Tier 1 Capital Blog

How Does the Debt Cycle Affect Me?

Do you realize that every single purchase we make is financed? Whether we financed traditionally or pay cash, we’re either paying interest or giving it up. How do we make our money as efficient as possible and put the debt cycle to work for us?

You’ve heard me say it before and I’ll be sure to say it again.

Whoever controls your cash flow, controls your life.

So how do you regain control of your cash flow and regain more and more of your financial freedom?

Well, the first step is to understand where your money is flowing to or, more importantly, what’s the beginning of the debt cycle. So here’s an example. Let’s say you’re a business owner. Probably when you started your business, you did not have a lot of cash or access to a lot of capital. So you want to be in this business and what do you do? You go and borrow some money. Well, the next step is you take that money and you use it to capitalize your business. You’re actually deploying that money to grow your business.

The third step is now that the money is deployed, you utilize it to generate a profit. And now with those profits, you go to the fourth step and you use those profits to pay back the loan. Here’s the problem, because all of your cash flow was going towards the loan. Now, when that loans paid off and you want to expand your business, now you’ve got to go back and borrow again. And this process continues. And that’s why we call it the debt cycle.

Because the beginning and the end are the same. It’s so hard to get out of this debt cycle. It becomes a perpetual cycle that happens with business owners because they never take the time to capitalize their own assets so they could finally break the cycle. There’s only one way out.

What if there was a way to take a portion of the money that’s going towards debt to build your own asset and capitalize your own asset so you could finally break that cycle without impacting your cash flow. Would you want to know about that process?

Well, the fact of the matter is the process does exist and it’s been around for over 200 years. Conventional wisdom teaches us that debt is bad. And so it’s often that we see business owners trying to repay their debt as soon as possible. But what happens when you do that is you’re giving up control of all of your cash flow to the bank. And then when it’s time to expand your business again in the future, you’re forced to go back and borrow because you didn’t take the extra step of building your own asset instead of building the banks.

We’re going to share with you a practical example. Several years ago, we met with a business owner who had started a business about 15 years prior, and they had no money. So they borrowed everything to capitalize their business. But as time went by, they became more and more successful and they paid off that 20 year loan in about ten years.

The problem was they were taking all of their cashflow to pay that debt off as quickly as possible. So when it came time to expand their business, they didn’t have any access to additional capital. So they had to borrow again. And my question to them was very simple. When you went back to the bank to open up your second store, whose money did they give you? And all we heard was silence in the boardroom.

Eventually, the president of the company said, “Oh my gosh, they gave us our own money back.” And the CFO said, “Yeah, and they charged us interest and fees in order to get our own money.” That is clearly the debt cycle and we can break you from that just by becoming aware of where your money is flowing and how to set up a pool of money that you own and control so that you could access that money to expand your business.

Now that you’re aware of the debt cycle, the next step is to learn how to put this process to work for you and interrupt it, so that you could be in more control of your cash flow and make your cash flow even more efficient. You’re building that asset for yourself so you’re less dependent on banks and credit companies.

If you’re looking to get started with this process, be sure to visit our website at Tier1Capital.com and feel free to schedule your free strategy session today.

If you’d like to learn more about exactly how we use this process, check out our free webinar, The Four Steps to Financial Freedom right on our home page.

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

Making Money Work For You

Have you noticed that when you follow the conventional wisdom, when it comes to finance, it could leave you feeling stuck financially? Paying off your credit cards, maxing out your 401k’s, paying off your mortgage as soon as possible, all of these things leave you more and more out of control of your cash flow.

But what happens when you need to access cash for a major capital expenditure? Whether it’s a major capital purchase, a medical or financial emergency, the bottom line is when you follow conventional wisdom, your money is inaccessible when you need it most.

Conventional wisdom teaches us that we shouldn’t be working for our money, but we should be putting our money to work for us. Whether it’s real estate, a brokerage account or a retirement account, all of these places are leaving our money inaccessible, even though they’re “working for us.”

Even worse, you put your money in the bank earning 0.0, and you’re not even keeping up with inflation. You want to put your money to work for you, your family, and your business. The problem is, when you follow conventional wisdom, your money is inaccessible and you’re literally paying somebody to oversee that money. They’re making profits off of that money, and you’re taking all the risk. And, when you need the money the most, you can’t get it.

When you follow conventional wisdom strategies, you may make money or you may lose money, but there are two things for certain: you will pay fees and you will pay taxes.

By following conventional wisdom, we’re parking our money in these accounts and it’s inaccessible when we need it the most. The money stops flowing. But how do we allow ourselves to still earn interest on our money and still earn continuous compounding of that interest and make the purchases that all of us need to make throughout our lives?

That’s why we develop the process that keeps your money flowing and more importantly, keeps your money flowing towards you so that you could be in a financial situation where you could make the purchases and still earn interest on your money.

We use specially designed whole life insurance policies designed for cash accumulation to help put our clients back in control of their cash flow. So whether it’s earning interest on your money or paying off debt or making major capital purchases, your money is always working for you.

If you don’t have a policy yet and you’re looking to get started with our process, check out our website at Tier1Capital.com today. Feel free to schedule your free strategy session or if you’d like to learn more about how this process works, check out our free webinar, The Four Steps to Financial Freedom, right on our homepage.

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.

Using My Life Insurance to get Financially Ahead

A lot of times when we’re designing a whole life policy designed for cash accumulations, people will get hung up on the break even point, the time where the cash value is greater than the premiums paid.

But today, we’re going to talk about how you could use your policy before that break even point so you could get financially ahead, even before you break even.

You’ve heard us say it before and you’ll hear us say it again.

It’s not all about the internal rate of return of your policy. It’s how you can put this policy to work for you to achieve your financial goals.

And putting the policy to work for you is critical in helping you to achieve financial independence. And the reason why is really simple.

Every time you take a loan from the insurance company, you are creating financial freedom in your life. Those loans are unstructured. What does that mean? It means you don’t get a coupon booklet, you don’t get a monthly invoice. You actually are in charge of structuring the loan repayment process, and that is complete control.

So what are some ways you can put this policy to work for you before the break even point within those first ten policy years? Well, initially, any small debts that you have, whether it’s credit cards or the you know, the last remaining year or two on a car payment, you can borrow against your cash value, pay off that loan. And instead of having that payment going away from you, you now have that money, that payment, flowing back towards you, into your policy.

You’re going to make the same payment you were making to Ford Motor Credit, back to your policy. The only difference is this you don’t own Ford Motor Credit, you own your policy. So when you make the monthly payment back to the policy, you can use that money again somewhere down the line.

That’s right. You’re going to be rebuilding that cash value by repaying your loan and you’re going to be building that cash value from within by paying that monthly or annual premium.

So now you have two payments per month working for you. You have the loan repayment, which you can access again through the loan feature, and you have your premium which is building and growing your cash value.

You see every single purchase we make and this life is financed, whether we finance traditional through a bank and pay interest to them, or we pay cash and give up the earning potential or growth potential on that money. This is simple finance 101. We’re either going to pay up, by financing, or give up, by paying cash. There are no exceptions.

So the question becomes, how do we put this law of nature to work for us? And the answer is with a specially designed, whole life insurance policy designed for cash accumulation. Why? Because we have guaranteed access to that money, and it doesn’t interrupt the continuous compound of interest within that policy. As long as you place it with the right company.

So keep this in mind. Even though you’re using the money to pay off some debt or to make a purchase, your money is still earning interest for you. Uninterrupted compound interest is working for you.

A lot of times we meet with people who didn’t buy life insurance policies for cash accumulation. They weren’t designed for the infinite banking process, but they have a policy that might be ten, 12, 15, 20 years old, even, and they have a lot of cash in there and they can access that cash through the loan feature. They never considered it because they were never told that they can do it.

The point is they have access to money that they can get on their terms and they can utilize that money to make the rest of their money more efficient and make their cash flow more efficient, where they can borrow against their policy, pay off an outside debt, and have that monthly payment now coming back to them by redirecting the payment back to their policy.

Now, if you have a whole life insurance policy, you have a policy loan provision and if you’ve had that policy for a long time, chances are there are some cash value built up within that policy. Not as much as it would have been with a specially designed life insurance policy designed for cash accumulation. But because of the second promise that insurance company makes to have the cash value equal to the death benefit at the age of maturity, there has to be cash accumulation within that policy. And this is key to this whole process.

You could access that cash through a collateralized loan. So your money is still in your policy. You get a separate loan from the insurance company. The insurance company puts a lean against the cash value. And now you can utilize this money that you get through the loan to pay off outside debts or to make purchases. It’s almost as if your money is in two places at once because, quite literally, it is. It’s always in your policy working and you can access that equity through a loan feature.

Now we’ve seen our clients use their policy loans for all sorts of things because, quite frankly, there’s no limits. There’s no qualifications for obtaining these loans as long as there’s cash value in the policy, you have access to the loan. You can make major capital purchases like a wedding, cars, vacation. You could pay off debt, you could send your kids to college using these policies.

The only limitations are in your imagination on how you want to put this policy to work for you.

There are many examples of famous people who have access to cash value in their life insurance to start their now famous business. One great example is Walt Disney. No bank would loan him money to buy swampland in Central Florida, but he had a vision. He also had a sizable life insurance policy that he was able to borrow against the cash value to start purchasing land in central Florida. And we all know how that ended up. He created the happiest place on earth, Disney World.

If you’d like to get started with a specially designed, whole life insurance policy designed for cash accumulation and some ideas on how to put the policy to work for you, even before it breaks even. Check out our website at Tier1Capital.com to get started with a 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 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.

Stop Giving Up Control of your Cash flow

In every household and business the main key to finances is cash flow. The difference between feeling financially free and financially stuck all comes down to that one thing, cash flow. But here’s the problem. How do you manage your cash flow to amplify the feeling of financial freedom?

We have cash flow and then we make decisions to save our money. But we save it in places that literally stops the flow of money. We put it in retirement accounts, we put it in home equity. We pay off debts sooner. We put money in 529 plans. We pay cash for major capital purchases. All of these things stop the flow of money. More importantly, it stops the flow of money towards us and starts the flow of money away from us.

Now, it’s not enough just to have cash flow. We have cash flowing in every month from either income or our business. But how do we use that money once it’s in our control to move us forward financially so we could achieve our financial goals without giving up control of that money? And again, keeping in mind that we want the money to flow, but it should be preferably flowing towards us, not away from us.

The next question becomes, “how do I use my money to achieve my financial goals, like sending my kids to college or expanding my business, or buying a new car without stopping the flow of money?” Well, it’s real simple when you look at the choices, you have to save your money.

Are those choices stopping the flow of money or are they allowing your money to continuously flow towards you? Whenever we’re looking at a financial situation we’re looking at those decisions from an aspect of control. Is this decision going to leave me in more control of my money or less control of my money?

There’s an old adage in the accounting industry and it goes like this:

“Follow the flow of money.”

Wherever money stops. That’s where you have an opportunity to make that money flow towards you.

You see, conventional wisdom teaches us to give our money away. It’s by design. Pay off your mortgage as soon as possible. Get rid of all this debt. But what these decisions are doing is leaving us out of control of our cash flow and we’re unable to get our hands on money when we really need it.

We’ve been trained to do things with our money that we would never do with the things that our money buys. We would never buy a loaf of bread and put it away for 40 years and not eat it. Yet, that’s what we’re trained to do with our money when we put it in a retirement account. Same thing with home equity. We would never buy something and forget about it for 30 years, but that’s what we do when we put extra money on our mortgage. We’re literally saying, Hey, I’m going to put this money in the house. It’s not going to earn any interest. The dollars I take out in the future are going to have less buying power than the dollars I put in. We would never do that with the things that money buys, but that’s what we’re doing with our money.

Now, we’re not saying you shouldn’t save for retirement or you should be in debt with your mortgage. But what we’re saying is you should save your money in a place where you have complete liquidity use and control so you can access that money to achieve your goals along the way. Without asking permission and without subjecting yourself to penalties and fees.

This is not a new revelation. We are following the rules of nature. In nature, things have to flow. Water has to flow. You would never want to drink stagnant water. And it’s the same thing with our money. We need to keep our money flowing and preferably flowing towards us. The problem we see too often is that money is flowing. It’s just not flowing towards you. It’s flowing away from you.

If you’d like to get started with our process using specially designed whole life insurance policies to regain control of your money and finally experience more of that financial freedom we’re all looking for. Be sure to visit our website at Tier1Capital.com.

Feel free to schedule your free strategy session or check out our free financial planning webinar, 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.

Taking More Control of Your Cash Flow

With the New Year often comes a refresh and what better way to start off the New Year than refreshing your finances so that you have more cash flow to do the things that you want to do, especially in these times of rising inflation and interest rates.

Let’s face it, none of us wake up in the morning and say, “Hey, how can I mess up my finances today?” But the fact of the matter is, a lot of the things that conventional wisdom teaches us about finances and how to use our money can leave us out of control. And it could take years for us to feel the effects of that.

Simple things like maxing out your 401k, putting as much as possible on your mortgage, paying off that mortgage as quickly as possible, paying off your student loans, paying off your high interest credit card debt when not done properly, could leave you feeling pinched down the line when you are trying to achieve other, bigger financial goals.

Now, keep in mind, every one of those strategies, paying down your mortgage quicker, maximizing your retirement plan, paying off your debt in and of themselves, they are all what we want to do. They are all the things that we should be striving for.

However, it’s not what you buy, it’s how you pay for it. And the way or the manner in which you’re addressing these issues could be costing you hundreds of thousands, if not millions of dollars over your lifetime.

 

You want to be in control of your money. You want to create financial independence. You have enough cash flow to do it. But it seems like you’re never getting ahead. It’s sort of like you’re driving down an icy road, slam on the brakes. But what happens? You’re going faster because of the relationship between the tire and the ice. And it’s the same thing with our finances. If we’re not careful, we could be doing things that we want to accomplish on a short term basis. But we’re missing completely the big picture.

You see, we’ll never see the interest we don’t earn, the opportunity cost on the money that we’re freely giving away, to these finance companies. By making some simple shifts and making your cash flow more efficient so that you’re in more control of that cash flow, and you have it working for you instead of other entities like the banks, Wall Street, and the government, could make all the difference throughout your entire lifetime and your financial journey.

We found there are two different ways that you can be in control of your money and your cash flow.

The first way is the strategies or the choices you’re making to actually save your money. Where you save your money makes all the difference in the world. You want to save your money in a place where you have complete liquidity, use and control of that money.

Putting all of your savings in a qualified retirement plan like a 401k or a 403b, puts your money literally out of reach when you need it most. So there’s no liquidity, there’s no use, and there’s certainly no control on your side for doing that. So where you decide to save your money is a very big factor on you being in control or not being in control.

You see, we believe that there’s more opportunities in making your money more efficient and avoiding the losses than there is in picking the winners. With the retirement plan, for example, a lot of people put all of their savings into these qualified plans.

But what about the short term financial goals? How are you going to fund those if all of your money is tied up in the retirement plan?

What we see happen a lot of times is people having to dip into their retirement plan. That money is fully taxable. And if you’re under age 59 and a half, you also get hit with a 10% penalty. So with this example, even if you’re earning a huge rate of return on that money, after the taxes and the penalty are you even breaking even? That’s why we preach that it’s so important to make your money more efficient and to use and save your money as efficiently as possible so you don’t have to experience that.

That brings us to the second area where you may be giving up control of your money, and that’s how you’re financing major capital purchases. You see whether you finance or a loan or credit card or you’re paying cash, every purchase we make is financed. And the question becomes, how do you use that financing as efficiently as possible? So you come out ahead instead of behind.

What if there was a way so you could be in control of the lump sum and still finance the purchase? The way we do this for our clients and for ourselves is using a specially designed, whole life insurance policy designed for cash accumulation.

And the reason is simple we have complete liquidity use and control of the money. We control the financing function as far as how much we’re paying back towards the policy loans and we are able to earn uninterrupted compounding interest on the money even after we access the policy loan.

So the specially designed life insurance policies accomplish two areas where we’re giving up control of our money.

Number one, where we’re saving our money because now we’re going to be saving it in a place where we have complete liquidity use and control of the money. And number two, we’re going to use that cash value to make the purchases that we need to make, whether it’s paying for our children’s college, going on vacation, buying a car or starting a business.

If you’re interested in learning about how to put a specially designed, whole life insurance policy designed for cash accumulation to work for you and your financial goals, be sure to visit our website at Tier1Capital.com and feel free to schedule your free strategy session today. We’d be happy to chat with you.

If you’d like to learn more about how we put this process to work for our clients, check out our free webinar that does a deep dive on our concept: 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.

How Can My Business Increase its Cash Flow?

Whether you have a service business, distribution business or manufacturing business, your problem remains the same. It’s all about cash flow.

We all know that cash flow is the lifeblood of any business. When cash flow is good, it could feel like your business is doing great. On the other hand, when cash flow is bad, it could feel like your business is falling apart. Cash flow is bad when you have more outgo than inflow. So how do you manage the challenge of daily cash flow?

As a business owner, you know how important it is to use money and credit efficiently so that you can avoid cash flow problems and more importantly, avoid having to make hard choices.

Do you realize that over 74% of businesses either have chronic or cyclical cash flow problems? And this all comes from using cash flow to your detriment. This forces them to either reduce their overhead or increase revenue, increase sales in order to address the cash flow problem. In essence, it puts them in a situation where they have to choose between their business or their family. No business owner should have to make that choice.

Most business owners don’t realize that they have a choice to increase cash flow without increasing revenue and without having to reduce overhead. This is exactly why we’ve developed a process that focuses on how you’re using your money and how to make that cash flow more efficient so that you don’t have to choose between your family and your business. There are no hard choices.

A lot of times when people think about finances, they focus on the product or where their money is parked. But it’s not what you buy that really matters. It’s how you pay for it and how you’re using your cash flow.You see, what you buy is the equivalent of a golf club, but how you pay for it is the equivalent of the golf swing. And we think that you can improve your finances by focusing on how you’re using your money, just as you can improve your golf game by focusing more on how you swing the club and less on the actual club.

Our process focuses on the five major areas of wealth transfer that we all experience to help make your money more efficient. Those five areas include taxes, mortgages, how you’re funding your retirement, how you’re paying for your children’s college education, and how you’re making major capital purchases.

By focusing on these five areas, we’re able to show our clients how to regain control of their money so that they’re giving away less and less of their cash flow. And they’re able to save more and more to accomplish their financial goals. Focusing on these five areas translates into more cash flow for your business, which can be utilized to get you through times when revenue isn’t coming in as quickly as possible or times when overhead is a little higher than usual.

If you’re a business owner and looking to regain control of your finances and your cash flow so you’re able to achieve more of your financial goals, be sure to visit our website at Tier1Capital.com. Feel free to schedule your free strategy session today or if you’d like to learn more about how our process works for our clients, 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.