Whole Life Insurance

How do I protect my money from inflation?

“As long as you keep your money in the whole life insurance policy, your money’s going to grow on a tax deferred basis.”

 

 

Inflation is a rise in prices of goods and services. Inflation reduces the purchasing power of our dollars. The problem is, the longer we hold onto our money, the less it can buy for us. Here’s an example. If you were to go into your backyard and dig a hole and bury $1,000 and leave it there for 10 years and after 10 years you go back and dig it up, what will you have? Well, it’ll be something that looks like a thousand dollars, but at 3% inflation over those 10 years, that $1,000 will actually only have the purchasing power of $744. The problem is not only will you have lost $256 of purchasing power, but you will have lost 10 years of time that you can never recapture. The government is destroying the purchasing power of our dollars every time they print money. Do you think our government will need more money in the future? If our government needs more money, there’s only two ways they can get that money. Number one is taxes. Number two is they can print more money.

There are six ways that whole life insurance can help protect your money against the effects of inflation. The first way is buying dollars for future delivery for pennies. Which means the premium you’re paying is pennies compared to the dollars you’re buying in a death benefit. What better way to protect your net worth than to buy discounted dollars for future delivery?

The second way is that your premium stays the same, but because of inflation over time, it’ll feel like less. For example, if you have a thousand-dollar premium at 3% inflation and 10 years, it’s only going to feel like $744. In this instance, you have inflation working for you rather than against you.

The third way that whole life insurance can help protect your money against the effects of inflation is what we refer to as multiple duty dollars. A lot of times clients will ask us, “Hey, I want to start saving, but I have to pay down my debt first.” We actually show them how to start saving today and how to pay their debt off quicker. How we do that is through whole life insurance. We take $1 that was just going to perform debt reduction and use it to reduce debt, to create an asset, to create a death benefit, to create a disability benefit, to create a long-term care benefit and provide retirement supplement. We took $1, that was previously doing one job, and got it to perform the job of 6 multiple duty dollars.

The fourth way whole life insurance can protect against inflation is dividends. Although dividends aren’t guaranteed, dividends typically increase as the policy matures. That’s an addition to the guaranteed growth within the policy. As interest rates rise in the market, the dividends in the policy typically increase. All other safe money products, as interest rates rise, the value of the product decreases because of the inverse relationship between interest rates and price.

The fifth way that whole life insurance can protect your money against inflation is through collateralization.  The loan feature, your loan against a life insurance policy, is actually a collateralized loan against your cash value. So literally your money could be in two places at once because you’re borrowing against your cash value and getting a separate loan from the insurance company. Our clients have found that this can help them to take advantage of tremendous opportunities that are created when the market crashes because they can borrow against their cash value. When the market is down, they can buy into the market and then sell when the market rises. They can then put the money back into their policy and then use the money the profits gained from that transaction to supplement their income or to buy another policy. Our clients have found this to be a tremendous tool to show them how to take advantage of downturns in the market rather than become victims of market volatility.

The sixth way that whole life insurance can help protect against inflation is taxes. As long as you keep your money in the whole life insurance policy, your money’s going to grow on a tax deferred basis. Additionally, you’re able to access your cash on a tax-favored basis. This is a huge advantage over other financial products.

In summary, life insurance can help protect your money against inflation by reducing or eliminating taxation. It also makes your money more efficient, think multiple duty dollars. Thus putting you in a position to take advantage of market volatility, rather than becoming a victim of market volatility.

 

 

Funding Your Child’s Education

Want to start saving for your child’s future but don’t know where to start? Conventional wisdom tells us to save for college in one account and save for retirement in another. With so many options out there, it can be confusing which one might be right for you and your family. Today’s video covers your basic options for paying for college. The most common ways of paying for college are cash, cash flow, and borrowing/financing. We will give you three great reasons to why you should fund a whole life insurance policy to pay for college!

 

“Additionally, the money that you save in either savings account or 529 accounts are disclosed on the FAFSA form, so you’re actually going to increase the cost of college for your family.”

 

Are you thinking about paying for your children’s college education? The problem with funding your children’s education oftentimes isn’t a problem of funding the actual education. It becomes a question of, how do you fund this huge expenditure that sometimes costs more than your home and still stay on track for your retirement goals. No parent should have to choose between sending their children to college and funding their own retirement.

Conventional wisdom to tells us to save for college in one account and retirement in another account. The problem with that is, it leaves a good chunk of our money inaccessible at the time we need it most. Our process for funding college tuition includes a whole life insurance policy and you may be wondering why on earth would I fund a whole life insurance policy for college tuition and there really are three reasons. Access and control. It’s fast and has continuous compounding of interest. Basically, there’s only three ways you could pay for anything. Cash, cashflow, or borrow. Let’s look at these three ways. The first method of paying for college we’re going to look at is paying cash, whether that’s from a savings account or a 529 plan earmarked for college tuition. In order to pay cash, you have to have saved first, so you will have access to that money and control of that money, but when you pay for college, you’re actually wiping out compounding forever on that money.

Additionally, the money that you save in either savings account or 529 accounts are disclosed on the FAFSA form, so you’re actually going to increase the cost of college for your family. You’re actually being penalized for doing the responsible thing, which is to save for your children’s education. The second method of funding college that we’re going to look at is funding it out of your monthly cashflow, and let’s face it, if you’re fortunate enough to be able to pay out of monthly cashflow, it assumes you have access to that money. However, you’re giving up control of that and with that, you’re forfeiting the ability to ever earn compound interest on that money. The third method of paying for college is to borrow or finance and basically there are only four types of loans you can get for college. First are Stafford loans, they’re in your child’s name, second are parent plus loans. Third, are home equity loans and forth, are life insurance policy loans.

We’re going to discuss why life insurance policy loans as the preferred method of financing your children’s education. Let’s look at parent plus loans. With the parent plus loan, you gain access to someone else’s capital with the collateral of your future income. So, you get money when you need it, when your children are going to college, but you’re giving up control of your current and future cashflow in order to send your child to college. Now it is FAFSA neutral, but because you gave up control, you forfeit the ability to earn interest now and in the future on that cash flow. What you really need to look out for with a parent plus loan is that it kills your ability to save for retirement, not only while your kids are in college, but for about 10 years after that. It really hinders your ability to save for retirement on your own terms. So basically, all you have to show for it is a diploma in your child’s name.

Next, let’s look at a home equity line of credit for paying for college. With that, you have access to the money because you have equity in your house and the ability to repay the loan. But you obviously don’t have control because the bank controls the situation. They can call that loan whenever they want and you’re also forfeiting the ability to earn interest on that cash flow forever. It’s not going to increase the cost of college and you are rebuilding your home equity, so hypothetically you could have access to that money again in the future. Next we’ll look at using life insurance policy loans to pay for college tuition.

Now using insurance policy loans is kind of a hybrid between savings and financing and that the money that you have access to in your policy is the money that you’ve actually saved. However, in contrast to traditional savings account and 529 plans, this money is FAFSA invisible, so it’s not going to go down on your FASFA sheet and it’s not going to increase the cost of your college tuition. Additionally, you’re in control of the borrowing process as opposed to parent plus loans or home equity lines of credit because life insurance policy loans have an unstructured repayment process, meaning that you control the terms and conditions as to when or even if you pay back those loans. Additionally, with life insurance policy loans, you’re not borrowing money from the account. You’re borrowing money against the account so you’re never going to be interrupted in the compounding of interest on that money.

You have access, you have control, you have FAFSA invisible and you’ll have continuous compounding. That’s why we recommend life insurance policy loans to pay for college. That’s why we believe life insurance policy loans are the best way to fund your children’s college education. It allows you to send your children to their dream school without having to reduce your current lifestyle or derail your retirement in order to do so.

How to choose an insurance company for the Infinite Banking Concept.

In this video we break down the important things to consider when choosing an insurance company for the infinite banking concept.

1.) Choose the right agent

2.) The process is much more important than the product

3.) Make sure the company you choose is a mutual insurance company

4.) The company should have a proven track record of paying dividends and sharing profits with policy holders

There are hundreds of thousands of insurance agents out there, but only about 200 are licensed IBC practitioners with the Nelson Nash Institute. “

 

Are you thinking about getting an IBC policy but aren’t sure where to begin? The number one criterion when choosing the right insurance company for the infinite banking concept is to choose the right agent. There are hundreds of thousands of insurance agents out there, but only about 200 are licensed IBC practitioners with the Nelson Nash Institute.

As a licensed practitioner, we’re not only trained to set up and structure a policy, but most importantly, to guide you on how to use your policy throughout your life. It’s important to find someone who’s not only knowledgeable but who’s also implementing this in their own financial life. The last thing you want is someone who’s pitching you a policy but doesn’t believe in the concept enough to put their own skin in the game. Ultimately, your success or failure in any given methodology is going to come down to your execution.

The process is much more important than the product. The next criterion is to make sure you’re dealing with a mutual insurance company. Mutual insurance companies were formed for the benefit of the policy holders. All profits that the insurance company makes are funneled back to the policy holder in the form of tax-free dividends. In contrast, a stock owned insurance company funnels their profits back to their shareholders because they’re the owners of the company.

So, a stock owned insurance company is there for the benefit of the owners of the company, the shareholders. It’s similar to a bank. A bank is there for the benefit of the owners of the bank, the shareholders of the bank. You see, if you want to become your own banker, it’s important not only to control the process of the banking, but also to benefit from the profits of the banking, which can only happen with a mutual insurance company.

The next criterion you want to look for when choosing an insurance company? Does it have a proven track record of paying dividends and sharing profits with policy owners? The companies we choose for our clients have been paying dividends for more than 120 consecutive years. That’s World Wars, depressions, recessions, gas crisis’s, you name it. They’ve been through it all.

In conclusion, these are the criteria we use when choosing an insurance company for the infinite banking concept, but again, the most important thing is choosing the right agent for you. You want somebody who’s going to take the time to understand your situation and then set up a plan that will help you to maximize your benefits from the plan according to your situation.

 

Why use whole life insurance for the infinite banking concept?

If someone can get your money, is it really yours? In today’s video we compiled a list of six reasons why you should use whole life insurance for the infinite banking concept.
1. Control
2. Safety
3. Guaranteed growth
4. Collateral opportunities
5. Tax deferred growth
6. Asset protection

Life insurance is actually designed to have more cash tomorrow than it does today. “

 

 

Have you ever wondered why people use whole life insurance for the infinite banking concept? The first reason is, control. Let’s face it, you can’t regain control unless you’re actually in control. Life insurance is a unilateral contract. What does that mean? Well one party, the insurance company, has a binding obligation. They have to guarantee the cash value, the death benefit, and any other benefits. The other party, the policy owner, has very few promises, which is basically to pay the premium. Once the policy is approved and put into effect, the insurance company is working for you. That is control.

Number two is safety, life insurance companies reserve 95 cents of every dollar that’s deposited and in contrast, banks only reserved 2 cents for every dollar that’s deposited. Based on that, where do you think your money is safer? During the great depression, over 9,000 banks in this country failed. In contrast, less than one half of 1% of all life insurance company assets were impaired. That’s a big deal because people who owned life insurance contracts during that time were not only able to access their cash value to weather the storm, but they were also able to access it to take advantage of opportunities that arose during that time.

One of the best examples of this is JC penny, the American retailer. He had over 1400 stores before the great depression and he actually borrowed against his life insurance to keep his business open and weather that storm. This takes us to our third reason. Guaranteed growth. Life insurance is actually designed to have more cash tomorrow than it does today. There’s no chance for market loss because your growth is guaranteed. Your money is allowed to continuously compound. This takes us to our fourth reason. Collateral opportunities. What does that mean? Collateralization is important because it allows you to access your money without interrupting compounding. It’s like your money could be in two places at one time.

Collateralization means that your money is always in your policy and if you want to access it, the insurance company gives you a separate loan and puts a lien against your money, your cash value. When the loan is paid off, the lien is released, and your money is exactly where it would have been had you not borrowed. In essence, your money has been able to achieve continuously uninterrupted compounding.

Number five is, tax deferred growth. Money grows in your policy on a tax deferred basis. Keep in mind that doesn’t mean that it grows tax free, but you can access it on a tax favored basis. The point is you can’t accumulate wealth in a taxable environment. Let me give you an example. If you start off with a dollar and that dollar doubles every year for 20 consecutive years, meaning that you earn 100% interest each and every year for 20 consecutive years, at the end of 20 years, your dollar would’ve grown to $1,048,576 however, you didn’t pay tax on that money. If you had to pay tax in a 25% tax bracket, how much do you think you would be left with after tax?

Well, 25% of 1 million is 250,000 so I think we’d be left with about $750,000.
The reality is you would end up with $72,571, but what happened to the rest of the money? Well, it was never there. Your money was never allowed to double. You were never allowed to earn 100% interest because you had to pay taxes each and every year along the way. That’s why you end up with less money in a taxable environment.

Number six is, asset protection. Life insurance is protected from creditors, predators, and legislators. Life insurance is regulated by the 50 States. Each state has different levels of asset protection. Check with your state to see how much protection you have on your policies, but let’s face it, if somebody can get your money, is it really yours?

Let’s recap the six reasons why we use whole life for infinite banking. Number one, control; two, safety; three, guaranteed growth; four, collateral opportunities; Five, tax deferred growth and six, is asset protection. My mentor, Nelson Nash, author of the bestselling book Becoming Your Own Banker, said it best. Wealth has to reside somewhere. What better place than a whole life insurance policy? A free contract between free people!

What are the benefits of whole life insurance?

What are the benefits of whole life insurance? In this video, we explain whole life insurance benefits and why they are essential in any diversified portfolio. A benefit of whole life insurance is that your money is continuously being compounded. There are three known factors that could interrupt compound interest, using your money, taxes, and market losses. We break these down for you and explain why whole life insurance takes them out of the equation. Another added benefit is that whole life insurance also protects you against inflation. When you own a whole life insurance policy, you’re allowing yourself to take risks in other investments!

“To call whole life insurance an investment is actually demeaning to whole life insurance.”

 

 

Have you ever wondered what the benefits of whole life insurance are? The number one reason why whole life insurance should be a part of your portfolio is because of efficiency. When we’re talking about efficiency, in this case, we’re talking about the fact that your money is continuously compounding in a whole life insurance policy. There are three things that could really interrupt the compounding of interest on your money.

The first, is using your money, then taxes and then market losses. So how does using your money interrupt compounding? Well basically you save and then you use the money to buy a car, or to make a down payment on a house, or to pay for a vacation or to pay for college, and then once you access that money, it’s no longer available for compounding. In contrast, when you take a loan against your life insurance policy, you’re able to continuously compound because you’re taking a loan against the cash value. You’re not taking the money from your life insurance policy.

The second factor that could interrupt compounding on your money are taxes. When you think about it, with traditional savings and investment accounts, you get a 1099 or a dividend statement and with mutual funds you could actually get a 1099 or a capital gain statement in a year when you lost money. Overall, it’s sort of like adding insult to injury and a lot of people don’t even realize how inefficient this really is because they’re paying their taxes from their lifestyle. They’re not taking money from their investments or savings, so they never have an opportunity to see the eroding effect that taxes are having on their investments and savings. The bottom line is, you cannot accumulate wealth in a taxable environment.

The third factor that can interrupt compound interest are, market losses. When you lose money in the market, you take a step backwards and need to restart the compound interest process. Again, with whole life insurance, you have contractual growth, which means that the growth is guaranteed by contract in the policy. On top of that, you have the ability to earn dividends and once dividends are paid, that could never be taken away. In conclusion, whole life insurance is efficient because it takes the three factors that could interrupt compound interest out of the equation.

The next benefit of owning whole life insurance is protection against inflation. Inflation is known as the stealth tax. You experience it but you never actually see it and what better way to protect yourself against the stealth tax than to purchase dollars in the future with pennies today. Use those pennies, the cash value in the life insurance, to purchase additional income producing assets. Life insurance is known as an asset because you’re able to maintain the death benefit, but also access the cash value along the way to purchase other investments and assets. When you get to retirement, you can use those additional assets to supplement your income and finally, you can leverage the death benefit in retirement to generate some additional passive tax-free income. Whole life insurance is a way to truly diversify your portfolio. True diversification is putting money you don’t want to lose in a place that you could never lose.

In conclusion, whole life insurance compliments your other assets. By owning a whole life insurance policy, you’re allowed to take risk in other investments, but understand life insurance is not an investment. To call whole life insurance an investment is actually demeaning to whole life insurance. This is because whole life insurance can do so much more than an investment.