the death benefit that she received as a beneficiary of his policy. So her children were going to get everything and his children were going to get nothing.

We brought that to their attention and just said, “Hey, not sure if you know this or realize this, but this is the way it’s going to work. Is that what you want?” And they immediately said, “No, that’s not what we want.”

So the next step is for you to go to your estate planning attorney and get documents drafted up to make sure what you want to have happen will happen, even if you’re not here to see it happen. No one wants to inadvertently disinherit their children.

The value we were able to add to this couple was that we brought out or we brought up the point of how the money was going to flow. And again, when you look at things through the lens of cash flow and being in control of your cash, when we brought that point up to them, they were saying, “Hey, that’s not what we want. How do we change this?”

Awareness is the first step and then you have the power to make the changes necessary to make sure what you want to have happen, to happen, even if you’re not there to see it.

 

If you’d like a policy review or a review of your beneficiaries, check out our website at Tier1Capital.com and feel free to 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.

How Long Do I Pay Premiums for with My Policy?

Traditional whole life insurance policies are paid for your whole life, whether that’s age 85, 100 or 121. But sometimes people want to stop paying the premiums at one point and they’re wondering what options they have to maintain some of the benefits of the policy without surrendering.

When a whole life insurance policy is issued, the insurance company is making you two promises. Number one is to pay the death benefit when the insured dies anywhere along the line, as long as that policy is in-force. And the second promise is that at the age of maturity, usually age 100 or 121, there’ll be a cash value equal to the face amount or death benefit of the policy available for the policy owner.

So in order for the insurance company to fulfill that second promise, they have to allow cash to build up. And it’s that cash that builds up that helps them to fulfill the second promise and more importantly, provide some other additional benefits that you can get by accessing that money.

Now, the cash surrender value isn’t just some number that’s pulled out of the air. Actuaries work with the insurance company to determine what the cash surrender value needs to be at minimum, every single year, throughout the contracts life.

Think of the cash surrender value as literally what the life insurance company is willing to pay you to walk away from the death benefit and all the other benefits.

Because of the whole life insurance policy design. These policies get better and better every single year.

In the beginning, there’s not a lot of cash accumulation because there’s a lot of costs that come with getting these policies issued. But as the policy matures, the cash value is going to grow more and more every single year. By building up that cash value within the policy, it gives the policyholders some options and they’re called non-forfeiture options.

Traditionally, there are three non-forfeiture options in most life insurance policies.

First is cash surrender. Again, what the insurance company is willing to pay you to walk away from the policy.

Second is extended term. And what does that mean? Basically, if you take the original face amount of the policy, the extended term would take that original death benefit for the face amount and extend it for as long as the cash value will buy that amount of term insurance.

For example, if you had a $125,000 death benefit, you might have, let’s say, in the ninth year, an extended term value for nine years and seven months. What that means is you don’t have to make another payment on the policy. And for the next nine years and seven months, you’ll have a $125,000 death benefit without having to make another payment.

And the third option is what’s referred to as a reduced paid-up. If we use the example of a $125,000 original policy death benefit, the reduced paid-up anywhere along the way might be $73,250. And what that means is you stop paying the premiums. The policy is paid up, but it’s not 125,000. It’s 70-some thousand. And as that policy grows and matures and more and more cash value builds up, that reduced paid-up amount will increase.

What these options allow the policyholder to do is to walk away from the commitment of paying that premium. And in the case of extended term or reduced paid-up, they’re able to maintain parts of that coverage for an extended period of time. The point is there are options and they will vary between policy to policy.

If you’d like to get started with learning more about the options or start a whole life insurance policy designed for cash accumulation, be sure to visit our website at Tier1Capital.com to get started today. Feel free to schedule your free strategy session today to get started.

if you’re ready to get started or if you’d like to learn more about how our process works, check out our webinar, 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.

How To Set Your Financial New Year’s Resolutions

With the new year comes New Year’s resolutions. What are you doing for your finances this year that’s going to leave you in a better position on December 31st than you are right now? And before you answer that question, if you say you’re going to do the same thing you did last year, why would you expect different results? Today, we’re going to talk about how to set your New Year’s resolution to leave yourself in a better position financially.

When it comes to finances, it’s important to keep it simple and consistent. What could you do this year to leave you in a better position than you are currently? Is it something as simple as making a budget and sticking to it? Or have you been saving but know you need to be saving more? Or have you been saving enough but not saving in a place where your money is accessible to achieve your short-term, intermediate, and long-term financial goals? Now is a great time to take a look at what you have been doing, what has been working, and what hasn’t been working so you could reach all of your financial goals without feeling strapped for cash.

This takes us to the beginning, which is basically understanding what your goals and objectives are. One of the biggest financial mistakes we see people make is really simple – their strategies are not aligned with their goals. So maybe your goal is to expand your business this year. What are you going to do to help achieve that goal? Or maybe you’re getting ready to send your children off to college? How are you going to achieve that goal without pinching your current and future lifestyle? It’s important to take a look at these things because missteps could have effects for years and years and years all the way into your retirement.

We always tell folks,

Every splash and every move you make financially has a ripple effect. It may not be apparent today, but at some point the piper has to be paid.

 

A great example of this is getting out of credit card or student debt. What’s the best way to accomplish this goal? We’ve covered this in several videos, but one piece of advice I could give you is to make sure you’re saving along the way. What if there was a way to begin saving while paying off your debt simultaneously? Would you want to know about that technique? And this goes back to what we had said in a previous video, how can you put your savings or pay yourself first on subscription mode? One way we’re able to help our clients and ourselves is by using a specially designed whole life insurance policy designed for cash accumulation to help meet all of these goals when it comes to paying off debt. By putting your savings on subscription mode and building up a pool of cash that you have access to in this whole life policy, you’re then able to access that cash to pay off high-interest credit card debt or student debt and then repay yourself and rebuild that cash value within your policy so that you don’t have to jeopardize your savings to pay off debt.

Another example is to utilize this tool to expand your business. But like we always say, it’s not what you buy, it’s how you pay for it. So whether it’s paying off a credit card, paying off some other debt, expanding your business, or taking advantage of an opportunity, either way, you’re buying something. If you’re using the right process to make that purchase, you will always be building wealth everywhere along the way. So you’re not taking that money out of circulation. You’re just utilizing it or repurposing it or deploying it somewhere else so it can get you another rate of return.

A lot of times when people are thinking about financial goals, they’ll think of long-term goals like a down payment for a house, retirement, or sending their future children to college. But it doesn’t have to be that complicated. Looking at what goals you have for this calendar year is a great feat.

So to summarize.

    1. Make your goals, but make sure that your strategies are in alignment with your goals.
    2. It’s not what you buy, it’s how you pay for it. Make sure that how you’re using your money is going to be moving you forward not only for your short-term goals but your intermediate and long-term goals.
    3. Pay yourself first. Put your savings on subscription mode.

One of the biggest mistakes that you could avoid is wasting opportunity cost. Something that we always say is you’ll never see the interest you don’t earn. Every time you drain your savings and drain that tank, you’re losing so much opportunity cost and you’ll never realize exactly what effect that’s having over your lifetime. We call that the cash trap. When you buy something and pay for it with cash, you think you’re winning because you’re not paying interest. Unfortunately, you’re also giving up interest and people don’t realize that that’s the opportunity cost. Every purchase you make has a cost. You’re either going to pay interest if you finance or you’re going to give up interest if you pay cash. It’s pay up or give up. That’s why we say it’s not what you buy, it’s how you pay for it that matters.

If you’d like to get started with your financial resolution for the New Year and put your savings on subscription mode, we’d be happy to help you meet your goals. Feel free to schedule your free strategy session right here on our website. Or if you’d like to learn exactly how we put this process to work for our clients, be sure to check out our webinar, 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.

 

Can I Insure My Nonworking Spouse?

You’ve heard us speak about the qualifications for life insurance several times. Both medical underwriting and financial underwriting. And you may be wondering how much insurance could I get on my nonworking spouse, whether they’re a stay at home parent or just a homemaker?

Traditional financial underwriting for life insurance looks at the insureds income to determine how much earning potential they have over their life. So what happens when they’re not earning any income? How much insurance could they qualify then?

Keep in mind that life insurance company underwriters are keenly aware that although a spouse may not be working and earning an income, they are still working and they are still contributing to the overall well-being of the household. They have formulas that will help you to determine how much insurance you can get for your nonworking spouse.

The general rule is there can’t be more death benefit on the nonworking spouse than the working spouse. Now, keep in mind that life insurance company underwriters are aware that sometimes the working spouse can’t get life insurance because of a health issue.

So in that case, let’s say they only have 100,000 or a very low amount of coverage. How do they determine how much insurance the nonworking spouse can get?

Well, it’s real simple. They have formulas. And again, the formulas vary from company to company. But keep in mind, you can get as much insurance as you both qualify for across the board.

Whether you’re insuring your non income earning spouse for a cash value policy so you could utilize that policy. Or for the death benefit to cover the expenses that you’re going to incur if they were to die prematurely. Check out our website at Tier1Capital.com to schedule your free strategy session today. We’d be happy to guide you through this process.

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

Should I Insure My Child?

There are several reasons why you would want to insure your child. Maybe you can’t get insurance on yourself and you’d like to lock in their future insurability. Maybe you’re cosigning their student loans. But regardless of the reasons, there are rules when it comes to ensuring your child.

The first reason why we see parents wanting to ensure their child is because they want to implement the infinite banking concept, but they weren’t able to obtain insurance on themselves. And so they’re going to own the policy and the cash value with the child as the insured, which is typically very possible.

Another reason why you would want to insure your child is to lock in or guarantee their future insurability. And in many cases, getting a policy when they’re young can help them throughout life as they mature and they take on their own family. Securing a death benefit at a very young age at a very low price could be very advantageous for them down the road.

Additionally, you could add a rider onto your whole life policy that guarantees your child the ability to purchase additional insurance, maybe $50,000 or $100,000, without showing any evidence of medical insurability every few years somewhere down the road.

Another reason why life insurance may be appropriate to insure your child is if you’re cosigning their student loans. This way, if your child dies before those loans are paid off, you have a death benefit to immediately pay off the balances. A lot of times people say, Jeez, I don’t want to insure my child. I just don’t even want to think about it. We’ll think about this. The hardest thing in life is to have to pay a bill that you made to educate your child, on an installment plan.

Now that we’ve gone over the reasons why it would make sense to insure a child, let’s dig into what are the rules when it comes to placing insurance on that child.

Now, the amount of insurance that the child is going to qualify for will vary depending on which company you go with. They all have their specific rules on how much insurance the child will qualify for, but for minor children, it’s typically a factor of how much insurance is on both parents. If mom has $100,000 on her life and dad has $100,000 on his life, that gives us $200,000 of insurance. The child would typically qualify for either $100,000 all the way up to over $200,000 of insurance. Based on the amount of insurance the parents have. And again, based on the company that you utilize.

The second scenario we see a lot is when the parents are trying to insure a child who is no longer a minor. So age 18 and up, when you’re dealing with an adult child, it’s going to be factored off of their income or their income potential.

The other day, we’re dealing with a client who wanted to ensure their adult aged child, who was actually a sophomore in college, and the insurance company came back and said, Well, how much does this kid earn? And unfortunately, he didn’t have a lot of earnings, but we were able to provide them with his major field of study. The insurance company actually projected his lifetime earning potential and issued a policy based upon his future potential income.

Now, if you’re insuring your student for the amount of their student loans, the insurance company would ask, what is the loan balance or what amount of loan do we expect by graduation? And you will qualify for that amount of insurance to cover the loan balance. The key is there are different rules and you have different choices depending on how much insurance you want, how much insurance you need, or how much insurance you can afford.

If you’d like to get started with the underwriting process and insuring your child, whether a minor or adult child, check out our website at Tier1Capital.com to schedule your free strategy session today.

Also, if you’d like to learn more about our exact process and how we put it to work for our clients, check out our free webinar, 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.

When is My Policy Most Beneficial?

A lot of times when people come to us, they have short term financial goals that they’d like to accomplish using a specially designed whole life insurance policy designed for cash accumulation. But the real magic tends to happen as these policies mature.

There are certainly a lot of reasons why you could use a specially designed whole life insurance policy, designed for cash accumulation on a short term basis to achieve your short term financial goals, like getting out of debt, sheltering money for your children’s college education, or just regaining control of your cash flow.

As with any whole life insurance policy, a policy specially designed for cash accumulation, the insurance company is making two promises. The first promise is that should you die while you own the policy and you’re the insured, the insurance company will pay your beneficiary the death benefit.

The second promise is simple at the age of maturity, which is typically age 121, the insurance company is going to have cash set aside equal to the face amount of the policy. So what does that mean? Well, year after year, the insurance company has to build up the cash value in that whole life policy. So they could make that second promise. By making that second promise, by having the money available at the age of maturity, the policy gets better and better and better with each passing year. The longer you have the policy, the better it gets.

You see, these policies are actually designed to build cash value over time, and that’s not counting any paid-up additions riders or dividends on that policy. When we design a whole life policy for cash accumulation, we add on paid-up additions riders which are going to increase the cash value availability in the early years of the contract. And we’re placing these policies with mutually owned life insurance companies.

When you purchase a policy with a mutual insurance company, you are literally the owner of the company as it relates to the profits or the profitability of your policy. And what does that mean? That means any profits the insurance company makes on your policy will be returned to the owner, you. And they do so in the form of tax deferred dividends.

You see, in life insurance a dividend is literally a return of overpaid premium. When you use those dividends to buy paid-up additions or paid-up additional life insurance, those dividends accrue on a tax favored basis. By designing the policies with the paid-up additions rider and with a mutually owned life insurance company, you’re able to turbo charge the access to cash in your policy. And as your cash value grows, your access to cash is going to increase and you’re going to be able to access more and more to achieve bigger and bigger financial goals for you, your business and your family.

So in the short term, you can get out of debt quicker. You can save for your children’s college or use it to make major capital purchases. But as time goes by, you get greater access to cash, greater annual increases in cash, and greater death benefits.

Nelson Nash’s number one rule was to think long term. He was trained as a forester. He thinks 70 years in advance and like Nelson would say, I may not be here and neither may you, but somebody is going to be there and they’re going to reap the benefits of our good decisions today. But the long term benefits of using a specially designed life insurance policy could never be counteracted. You see, these policies could allow you tax free access to cash value to accomplish your financial goals, tax deferred growth within the policy, and a tax free death benefit to your family when you die.

If you’d like to get started, with a specially designed whole life insurance policy designed for cash accumulation to accomplish both your short term and your long term financial goals, be sure to visit our website at Tier1Capital.com to schedule your free strategy session today. Also, if you’d like to see exactly how we put this process to work, check out our Four Steps to Financial Freedom webinar.

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

Can I Qualify for Life Insurance Without a Physical?

Have you considered getting a life insurance policy but you’re turned off by the idea of an insurance physical? When it comes to life insurance underwriting, there are two main components that the insurance company looks at.

The first is financial. They’ll either look at a loan, your net worth, or your income to determine how much death benefit you qualify for. Just as you cannot over insure a building for more than it’s worth, you can’t ensure a human being for more than they are worth.

The second component of life insurance underwriting is the medical component. This is where the insurance company will assess your risk from a medical standpoint. They’ll do a deep dive on your medical history and review questionnaires and often order medical records or an insurance physical.

However, with these new advancements in technology, a lot of companies are using algorithmic underwriting where you don’t necessarily need an insurance physical. Especially if you’re young and healthy. We’ve managed to foster a few relationships with insurance companies who offer an express or algorithmic underwriting process, which means that the insured doesn’t necessarily need an insurance physical if they meet the qualifications of these program.

How the process works is we fill out medical questions, send it to the insurance company. The underwriter determines whether or not they need an exam, and if they don’t need an exam, the policy is issued within a day or two. If they need an exam, then they go through the process. But the key is you might have that option where you don’t need an insurance physical.

One caveat to this process is sometimes the insurance company will still order medical records, which can take more time and still allow them to go through the express program without an insurance physical. The key is to save you time and headaches of having to schedule an insurance physical. Most companies allow this to happen between the ages of 18 and 60 and for up to $1 million of coverage.

So if you’re looking to get started with a life insurance policy, whether it’s term whole life or a specially designed whole life insurance policy designed for cash accumulation, this may be the solution for you without an insurance physical.

If you’d like to see if you qualify for this program, check out our website and schedule your free strategy session today at Tier1Capital.com. If you’d like to see exactly how our process works to put people in control of their cash flow, check out our webinar, The Four Steps to Financial Freedom, 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.

Are You Insuring Your Key Employees?

Are you a business owner who is insuring your PCs for more than your VPs? You see, there are three main reasons why you would want to insure your key employees.

First and foremost is the fact that they are the people who are adding to the growth and profitability of your business. Let me give you an example. About 25 years ago, I had a business owner client whose building burned to the ground. And it wasn’t till after the fire that he realized that his building, which was worth over $250,000, was only insured for $68,000.

Most business owners would have seen that as a problem. But he along with his key employees, kept the business going and profitable throughout the time it took to rebuild the building.The point was he didn’t have proper insurance on his building, but he was able to grow the business and came out much further ahead than he would have had he lost a key employee. You see those key employees were the people responsible for keeping that business alive, even when he didn’t have enough insurance to rebuild the building.

 

You see, people don’t do business with you because of your building. They do business with you because of the people you have working and supporting your business and your operations. If something was to happen to one of them, what impact would that have on your business? And are you willing to take on that cost?

The second reason why you would want to insure your key employees is because with life insurance, it’s the only product that allows the problem the death of your key employee, to also trigger the solution, the death benefit and the cash flow that comes with this life insurance. Think about the devastating effects it could have. Losing a key salesperson, for example, on your business. Think about all of the revenue that your key employee brings in for the business and how many people within the business depend on those sales.

You see, in a lot of situations, the key employee is the founder or the owner of the business, somebody who might be older and the next generation is going to need two things, time and money. Time to make up the mistakes that they might make, and money to gloss over those mistakes.

So again, with life insurance, the problem also triggers the solution. When the key employee dies, it also triggers the solution of money that allows you to make mistakes during the time of transition.

The third reason why you would want to insure your key employee is is because life insurance is the only product that allows you to buy dollars at a discount. Think about it this way. If you had a key employee that passed away, you would need money to attract and retain a new key employee to replace them.

Again, only life insurance allows the problem, the death of that key employee, to also trigger the solution, an influx of cash into your business, exactly at the time you needed it most, on a tax free basis. Now, here’s the best part. If you’re using a specially designed whole life insurance policy designed for cash accumulation to insure these key employees, you, the owner of the policy, the business owner, has access to the cash value via the policy loan provision on a tax free basis. And you’re still able to earn continuous compound interest on that money all along the way.

So you’re able to access that money, let’s say, to reinvest in your business, maybe make a major capital purchase like new equipment for the business or new cars for your team. Or we had one of our clients access the cash in their policy to buy out a competitor.

You see, there are no restrictions on what you could use that cash value for. So it’s great for business owners who want to be able to access cash and still be responsible and ensure their key employees.

If you’d like to get started putting this strategy to work for you and your business, check out our website at Tier1Capital.com to get started with a free strategy session today.

Also, if you’d like to see how we put this practice to work for businesses and small business owners, check out our Four Steps to Financial Freedom Free webinar right on our homepage.

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

Can My Policy Handle All of My Expenses?

When people find out how powerful, specially designed whole life insurance policies designed for cash accumulation are, oftentimes they want to put in as much money as possible on a monthly basis. Today we’re going to answer the question of how much premium is too much premium?

Just the other day we got a phone call from a client and they said, “Hey, I would really like to run all of my lifestyle expenses and all my major capital purchases through this policy. Is that possible and what would the benefits of that be?” In order to answer that question. We need to first step back and take a look at how things are done normally without the infinite banking concept or without a specially designed whole life insurance policy.

So every week or every month, money flows into your life. Money flows into your household or to your business. It could be your income from work, your income from your business. It could be passive income from real estate or other investments. It could even be an inheritance. Money comes into your life, and from there you pay your expenses. So think about it. Once the money gets into your account, into your checking account. There’s only four things you can do with it.

Number one, you could spend it.

Number two, you could save it.

Number three, you could invest it.

Or number four, you can defer it into the future through a qualified retirement plan. Things like IRA’s, 401K’s, 403B’s are examples of qualified retirement plans. And with those, you defer the taxes into the future.

Another word for defer is postpone, so that money comes into the account tax free. But when you take it out, it gets taxed.

The key here is you’re not necessarily saving taxes. All you’re doing is postponing the tax into the future when hopefully you’ll be in a lower tax bracket. But that begs the question, is that really what you want? Do you really want to be in a lower tax bracket in the future? And if you are, wouldn’t that indicate that you weren’t really successful at saving money?

So now that we’ve identified the four things that could happen to your money once it comes into your life, let’s just focus on, the spending aspect. Once what money comes into your checking account and you spend it on your lifestyle, necessary expenses, your mortgage, your rent, that money is lost and gone forever. And what we mean by that is you no longer have the opportunity to earn interest on that money.

So money comes into your life and you use it for lifestyle. You make any type of expenditures, regular bills, etc. Once you do that, the money’s gone, never to return. So what can you do to change that? To make it advantageous to basically pay your bills?

Well, it’s like this. When the money comes in, take a portion. Not all of it. Take a portion of it and put it aside in a specially designed life insurance policy and then you could access that cash value through the loan feature to pay for major capital expenditures like paying for a car, a vacation, or maybe your children’s college education.

The key here is you got to make payments back. But once that policy is built up and capitalized, maybe you’ll be in a position where you can save more money and start a second policy or a third policy. And then as those policies build up, then you’ll be able to access more and more of the cash value through the loan feature and utilize that to offset some of your lifestyle expenses. So this process allows you to both make your regular purchases and save so you’re never draining that tank and you are able to earn uninterrupted compound interest on your money. Because once you drain that tank, you’ll never see the interest you don’t earn on that money.

So now you always have a portion of that money working for you rather than for someone else. A way this could practically be implemented in your life may be paying off credit card debt. Maybe you have a credit card debt and you’re paying as much as you can every month and you’re putting hundreds or thousands of dollars towards this credit card debt, trying to knock it out.

What if instead, you took that excess payment, put it towards the policy, and built up cash value to then repay the credit card debt with a policy loan? Then as you repay the policy loan, you’re rebuilding your own capital instead of Visa’s or MasterCard’s.

So let’s back up to the question we started with. How much premium is too much premium? And it’s all about your cash flow. The last thing you want to do is overextend yourself with a monthly premium payment and not be able to sustain this policy.

Once you start a policy, you never want to get rid of it because the longer you have it, the better it gets. Most of the big benefits are on the back end. Nelson Nash used to tell me, “Tim, this is not a get rich quick type of strategy. This is a long term.”

He used to say, “Remember, I was trained as a forester. Foresters think 70 years in advance.” I may not be here, but somebody will. And if we set this up properly, somebody can benefit dramatically from that planning that you’re doing today. But the key is you’ll also be able to have access, liquidity, use and control of that money and continue to earn dividends and uninterrupted compounding of your money.

So the answer is, it will depend on your specific situation, your cash flow coming in, and your monthly expenditures that aren’t really changing things like your utilities, your food bill, your mortgage. You don’t want to run everything through the policy, but you have the ability to run some major capital purchases through the policy.

If you’d like to get started and learn how to put this practice to work for you and your specific situation, we’d be happy to talk to you. Hop on our calendar at Tier1Capital.com to schedule your free strategy session today. Or if you’d like to learn more about how we put this process to work for our clients, check out our 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.