Lifestyle

Can Life Insurance Help Pay for My Home Renovations?

Are you thinking about renovating your home and wondering what the best way to finance that purchase would be? Whether it’s paying cash or taking out a home equity line of credit?

It’s a foregone conclusion, you are going to do some renovations or remodeling around the house. Whether it’s adding on a deck, redoing the kitchen or a bathroom, getting new windows and siding. Either way, remodeling your house is a major capital purchase, and you’ll always hear us say, it’s not what you buy, it’s how you pay for it that really matters.

So the question remains, what is the best way to make this major capital purchase so that you will come out ahead on the other end? Our unique ability is to see things through the lens of being in control of your cash flow or not being in control of your cash flow.

So with every financial decision we look at the question, is this putting you in more control of your money or giving control to someone else and leaving you in a weaker financial position Let’s take a look at how you could be in control of your money and still buy the things you want, like renovating your house.

First, let’s assume you have enough cash or enough savings to pay cash for the renovations that you’re planning on making. So in this scenario, what happens is you have all the cash sitting here that you own and control, and then as soon as you make the purchase, the control is gone, your bucket is empty, and now all that cash is given away to an outside entity.

But what does that really mean for you financially? Well, you’ve drained the tank. You’ll never see the interest you’re not earning on your pile of cash because you drained the tank and it could no longer earn any compound interest for you. We call that opportunity lost.

The second way you could pay for your renovations is to do traditional financing, whether it’s an installment loan, whether it’s a home equity loan, whether it’s a total refi or a cash out refi to pay for the renovations. Either way, you’re asking permission to get the loan and now you have an additional payment to make out of cash flow.

So what this looks like is you had these payments going towards your savings or investments and now you have to redirect that cash flow to pay this installment loan, home equity, loan, mortgage, whatever you chose. So based on what we just said, whether you finance or pay cash, you’re either going to pay interest if you finance or give up your interest if you pay cash.

So the question remains, what’s the best way to pay for your renovation and how can you be in control and continue to earn interest even while you’re using that money for your renovation?

The answer may be a specially designed, whole life insurance policy designed for cash accumulation so that you could build up a pool of cash that you have full liquidity use and control over so you could access the cash through a collateralized policy loan, a contractual guarantee, and still continue to earn continuous compound interest.

Now you’ll have a loan against the policy and you could make payments back to the policy loan and rebuild access to that cash value. So you could use it again in the future instead of giving away control to an outside entity.

So again, looking at things through the lens of you being in control of your money and showing you how to regain control of your money, it’s very simple. You build up a pile of money that you are in control in your life insurance policy. You pledge that, as collateral through a collateralized loan, all they do is put a lean against your policy and they give you a separate loan. Now, when you make a payment, every payment you make increases the equity that you have. You stay in control of the cash. It’s always earning compound interest and you’re in control of the loan payments that you’re making because every loan payment reduces the outstanding policy loan, increases your equity and is completely accessible to you through the contractual loan provision.

Let’s look at this for a second. What’s the difference between building equity in a life insurance policy in the cash value versus, let’s say, building equity in your home? And there’s a very distinct difference, and that is you have guaranteed access to your cash value. There is no ifs, ands or buts or qualifications of any kind to access that money. It’s simply giving an order to the insurance company. “Hey, I want a policy loan against this cash value,” and then they send you the money versus going to the bank and saying, “Hey, I’d like a home equity line.” And they say, “Okay, show me everything you got and prove that you could repay this loan.” It doesn’t work like that with a policy loan, and that is a very distinct difference.

So it basically comes down to this: with a policy loan, you’re giving an order. With a home equity loan, you’re asking permission. Which position gives you more control when you’re giving an order or when you’re asking permission? So when you take a policy loan against your cash value, it basically is giving you the best of both worlds. The aspect of paying cash and financing.

 

So what do we mean by the best of both worlds? Well, it’s really simple. If you were to pay cash, you would have first had to have saved money. But when you pay cash, you drain down the tank. You don’t want to do that because you’re giving up control to the contractor.

Borrowing against your cash value, you don’t drain down your cash. You still access it through the loan provision, but now you have a payment. But now that payment is yours. Every payment you’re making goes back to reduce the policy loan and increases your equity. So you’re controlling your cash because it’s continuing to earn compound interest and you’re controlling the monthly payment to pay back the loan against your policy. The best of both worlds.

If you’d like to see whether or not a specially designed whole life insurance policy designed for cash accumulation makes sense in your situation. Be sure to visit our website at Tier1Capital.com and schedule your free strategy session today.

On our website, we also have a free web course, The Four Steps to Financial Freedom, where we do a deep dive on exactly how we use this process to achieve our clients financial goals.

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

How Do I Become a Wealth Creator?

Have you recently received an inheritance or anticipate receiving one soon? For the past 37 years working in financial services, I’ve seen many people receive inheritances and they generally fall into one of two categories. First, they’re either a spender, or second, a saver.

The first type of person who would receive an inheritance is a spender, and the spenders finances typically look something like this. They start at the zero line, and when it comes time to make any major capital purchase, they’re forced to borrow because they have no savings, they’re at zero.

And so they dig themself a hole in debt and all of their extra cash flow, instead of going towards savings, goes towards repaying that debt and filling in that hole. So when they receive their inheritance, it makes sense that they first, pay off their debt and then would drain down that tank, draining down the rest of that inheritance to make other major capital purchases.

The second type of person who would receive an inheritance is a saver and savers start at the zero line and they save and save and save. But when it comes time to make a major capital purchase, they drain down the tank or reduce their savings back to zero. And then they start saving again for, let’s say, the next automobile or the next major capital purchase.

So if you’re a saver and you receive an inheritance, it would make sense that you would use your inheritance to make major capital purchases and pay cash for everything.

Now, it may seem to you that the saver and the spender are two very different people, but they have something in common, and that whether you’re a debtor or a saver, you spend a lot of time at the zero line and you never get to experience the magic that comes with continuously compounding interest on your money. The other thing that neither the spender nor the saver receive or experience, is being in control of their money. Which brings us to the third type of person who can receive an inheritance. And that’s the wealth creator.

The wealth creator is a very unique individual. They save, as a matter of course, just like the saver. The only difference is, unlike the saver who drains down the tank to make purchases, they continue to earn uninterrupted, compounded interest by borrowing against their savings. And when they borrow against their savings, they’re making their money more efficient.

 

Now, if you’ve recently received an inheritance or anticipate receiving one soon, you may want to look into becoming a wealth creator. Keep this in mind, the saver, spender, and the wealth creator are all making the same exact purchases. And we say this all the time. It’s not what you buy. It’s how you pay for it that really matters. The wealth creator is still able to make that purchase without draining the tank and without giving up control of their money, all the while making their money as efficient as possible. They’re never jumping off that compound interest curve. That is a huge deal.

If you’re using a specially designed whole life insurance policy with a mutually owned life insurance company, you’re automatically building in a legacy for the next generation and being a great steward of your money.

If you want to make your inheritance work for you, your business, and your family and last for generations. Visit our website at Tier1Capital.com to get started.

Feel free to schedule your free strategy session today or check out our free web course, the Four Steps to Financial Freedom to see exactly 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.

How Can I Utilize My Policy Loan Provision

Do you have a cash value life insurance policy, but you’ve never accessed the cash value? Well, that’s kind of like having a Ferrari in your garage and never driving it.

Did you know that every single cash value life insurance policy has something called a policy loan provision, that allows you to have full liquidity use and control and access to that cash via a policy loan?

So the questions remain, why would you want to use a policy loan? Why would you pay somebody to access your own money?

Well, it’s real simple. It isn’t your own money that you’re getting. You see, your money will continue to stay in the policy and grow on an uninterrupted compounding interest basis. The insurance company will use the equity in your policy and put a lean against it. They’re going to give you a separate loan outside of your policy so your policy continues to grow. But now you have this extra loan and now you can use it for whatever you want, whether it’s to pay off a bill to buy an asset or just to go on a vacation.

So the next question is, who is showing you how to use this asset? Who’s showing you how to utilize this tool in your financial game plan?

For the past 37 years I can’t tell you how many times people have come to my office and they show me their assets and they have these life insurance policies and they say, “You know, my brother in law sold me this policy. He’s probably ripping me off, but it’s my wife’s brother. So I did him a favor.” At the end of the day, what they don’t realize is that the best asset they have ever owned is that life insurance policy.

It takes a little education and becoming familiar with the ability or what you can do with that policy. But once we show them how to utilize that policy, they never go back and they always want more life insurance rather than getting rid of what they thought was a bad asset.

So think about the assets that you own, whether it’s a bank account, an investment account, real estate or even insurance policy, they were all purchased through a financial institution. But you see financial institutions have rules, and those rules center around getting our money and keeping our money for as long as possible. But what if you are able to maintain full liquidity use and control of your money so that you’re able to achieve your financial goals and still maintain that continuous compounding of interest that we all want so badly so our money could be working for us instead of against us.

Well, that’s exactly what you get with a cash value, life insurance policy. Full liquidity use and control and access to achieve your financial goals. You see, when you’re accessing the cash value in your life insurance, you’re following a simple law of nature. You see, in nature, everything has to flow. And when you are accessing your money, your money is flowing. But when you leave your money somewhere, it is stagnating. And guess what? Wherever you left that money, that institution is earning interest on that money.

The key is to utilize your cash value, to utilize that policy loan provision, that contractual guarantee that allows you full liquidity use and control of your cash value so that possibly maybe you could take that cash and invest it somewhere, so you have the internal rate of return within your contract, as well as an external rate of return on an investment.

 

Another option to utilize your policy cash value is to take a policy loan to repay debts. Whether that’s a high interest credit card or possibly some student loans. Once you take the policy loan, you now have free cash flow from the payments that were going to your credit cards or student loans that you could redirect back to your policy loan payment. And what that’s going to do is rebuild and reestablish that equity in your policy so that you can access it again in the future. All the time never interrupting the compound interest curve within your life insurance policy.

Let us know how you use your cash value within your policy or if you’ve never accessed it before, and have this Ferrari sitting in your garage. How we can help you the most is to show you how to unlock this stagnant money, how to utilize this asset, how to drive this Ferrari as fast and as far as you want.

If you’d like to get started with our process, be sure to visit our website at Tier1Capital.com to get started today. We show people how to use cash value life insurance policies, whole life insurance policies designed for cash accumulation to achieve their short term, long term and other financial goals.

Feel free to schedule your free strategy session today or check out exactly how we put this process to work for our clients in 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.

Pay Yourself First

Nowadays there is so much competition to get in our checkbooks every single month. Between subscriptions, utilities, credit card bills, student loans, rent or a mortgage the competition is fierce. Not to mention the increasing rate of inflation that could be detrimental to our cash flow each and every single month.

Today, let’s look at why it’s more important than ever to pay yourself first.

The Golden Rule in personal finance is to pay yourself first, but the question becomes, how do you do that? There’s never been more competition. It’s never been easier to give away control of your cash flow.

With as many subscription options as we have today, whether it’s a large corporation, a small company, a financial institution like an investment firm, a bank or an insurance company, or the government, they all are experts at getting into our checking account and getting into making sure that we’re paying them first rather than paying ourselves first.

So the question remains, how do we pay ourself first? The answer is simple. It’s to get $1 to do multiple jobs. If you were able to get $1 that you were using to repay a credit card with, to do multiple duties so that it’s also able to continuously compound interest and be working for you at the same exact time, that’s the secret.

Think of this question. What’s the rate of return? I’m getting $1 to do several jobs. The answer is that it’s almost infinite, and that’s the key. Making sure your money is much more efficient than just doing one job. That takes us back to the original question.

How do you pay yourself first? Well, first and foremost, you have to prioritize savings. And it’s really simple, but it’s also very hard. So think of this. I’ll never forget when my son got his first real job after college and after he got his paycheck. He was figuring he was going to make about $2,000. When he got his first check, it was closer to $1100. I’ll never forget what he said to me. He said, “Dad, who in the world is FICA?” And I said to him, “Welcome to the real world, son.”

So again, how do we pay ourselves first when we’re only going to end up with 50 or 55% of what we think we’re going to get in the first place? Well, it’s real simple. You’ve got to make sure that you’re understanding how much you get and also prioritize, and say, “Okay, whatever I get, 10% is going into my savings, could be 5%, could be 3%”, whatever you choose. You just need to start somewhere.

So when it comes to compounding interest, there are two factors and only two. Time and money. We can never get the time we lose back. So it’s important to start saving now, and make a habit out of saving. Save month after month, week after week, and never drain that tank so that you can experience the eighth wonder of the world: compound interest.

When we talk about not draining down the tank, what does that mean? Well, typically what happens is people save with great intentions, and then all of a sudden a disaster hits them. They have a financial or a medical emergency, so they wipe out their savings. Another example is that they’re saving money, and they need a down payment to buy a house. So what do they do? They drain down their savings and use it to pay for that emergency or they use it for that down payment on the house. Well, what happened is you drained down the tank and you stopped compounding interest on that money.

So again, the key is getting $1 to do two things. Have it in a place where you can utilize it to do whatever you need, whether it’s a financial or a medical emergency, a down payment on a house, paying cash for a car, things like that. But also, still make that money continue to grow and earn uninterrupted compounding of interest. Because if you drain that tank and deplete all of your savings, you lose all the opportunity that that money could have earned you. You’ll never see the interest that you don’t earn on that savings. But more importantly than the opportunity, you just lost all the time it took you to build that money up. Now you’ll never get that time back either.

So when you look at a compound interest curve, and in the beginning years you don’t see much growth, keep this in mind. Compound interest is when you are earning interest on the interest. That interest continues to compound and grow every single year. If you continually drain down that tank, knock yourself back down to zero, and start all over again, you’ll never experience the real growth on your money, which takes place in the later years.

It’s so important to never get off that compound interest curve, because by the time you realize the detrimental effects this is going to have on your finances and your ability to achieve your financial goals, it’s going to be too late.

This is where we always say the future you needs to have a sit down discussion with the present you about how you’re using your money, because the present you could really be shortchanging the future you out of a comfortable retirement.

So here’s the key. Pay yourself first and never stop. Pay yourself as a matter of course and never drain that tank. One of the ways we help our clients achieve this goal of paying themselves first is with a specially designed whole life insurance policy designed for cash accumulation. So, they’re able to meet their short term goals of paying off their credit card debt or paying off their student loans, as well as their long term goals, such as paying for a wedding, sending their kids to college, or saving for their retirement.

If you’d like to get started with this specially designed whole life insurance policy for cash accumulation, to help meet your short term and long term financial goals, so that you can save and pay yourself first and never drain that tank. Be sure to visit our website at Tier1Capital.com.

Feel free to schedule your free strategy session today or check out exactly how we put this process to work for our clients in 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.

Are you Unknowingly Giving Up Control of your Finances?

Do you make a great income but still feel stuck financially?

Well, you’re not alone.

Most of our clients don’t understand how to make their money as efficient as possible. That’s where we come in. We find money that’s hiding in plain sight, that people are giving up control of unknowingly and unnecessarily.

If you’ve ever met with a financial advisor, traditional financial advisors are really good at pointing out problems.

“You don’t have enough money saved for your kids to go to college. Therefore, you need to save more for college.”

“You don’t have enough money to fund your retirement income. Therefore, you need to save more money for retirement.”

But the thing is, you’re probably doing the best you can with what you have, and if you could save more, let’s face it, you would be saving more. The question is, how to do it?

This is exactly what makes us unique. We’re trained to identify where you’re giving up control of your money unknowingly and unnecessarily. And these are two keywords. Unknowingly, meaning you don’t realize you’re doing it. And unnecessarily, meaning a simple shift, sometimes just in perspective, can change what you’re doing that’s actually holding you back. It’s our mission to help as many people as possible make the best decisions possible financially, and oftentimes that means making their money work more efficiently.

 

What does it mean to make your money work more efficiently?

Well, it means putting your money to work for you, not the government, not the banks, and not Wall Street. Maintaining control of as much cash flow as possible is what will move you ahead financially. It’s not enough to point out a problem. It’s not even enough to offer a solution. What makes us unique is that we actually help you find the money within your current cash flow to pay for the solution. Basically, we would have minimal or no impact on your current cash flow to solve a problem and provide a solution.

There are five major areas of wealth transfer where we look for these inefficiencies in your personal economic model.

    1. Taxes
    2. Retirement
    3. Mortgage
    4. Education
    5. Major Capital Purchases

Identifying these five areas is literally how we find money that’s hiding in plain sight. Ultimately what happens is we can provide you with a solution to your problem with minimal or no impact on your current cash flow.

Let’s face it, none of us wake up in the morning and say, “Hey, how can I hold myself back financially today?” No, we think we’re making the best decisions that would be moving us forward. But what if what you thought to be true turned out not to be true? When would you want to know about it?

If you’d like to get started with our solution to find the money within your current cash flow so you’re able to achieve your financial goals sooner, visit our website at Tier1Capital.com to schedule your free strategy session today. Or if you’d like to learn exactly how we use this process to identify inefficiencies in the cash flow model, check out our free webinar where we go into 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 Get the Best Rate of Return!

Today we’re going to talk about rate of return and why rate of return isn’t the end-all-be-all of any financial plan.

If you’ve ever sat down with a financial advisor, watched an ad for a financial advisor, or turned on the finance section of the news, you know that they talk about rate of return a lot. But in our opinion, the risk that’s required to obtain that high rate of return is spoken about enough. 

When it comes to risk, are you willing to leave your money at risk in the jungle every single day for the rest of your life in order to earn a high rate of return? Keep in mind that the rate of return isn’t guaranteed and nowhere is it written that you have to lose 50-70% in the market in order to get a high rate of return. 

The second thing that isn’t spoken about nearly enough is taxes and what impact our taxes and the current tax laws have on your savings and investments. Whether it’s a qualified government plan like an IRA Simples, SEP, 401k, or 403b or a non-qualified investment account where taxes are paid on growth annually, your money is exposed to taxes. And, as you know, it’s impossible to accumulate wealth in a taxable environment. You may look rich on paper, but the after-tax rate of return is not the same as the pre-tax rate of return that’s often advertised. 

So, keep in mind, whenever you’re looking at a mutual fund prospectus, they’re publishing the pre-tax rate of return. We’ve said it before: It’s not how much money you make, it’s how much money you keep. And along those lines, how much are you keeping after fees? There are money management fees, broker advisor fees, and any number of other fees whittling away at your money. 

 

So when you’re thinking about investing and going for a high rate of return, don’t forget to consider the effect of market losses, taxes, and fees. Do not ignore the elephant in the room. What happens if you need to access that money? What’s the rate of return on your money going to be after you access it to buy a new car, put a down payment on your home, pay for a wedding, or send your children to college. The answer is zero. After you drain that tank, after you take the money out of that account, not only are you paying taxes on that money, but you’re also losing any interest. You’ll never see the interest you don’t earn on an account. 

These are all factors that need to be considered when designing your financial roadmap and your financial game plan. If you’d like to learn more about our process and how a reasonable rate of return can often get you to your financial goals with less risk, less taxes, and, obviously, less fees, be sure to check out our website at Tier1Capital.com to schedule your free strategy session. Or if you’d like to learn more, be sure to check out our free web course, The Four Steps to Financial Freedom, to learn exactly how our process works and how it could work for you.

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

5 Best Tips For Financial Success

So your cash flow is tight, but you still want to set yourself up for financial success in the future. If that sounds like you stick around to the end of this blog because today we’re going to go over five things you could do right now to set yourself up for success.

Let’s get started with the five things you could do today to move you ahead financially down the line, whether you’re just getting started or maybe your income isn’t as high as you’d like it to be, these things can make a huge impact on your financial future regardless. 

The first thing you can do is to start saving today, no matter how small the amount. There’s an old proverb that says “The journey of a thousand miles starts with one step,” and that’s the key. Pay yourself first, no matter how small that amount is. That’s right. Start saving and start saving on a consistent basis. These days we have so many subscriptions and auto-pays and everything else in our checkbook every single month and it seems like there’s always more. Pay yourself first. No matter how small the amount. 

This brings us to number two: never drain the tank. Keep this in mind. You’ll never see the interest you don’t earn. Once you put that money aside for savings for your future self, don’t drain the tank. Don’t use it to go on vacation. And don’t use it to go buy your car. Now, we’re not saying don’t use that money. What we’re saying is to use your money in a way that you’re able to always continuously earn compound interest on the money. So it’s always working for you, but you’re using other people’s money to make your money more efficiently. It’s the key fact. Leverage will move your head. Never drain your tank. 

The third thing you can do to move forward and set up your future self is to live within your means. For many of us, that might mean that we need to set a budget and stay within that budget. 

Number four: keep your savings liquid, and free from taxes, losses, and government regulations. Conventional wisdom teaches us to save our money in places where it’s inaccessible, places like qualified retirement accounts like IRAs, simples, SEPs 401k’s or 403b’s. Where we have to pay a penalty if we access before age 59 and a half and at all times we have to pay taxes, and it’s taxable as income when we access that money or non-qualified accounts where the growth is taxed every single year on that account. And we all know you can’t accumulate wealth in a taxable environment. 

Rule number five is probably the most important. Not all debt is bad, especially when you own your debt. You see, when you own your debt, you’re in control of the terms and conditions of that debt, meaning that you can set up the interest rate. You can set up the payment plan. You can set up how the money is going to be used. The bottom line is you’re in control. But think of it this way. Before you pay that loan, you control the value of that payment. 

Let’s say it’s $450. So, this month, you control $450. The next day, when you make a payment to a credit card or on a car loan, you no longer control that loan. The lender controls that $450. Now, here’s the key. When you control your debt and you own your debt, you get to control the payment before you make the payment and you get to control that same amount of money after you make the payment. That’s complete control. And that’s why we’re sticklers for putting our clients in control of their money. Why? Because when you’re in control of your money, you’re in control of your cash flow and you’re in control of your life. 

Think about it this way. When it comes to owning your debt, it could be likened to having money in your pocket and sliding it over to your right pocket. At all times you have full liquidity, use, and control of that money. The bottom line is this, when it comes to your money, keep it in your pants. 

If you’d like to get started on your financial journey, visit our website at Tier1Capital.com. We have a free web course, The Four Steps to Financial Freedom that goes through our process step by step and could show you how to get ahead financially.

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

Pros and Cons of a Disability Waiver of Premium

So you’re thinking about getting an Infinite Banking Concept Policy and you’re wondering, “Should I include a disability waiver of premium or not?” If that sounds like you, stick around to the end of this blog post because today we’re going to cover top to bottom why a disability waiver of premium may make sense for your situation.

A lot of times when agents are designing an IBC policy, they’re solely focused on the rate of return. So they don’t end up including any riders that have a cost to them, like the disability waiver of premium. 

But keep in mind for sure, having disability waiver of premium will reduce the rate of return. And depending on the company you’re using, they may only charge the rider on the base policy, so the cost is going to be negligible. And again, depending on your situation, it may be well worth having that extra protection in case something happens to you. For example, you get sick or injured and cannot work, therefore you have no money coming in. And then the question becomes, how are you going to pay for the policy? 

So, let’s take a step backward. What exactly is the disability waiver of premium rider and what does it do and why would you want it? Well, the disability waiver of premium rider is a rider on the policy that has a small cost that ensures your premium gets paid even if you’re not paying it yourself. So if you become disabled and unable to work, the insurance company is going to cover the cost of your premiums. And depending on the company you go with, they may cover the costs of the premiums for the base policy and any riders included on that policy. 

So we think if that’s the situation, it may very well be an advantage for you to include that rider primarily if you’re the main breadwinner in your family or you’re a dual-income family and you’re depending on your income for lifestyle and savings. 

So think about it, right now you’re designing your IBC policy and you have certain goals in mind of how you want to use that policy. Why would those goals change if you become disabled? Just because you’re not working doesn’t mean that your financial goals are going to change. Keep this in mind: you can always take the rider off of the policy. However, if your policy isn’t issued with the disability waiver of premium, you can’t go back and add it on later. So, it’s something you should really put some thought and consideration into, especially if you’re a younger person, let’s say, under age 50. 

So now let’s take a look at what happens if you get disabled, you’re unable to work, and you did not have the disability waiver of premium rider on your policy. So, if you don’t have the rider, the first thing you have to ask yourself is: is there enough cash in your policy to keep the policy going if you can’t make the premium payments? Another question you have to ask is: how are you going to make those premium payments? And the third question would be, again, if you’re disabled and you didn’t have the rider, how is the policy going to continue and how are you going to use and/or access the money in your policy going forward if there are no premiums going in? 

Think about this, if you have an IBC policy properly designed with the waiver of premium rider and you become disabled, and hey, maybe your financial goals have changed, maybe your new financial goal is to maintain your lifestyle and your financial security, which is a great goal. This properly designed policy will allow you to do it. You’ll have complete liquidity use and control of that cash value with no questions asked, which is very important at this time of your life, because let’s face it, you have no proof of income. Traditional means of accessing money from a bank or credit card are now going to be difficult because you have no source of income and the premiums are being covered by the insurance company. Imagine the peace of mind that comes with that. 

So keep in mind having the rider on a policy protects not only your income, but also think about it, the policy has a death benefit and the reason you’re setting it up is to be in control of your finances and to be in control of your money. Why should those goals change if you become disabled and you have actually less money coming in? And as we mentioned earlier, the cost of the rider is generally negligible. It’s a very small amount. And more importantly, insurance is a transfer of risk to begin with. So you’re transferring the death benefit risk. But more importantly, now you could transfer the disability risk all for a negligible cost. So it may be beneficial to you to include that rider in the policy design, especially if the cost is very small. 

Although, IBC policies are designed for maximum cash accumulation, so you maintain full liquidity use and control of your money throughout your financial journey at the end of the day. We do use a life insurance policy to accomplish that. 

If you’d like to talk about whether the disability waiver of premium makes sense for your situation, be sure to check out our website at Tier1Capital.com to get started today. If you’d like to learn more about our process, click on our website to watch 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.

5 Essential Rules of the Infinite Banking Concept

Do you have an IBC policy or are you thinking about getting one? If that sounds like you stick around to the end of this blog post because today we’re going to go over the four essential rules that need to be followed for any IBC policy to be put to work for you.

Rule Number One: Think Long-Term.

In Nelson Nash’s book, Becoming Your Own Banker. He explicitly says you have to think long-term. Remember, he was trained as a forester, so he thinks 70 years in advance. And like Nelson would say, “I will not be here. And probably neither will you. But somebody will and they will pay the price of you, not thinking long term.”

So what does this look like when it comes to designing your IBC policy? Well, it can look like maybe putting 10% of your premium towards the base policy and 90% towards the PUA, the paid-up additions, and the cash value part of that policy. And what that does is it directly violates rule number one. Think long-term.

So with this design, you’re getting a lot of cash value upfront, which could be great for your short-term needs. Maybe you want to make an investment as soon as you place the policy.

But what about the long term? How is this policy going to serve you and how is it going to serve you best? And it’s usually not with a 10/90 split.

Keep this in mind. When Nelson Nash discovered the infinite banking concept, there was no such thing as a paid-up additions rider. Because he was a long-term thinker he realized that he had to get the premiums, the base premiums of his life insurance to equal his mortgage. And then he knew at some point the cash value build-up would be four times his mortgage, allowing him to weather any financial storm created by inflation or manipulations in the financial markets.

Rule Number Two: Don’t Be Afraid to Capitalize.

And what Nelson meant by that was don’t be afraid to put in as much money as possible for as long as possible. Again, the temptation might be to do the 10% base, 90% paid-up adds. And that might work for some people who want to use their policies more aggressively early on. But what we found is, again, people are long-term in thinking and the best or the most efficient way of funding a policy or capitalizing your policy is 40% base, 60% paid-up additions.

Let’s take a step back here. When we say don’t be afraid to capitalize, we also don’t mean overextend yourself. If you’re looking for ways to make your cash flow more efficient, and to fund your policy more, we could help. Visit our website at tier1capital.com to schedule your free strategy session.

Rule Number Three: Don’t Steal The Peas.

If you’ve read the book Becoming Your Own Banker, I’m sure you remember the example of the grocery store owner and the temptation of them stealing the peas, going out the back door with their groceries, and not paying for them. So what he meant by that was if you are going to set up an IBC policy and you are going to borrow against your policy, make sure you put the money back, because if not, you are no better than the grocery store owner who goes, who bypasses the cashier and goes out the back door with his groceries. You’re stealing the peas and you cannot and will not or should not do that.

Rule Number Four: Don’t Deal With Banks More Than You Have To, Especially For Access To Cash Or Borrowing.

What did Nelson mean by that? He fully understood fractional reserve lending. He knew that if you pulled yourself away from the fractional reserve lending system and went to infinite banking, which is 100% reserve lending, he knew that you would no longer be contributing to inflation in America, and more importantly, you would be in control of the financing function in your life.

So let’s recap the four rules.

  • Number one, think long term.
  • Number two, don’t be afraid to capitalize.
  • Number three, never steal the peas.
  • And number four is, don’t deal with the banks more than you have to.

In January of 2019. I got a phone call from Nelson Nash and we chit-chatted for a little bit and Nelson said to me, he said, “Tim, I need to rethink my four rules. I think I need to add another rule.”

I said, “Nelson, what? What would that rule be?”

And he said, “Real simple. I’m going to graduate from this world one day and I’m going to leave my family a significant amount of death benefit. And if they don’t have large enough holes in their policies, they’re not going to have a place to store that money. I think we need a fifth rule.”

Rule Number Five: Make Sure That You Have Enough Holes in Your Policies to Accommodate a Windfall.

So that could be in the form of a policy loan against your policy or having term insurance that you’re able to convert into new policies when that windfall happens.

If you’re looking to regain control of your cash flow and put these four plus rules to work for you and your situation, we’d be happy to help. Visit our website at tier1capital.com to get started today. You could schedule your free strategy session or check out our free web course where we go through a deep dive on how we put our process to work for you.

And 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.