One of my most frequently asked questions is how many policies should I have and whether is there a benefit to having one big policy versus several smaller policies. When deciding what the best policy for you is, you may be wondering how much premium is too much premium and what is the benefit of having multiple policies working for you.
And the answer is, it depends. It depends on how much income you have, how many assets you want to use or deploy into policies, and whether you have business interests. Do you have a family? How many children do you have? All of these factors weigh into making the proper recommendations for you.
You see, the bottom line is this going into this, it’s all about you. It should never be about the adviser. Unfortunately, we have seen several times where the adviser put their interest in front of the client.
When thinking about how much premium to use, I always ask the client what’s a comfortable number for you. How much can you afford to save on a monthly or annual basis? Using our growth process, we’re able to find the money, money that you’re giving up control of unknowingly and unnecessarily.
But the question still comes back to you, how much of that money do you want to use to get started with this process on your path towards financial freedom? We could never answer that for you because it’s not our money. And you see, that’s one of the keys to having a process where we could actually find additional money for you.
Recently, we worked with a client who said that they could afford to put away about $1,000 per month, and that was great. We set up their initial plan using the $1,000 per month. But in the course of working with our process, we found an additional $1800 per month that was already in their cash flow. It was just being utilized inefficiently.
My response to them was, “Hey, here’s another $1800. What do you want to do with it? Do you want to put it in your lifestyle or do you want to continue to save and add to your program?” Their response was, “Well, it was already in our cash flow. We basically don’t need it for lifestyle. Let’s save it.” The bottom line was we let them know that at any time they could cut that $1800 in half if they wanted to, because of the way we had structured the plan.
So the question remains, how many policies are too many policies? Do I really need more policies? And for me, I have multiple policies because when I got my first policy, I was 22 years old, fresh out of college. I couldn’t afford much premium. However, as I built my income year over year, I was able to put away more and more of my money because my goal is to save 20% of my income. And for me, my policies are a way to do that in a structured way where I don’t have to think about putting money away because it’s automatically deducted from my bank account.
And basically, I was in the same situation. I started off with small policies. And then as time went by, I built larger and larger policies. And I’m saving over 25% of my income. But the bottom line is you have to find a place that’s comfortable for you. And that’s where we could help you,
It’s not enough to say how much can you comfortably afford. The question is really how much can you comfortably afford in good times as well as bad? Another thing to consider is these policies are actuarially designed to get better and better over time.
For example, in the first policy year, you could expect about 50% of that premium deposit to be available in cash value. However, in the fifth year, I could expect, dollar for dollar, once I put that premium in, I’ll have a dollar of cash value that I could leverage against.
Allowing that laddering effect could allow me to have an efficient policy and then build on build on my policies with another policy and allow that one to get efficient as I go along in life.
But see, the bigger question is this: it’s not so much how many policies should you have. It’s really what kind of policy should you have. Should you have extended pay or compressed pay? And that’s where we can help as well.
So here you are, you want to get started with the infinite banking concept so that you can control the financing function in your life, but you’re not sure how many policies you should have or where you should start. Therefore, we created a process that’s client-focused so that we could help you get clarity as to how much you should be starting with and how many policies you should have.
If you’d like to get started with this process, schedule your free strategy session with us today. And remember, it’s not how much money you make, it’s how much money you keep that really matters.
