The following is a transcript from our webinar titled
Using the Infinite Banking Concept for Estate Planning [Asset Protection and Tax Benefits]
The primary focus of this webinar deals with estate planning best practices and how infinite banking can help you accomplish three primary estate planning goals: Asset Protection, Tax Protection, and Legacy Creation. You can watch the video below and read the transcript at your convenience.
Steve:
All right, well, thanks for joining us today for an exciting webinar. Really glad to have you guys on board. I think it’s going to be a rewarding time for you. I’m Steve Gibbs with Insurance and Estates, and I’m happy to be here with Barry Brooksby and we’re going to be tag teaming on this webinar today because we want to be bringing two very important concerns together to help you think about these areas in a new way. So to think about your estate planning and everything that goes along with that. And some of you may not even have a good working definition yet of estate planning. We’re going to give you that. And we want to also then segue into how we can make a regular estate planning approach even better by using something that, Barry, you want to introduce that aspect of this?
Barry:
Yeah, it’s infinite banking. And the infinite banking concept, what we do is we structure a insurance policy for you, but we focus on the cash value growth. So when people hear insurance, right off the bat they have some concern or some beliefs around that. But I want you to think about these four things primarily. One is guaranteed growth, two is access to liquid cash, three is protection, meaning that money and death benefit are protected from creditors, bankruptcy, lawsuits in most states, and finally, my favorite, tax-free use of money. Those four benefits, if you like those, you want those in your financial plan, we’re going to dive into the details of how you can get those.
Steve:
Awesome. Well, I hope you guys were listening there because Barry revealed a little bit of the secret that we’re going to reveal as we go through this webinar. But Barry’s talking about some of those advantages or actually some of the secret planning aspects that I know you guys will get excited about. So diving in, we want to talk about your sense of safety and predictability. And the reason this is all important is because we’re all vulnerable to changing life circumstances and we like to avoid difficult topics like this, and yet we all need to be intentional about protecting ourselves and our loved ones, our families. And we also all want to do something important, most of us do anyway. So we want to create a way to do that, a starting point for that. And that’s why this is so important. Everything that Barry just said goes and supports that in a powerful way. And so we’re going to dive into that about halfway through this webinar.
But before we get into that side of it, we’re just going to talk about, first, we’re going to introduce ourselves a little more and we’re going to talk about estate planning and set the stage for why, what Barry just mentioned, the tax advantages in these things are so powerful when it comes to estate planning. So this is just me. Why I started Insurance and Estates in partnership with some other estate planning professionals is to do exactly what we’re setting out to do in this webinar. And that’s really to help promote some sound life insurance strategies that are not often talked about in the context of estate planning. So I’ve been an estate planner and estate planning attorney and worked in a lot of different strategies. And so this is just a great life’s venture for me to bring the life insurance strategies into the estate planning sphere. But we still want you to know about basic estate planning as well because it’s so important for you and your loved ones. Barry is focusing on his expertise here. And Barry, I don’t know if you’d like to introduce yourself?
Barry:
Sure, yeah. I’m the founder of Focus Wealth Group, Utah based financial company. I’ve been in the industry 20 years, I’ve co-authored several books. One of those, my favorite is Tax-Free Money for Long-Term Care!. I speak nationally. I have clients all throughout the country. I am an infinite banking practitioner and that is my expertise. I reside here in St. George, Utah with my wife and five kids. I love what I do and am very passionate about our topics today and hope you’ll find great value in what we go through, Steve and I.
Steve:
Yeah Barry, and you always do something at the beginning of your webinars and I think it’s very good, you offer some ground rules kind of for people.
Barry:
Yep. Our goal obviously is to create a ton of value for you on the webinar today. But before we move forward, I call it housekeeping, the ground rule Steve’s referring to. So number one, shut down your cell phone, get rid of Facebook, be very engaged with the webinar today because what you learn can be life changing. So we want to make sure that you’re focused, so get rid of any distractions that you have, shut things off and really focus. I would even encourage you to take some notes as we go through the webinar for things that are important to you, like, hey, I want more information on that or you find principle that we talk about in the financial world that you’re excited about. Write those things down and write your questions down.
Steve:
Awesome, Barry. Thank you sir. Let’s roll. So we live in an uncertain world. I borrowed some of this from Barry actually in trying to merge our topics. And Barry, you’ve talked a lot about the financial markets and how uncertain the financial landscape is for people.
Barry:
When you look at the charts, Dow Jones, S&P 500, the instability is everywhere. You see the lines go up and down, losses and gains, and that’s a big issue. And so we’re talking about planning today that helps us really have more guarantees in our life. But predictability, that’s what we want is predictability. But Steve, you’re right, there’s so much uncertainty out there. We don’t know what the future holds.
Steve:
And I kind of jumped off of that, that you’ve got the financial markets, which is what you mentioned, but also uncertainties in the banking system, the retirement system, you mentioned the inventor of the 401K has expressed a lot of concerns that it’s gone awry.
Barry:
Ted Benna, founder of the 401K, he has stated he’s created a monster because Wall Street has taken it and is using it across the United States in ways that he never imagined and potentially hurting a lot of people. He does what we’re going to talk about today and has felt really frustrated by how the 401K system has been put in place.
Steve:
And we do talk about that a lot on Insurance and Estates and questioning some of the 401K decision making that’s out there. But we’ll dive into some of that and maybe some alternatives. And of course, government debt and the job markets and all these things play into creating a level of predictability, which Barry just mentioned, over the things in our life. And of course, I put this little quote by Jack Canfield here. We’re obviously as financial people and planners, we’re going to focus on the financial decisions side of it and on the legal decisions as well, to an extent. We all need to try to create a little more predictability because things can be so unnerving and uncertain.
In this webinar, just in talking about predictability, we’re going to talk about how you can bring that to your estate plan with some simple steps. Your estate plan is going to be what kind of plan do you have for your legacy and your loved ones? Do you have any plan whatsoever? If you’ve worked hard to create a nest egg or to create a good job, good income, wherever you’re at, you want to have a plan that can support that and help you build upon that. We also want to talk about a powerful secret asset, which Barry gave you some hints on, and he’s going to talk in depth about what that secret asset is and how that asset can increase predictability. So let’s say that you have the most amazing estate plan. This will take that amazing estate plan and bring it to the next level and lessen the uncertainty that you would otherwise have working with traditional kinds of assets, financial assets in particular, and then how the secret asset can expedite growing your wealth through tax advantages and leverage, which Barry’s going to dive into. So we’re going to cover these areas.
First is just legal planning, and I want to give you guys a framework for what you need to know before hiring your estate planning lawyer. Because I’m not licensed in all 50 states, don’t take this as legal advice that pertains to your state, but take this as a general course, a crash course on the kinds of things that you should know about estate planning before you go and hire somebody so that you can be in the driver’s seat on it. We want you in the driver’s seat on your documents, and we want you in the driver’s seat on your life insurance by the time you get done with this webinar.
All right, so documents that are poorly designed, they may be no good and create less predictability because they leave questions. So we want to make sure you get the right kinds of documents protecting you and your loved ones.
We always offer stories and you can see from my little spiel, I’ve worked with probably thousands of people actually in the state of Florida at this point because I had a practice there for many years. And so the kinds of circumstances that unfold where people have, in the case of this gentleman, he had adult children from a prior relationship, so did his spouse. They purchased property together and they wanted to give it equally to their two sets of heirs. And yet if either of them would’ve passed, the survivor of them would’ve inherited the property. And so the other set of heirs would’ve been cut out.
And so we had to do a simple document, but it was a very targeted document just to make sure that both their heirs would end up with a little piece of that property. And in that case, we were able to do that shortly before the gentleman passed away and avoided some huge problems. So point being the documents matter. We think that we’re different at Insurance and Estates and in this way that we can coach people on this stuff and say it in plain language so that you guys know how to direct your experts and your plan.
So the point of all estate planning is to create predictability, legal predictability, legal documents, tools that have enough flexibility to handle the unexpected and yet have enough clarity so they’re not confusing. And so you need these tools and building blocks. Each one has a different purpose.
You want to create areas of certainty and predictability so you don’t have the court have to get involved. And you want to create plans for these different areas. And I just wanted to touch on them. My point here with you guys is to touch on, and if you guys got the ebook on estate planning, you’re going to know some of this already. So I’m really doing an overview to make sure that I’m filling in the blanks. You need a plan to limit court involvement. You need to plan to handle long-term medical care costs, z plan for disability. A plan for wealth transfer and limiting taxes, which Barry will address some of that. And to minimize risk by maximizing available asset protection. And depending on your state’s laws, you’re going to have more or less asset protection. And life insurance is an area that you might either have more asset protection, or possibly less depending on your state. And so that’ll be something that we’ll just continue to talk about as we unfold some of these strategies.
Probate. One of the things that’s great about life insurance by the way, is that you have a death benefit that goes to your loved ones. And sometimes that’s the last thing we talk about because these strategies don’t always think of that, but it’s an important part of the picture, right, Barry?
Barry:
Massively.
Steve:
And as a long time life insurance pro, I’m sure Barry’s given quite a few beneficiary checks to people that lost loved ones and probably felt great doing it.
Barry:
Yeah, and it’s tax-free that we’re going to get into later. But such peace of mind and predictability.
Steve:
And avoiding probate court is a part of that. The death benefit on life insurance doesn’t have to go through probate, so you don’t have the huge costs and you have the public process and complications and long time and all this stuff. So your plan, that includes life insurance, but also the documents that you have shall be designed around avoiding probate.
Proper trust planning is another area where you can avoid probate and having names of transfer on death on your accounts jointly titling assets and then of course beneficiaries on your life insurance and other products. And I know we’re talking life insurance a lot, but we’re going to segue into the other side of life insurance later.
Why plan for disability? Because it’s a major issue. Hospital costs and privacy laws and the healthcare system and all these things. So you need a plan for these areas as well with the proper documents and have the proper nest egg set up to cover these kinds of costs as well. One amazing thing about a lot of permanent life insurance now is there’s long-term care and chronic care riders that attach to a lot of these policies. So that’s something that I know Barry deals with a lot.
Barry:
And Steve, another thing to consider, statistically today, 70% of people over the age of 65 are going to need some type of long-term care. And the question I often ask is, how are you going to pay for it? So this webinar will help people get settled on that.
Steve:
Awesome. And I know you’ve got a lot of experience and knowledge coaching people on the long-term care side of the equation.
All right, so legal tools, I mean in addition to your coverage and your nest egg, you need your documents. Okay? So healthcare power, living will, guardianship, trust planning. If you own a business, you’ve got especially complicated issues that can arise. Who runs the business if you can’t run it, these kinds of things. And so you need to have both a legal plan and a financial plan that goes together to cover that. And a lot of buy-sell agreements, use insurance as a way to fund a buyout of a company. And so all of these things.
Basically one of the hardest things in your shoes as a consumer, I’m confident of this, is that knowing what questions to ask your experts. And so these are the questions. These aren’t really the answers, they’re the questions, how do I properly protect my business if something happens to me? How do I make sure my trust is solid? How do I appoint guardians in healthcare care, people that take care of my needs and how do I know my power of attorney’s good? Powers of attorney are one of those areas that is something that’s completely reinventing itself every few years in many states, it seems like. We just had them rewritten, had some big changes to notary requirements in Florida. And so these things can be rewritten. So you just need to make sure you know that yours is taken care of, enforceable, and that you do those reviews as well.
So Barry mentioned this, that long-term medical, the statistics related to that and you guys can look if you want to take down some links and things like that and you can do your own research as well. There are many statistics out there about long-term medical care costs that you guys need to consider as part of the plan.
In addition, there’s a few ways to pay for long-term care. Long-term care insurance or coverage as part of life insurance is probably the most flexible and easy one to use. Self-pay is typically not recommended. And government benefits are very difficult. You have to basically spend down all of your assets or be severely limited in order to qualify oftentimes.
All right, this one we’re starting to get into some of the financial concerns, some of the reason that you might want to think about your own ability to be your own banker. I’ll just put that out there as a clue, something we might talk about. And it’s because you want to have the ability to draw from a reserve when things happen both for yourself and also your loved ones. Family business owners, this is huge. We could talk about the Joe Robbie situation. That’s a big example of an underfunded state that didn’t use life insurance the way they should have that one, you can Google that. But basically the entire Dolphins team and stadium had to be sold at what the lawyers referred to as a fire sale because there wasn’t enough cash in the estate to pay the aggrieved spouse and continue to operate the team.
So that was a famous case. And then if some life insurance has been involved in some other kinds of planning done, that scenario wouldn’t have had to happen the way that it did. So that’s just an example of fire sale emergencies. And when you’re deliberate in some of the strategies that Barry’s going to talk about, that can really prevent having fire sales and crazy things happening upon the death of one of the principle providers.
And again, you need your documents, you need the operating agreements and buy-sells and you need your powers of attorney. And you also have to have liquid funds. And there’s a lot of different things that can be done if you’re talking to experts on the front end. So these are all things that can be considered.
The other thing is that we need to have asset protection. So in addition to wealth transfer, long-term care, which we just covered, you also want to think about if I’m sued, what happens? And this is where you want to focus, and I was just actually in a long call this morning with a gentleman that was asking me all about asset protection and talking about things like your family home, talking about your investment accounts, you’re talking about other kinds of assets, that whether they’re protected or not. This gentleman asked about annuities, he asked about life insurance. And depending on your state, you could have a lot of substantial protection.
And this is something that a lot of financial people never really want to talk about. And they want to push you into certain assets oftentimes that have absolutely no asset protection. So just something to really ponder that if you’re being pushed toward a brokerage account of some kind, a mutual fund, the only way that you can have any asset protection in those is if they’re qualified, like in an IRA, then they do have some, but then there’s other restrictions that sort of gum up the works on that.
But we are in litigious society. Setting the stage for why do we want asset protected assets? Why do we want to have categories of assets that are shielded from creditors? And the secret asset that Barry’s going to really dive into is one of those assets that’s got state statutory protection around it that may be, to a larger or lesser extent depending on state laws, but most states have some level of protection there.
All right, so you want to include it in your plan, you want to use your trusts, you want to use LLCs and corporations, you want to become familiar with your state’s asset protection laws and you want to maximize assets that have protection. That might mean, especially for folks getting older, that you would want to convert some assets to asset protection types of vehicles. And Barry, you have any thought about that? You see people with large amounts of cash not protected?
Barry:
Yeah, and what’s interesting is using this secret tool we’re going to talk about, when they implement that strategy, they’re actually able to leave more money to their loved ones than had they just sat on the cash. So not only are they protecting the cash, but they’re making their pile of assets even larger to propel that legacy further.
Steve:
That’s powerful too. And I get excited when I hear you say that. And when I think about that and how these strategies work in my own life and for others, the gentleman I was speaking to today was asking about purchasing a large homestead property and then using the equity for if he needs extra money. And I often equate that, I did discuss the issue with him that you can do the same thing with a strategically designed cash value policy that’s more flexible. So taking that, in other words, putting cash into an asset and then converting it. And that’s kind of what you’re getting at, right, Barry?
Barry:
Yeah.
Steve:
So we’ll jump into that a little bit more. Again, we’re giving you guys clues, but key is cash unprotected, other kinds of assets protected. Using those other assets, leveraging them can create all kinds of advantages.
All right, and this is just reiterating that these different products have asset protection based on state laws. And some of it’s federal law as well.
All right, this is a link on Insurance and Estates, and this is life insurance protection breakdown state by state. So you could actually get a picture here if you guys want to copy this or whatever you want to do. This is a way to just verify what we’re seeing, but also see state by state how much life insurance cash value is protected in your home state.
So this is a summary of secret number one. Secret number one is all about doing the proper kinds of planning and having the proper kinds of assets. So we talked about your family trust and your heirs, and this is an asset protection little bubble right here on the bottom under heirs and dynasty. Notice on the left you have all of these different assets that are asset protected under the laws. And then you have your homestead there on the bottom. And then you may have real estate investments in LLCs, and we didn’t even touch that one yet, but Barry does a lot with real estate and investors as well, and I’m sure can speak to that at some point. And there’s ways to hold real estate investment in LLCs and also to fund real estate investments, which is another part of the strategy.
We live in an uncertain world. We live in an unpredictable world. We’re creating predictability. Does a 401K offer a predictable retirement plan? We talked about that. The banking system, Wall Street.
Who bears the risk of all this uncertainty on the financial side? So what we’re doing right now is we’re segueing over to the financial side. And so Barry, you probably start talking more and you’re certainly welcome to jump in at any point, but Barry, who bears the risk of market-based investments?
Barry:
Yeah, it all comes down to the investor. And some of the slides you had shown just prior, when we see trouble with 401Ks and these types of qualified plans, the burden is on the investor and there’s no guarantees. That’s the word you’re going to hear me talk about over and over again is guarantees. When you’re in a market-based investment, 401K and IRA, mutual fund, stocks, there are no guarantees. And sure you can put money there, but if you’re looking at your future and you want predictability, you have to have some guarantees in your financial plan. It’s just, you have to. If you want peace of mind and predictability, the guarantees have to be there.
And so what we’re referring to is the risk falls on the investor. And there are so many articles out there, whether it’s the one we’re looking at now or Forbes, DALBAR, Bloomberg, you’ll see a lot of stories, 60 Minutes, Frontline where they’re talking about this, we as investors have the brunt of the risk, if not all the risk. And as you’re thinking about, well, this is what my CPA told me to do, or this is what everyone’s doing, this following the crowd mentality comes with some problems. And what I tell people is first off, you should really be investing in where you know, what you know or invest in places that are guaranteed and predictable. And I’ll get more into that in a little bit.
And the next slide might be bidding with who are other people that are following the secret strategy and using the secret strategy, the names here and what do they have in common? They are all using, and we’ll go to the next slide as well, more social proof if you will, but they’re all using permanent cash value insurance. When you look at the banks, Wells Fargo, US Bank, JPMorgan Chase, they use cash value insurance as tier one capital. Now they’ll never tell you about it. This is called bank owned life insurance. They don’t tell you about it because they prefer to sell their clients the brokerage accounts and the IRAs, because they earn the fees, it’s much more lucrative for them to be managing money for 20, 30, 40, 50 years of someone’s life to earn the fees.
But what’s so ironic is what do they do with their own money? They purchase cash value life insurance. And the acronym BOLI, bank-owned life insurance. Corporations do the same thing, that’s the acronym we saw there, COLI, corporate-owned life insurance with a lot of these companies. Nike, Disney. Matter of fact, stories are told by Walt Disney and JCPenney, when they couldn’t get loans from the bank, they actually use their own cash value insurance policy. It’s pretty remarkable that Disney is huge as Disney is today, that that company was started by Walt with a cash value insurance policy.
Steve:
Yep, it is. And we just saw the Ray Kroc story was one that was recently put out there as well, and I think the deal with him is he borrowed as well from his policy assets. I don’t think they got into it too much in the movie.
Just to give people the perspective, I threw this in here because somebody about 10 years ago, it wasn’t Barry, it was another colleague had sort of unveiled this idea of this. So guys, just so you know, this is not a pie in the sky thing. This was something that, as an estate planner, I was somewhat astonished, realized that you could use a cash value life insurance vehicle like this in the way that Barry is talking about. And that you’re using it in a very unconventional way. So if you went and asked 10 life insurance agents, Barry, about the strategy, how many do you think that would actually know what the person was talking about and be able to respond in a coherent way?
Barry:
Well probably zero, but if we had to break it down, it’s probably less than 5% of advisors. So a half of an advisor would know about that in that 10 scenario, but most don’t. Some have heard of it, many don’t know how to structure it and frankly they don’t want to because it actually reduces their commissions because more cash is going into a policy for a client. And I’ll get into some of that later, but most advisors, insurance agents do not understand the structure or the strategy.
Steve:
And I think we’re going to get into that. You’re going to get into it. It’s a uniquely devised strategy using cash value life insurance. When I discovered it, there’s sort of this old and limited life insurance model and people think that permanent or cash value life insurance is expensive because it’s all focused on the death benefit.
And so I got introduced to a different idea, and I’m going to let you unveil that, but to suffice to say for this page, just so people know what I’m talking about, a different approach helps build cash value quickly and makes the changes the cost of insurance and these kind of things and be able to put more cash in the policy. I realized it’s so powerful that the IRS stepped in, they did many things in the eighties and limited how much could be added to a policy. So it changed my view and drove me to connect with experts like Barry. And I was introduced to this book. Barry’s been a practitioner in this area for a long time. So Barry, you want to kick that off and talk about Nelson and what the book introduced?
Barry:
Yeah, very good. Nelson wrote the book, Becoming Your Own Banker, in the eighties and whole life insurance has been around for over 200 years. But he was himself going through a financial struggle when he discovered that, wait a second, I have a cash value whole life policy. I can use some of this money, be my own bank and take care of my financial trouble. And it was that experience that he had, which was a negative experience, but it allowed him then to propel and move forward to see how the policies really work when it comes to policy loans and establishing this idea of becoming your own bank.
When he wrote the book in the eighties, he was very clear about how these policies needed to be designed. The policies have to be with a participating dividend paying mutual whole life company. Now there’s a big myth out there right now that you can do this same thing with an indexed universal life policy or a universal life. And that isn’t true. There’s some reasons you can’t because of the increasing insurance costs and other things we won’t get into. But the correct structure is with a mutual whole life policy. The policy must be properly structured, which means we minimize the death benefit and we maximize the cash value. That’s the goal. So the insurance cost is very low. And with a whole life policy, there are no increasing insurance costs for that base premium of the whole life policy. So you don’t have to worry, 30 years from now, is my policy going to blow up because I’ve got to pay higher premiums and if I don’t, it’s going to go away? That does not exist in a whole life policy.
Steve:
And it could be an issue with a universal policy. Is that what you’ve experienced here?
Barry:
Correct. And I’ve had people come to me with policies that they’ve had, index universal life or universal life for years, they’re saying, “Why is my premium going up and my cash value going down?” And I have to explain to them about increasing insurance costs. They become clients, we fix the problem and they’re great moving forward. But I’ve seen a lot of that.
Now with infinite banking on the next slide, there’s a lot of different names for infinite banking, bank on yourself, the 702j account, LIRP, cash flow banking, these are all names that mean the same thing. It’s all infinite banking. It doesn’t mean however, that if you choose one of these, that it’s going to be structured correctly. So I just want to emphasize this because I’ve had people meet with me and they’ve been like, “All right, I’m going to set this up with my local State Farm guy. I’m going to set this up with my local Allstate guy.” It doesn’t work. You have to be with the right company in order for it to work. And so they come back to me and we’ve got to fix the problem, but they’ve wasted time and money in trying to do it themselves and working with someone in their local market.
Steve:
So you need competent advice. Somebody that knows infinite banking?
Barry:
That’s right.
Steve:
All right.
Barry:
Has done it and uses it themselves.
Steve:
Wrong company, wrong policy design, wrong coaching, right? So definitely. And we’ve seen that a lot, Barry, as well. And we get people asking about the strategy with all kinds of different types of policy, even variable life insurance and stuff. And we’re not going to dive into the different types, guys, too much right now, but understanding the difference between a whole life policy, which is kind of the bedrock of the life insurance industry and the longstanding guaranteed type and Barry will get into that more. And then over the years, other types evolved like term, which is basically temporary insurance, or universal, which even though it seems very attractive to many, it does shift the risk back to the consumer. It’s common knowledge that universal policies do that. So something to be aware of, guys, not only in infinite banking, but just in general when you’re shopping your life insurance.
Barry:
Great point.
Steve:
Yeah. So okay, essentials for infinite banking. Barry, this is where you shine. I know you like to quote Kiyosaki and paying yourself first, and we’re big on that as well.
Barry:
One of my favorite books out there, Rich Dad Poor Dad that Robert wrote is full of financial principles. I highly recommend that you read the book if you haven’t read the book. And one of those financial principles that Robert talks about is paying yourself first. You’re more important than the utility company or the cell phone company. Pay yourself first and set money aside for your future. And where you should be setting that money aside is permanent life insurance that is structured correctly because of the guarantees and the predictability.
So when I talk to a client, the first thing I’m talking about is the dollar amount that you want to put into a policy. You’re paying yourself first. This is where this money’s going. And the idea is put as much as you can in, you want to sleep well at night, so don’t have a premium that’s going to cause you to lose sleep, but a comfortable amount. And know that that money will always be there. It’s going to grow for you, guaranteed for the rest of your life. But your policy should be properly structured.
So we’ve emphasized this a little bit that most whole life policies out there are mainly focused on the base premium, that your life insurance agent or financial advisor will take your entire premium amount and only purchase base premium, which is all death benefit. There’s no cash value in the first year. Very little cash value in the early years, and it takes 16, 17, 18, 20 plus years for you to see significant cash value growth. Long time to grow.
Steve:
High commission products too, right, Barry?
Barry:
Yeah, because speaking very candidly, I’m open about this with all my clients. How are we compensated? We’re compensated from a commission from the insurance company and it’s on the base premium. So if an agent is selling you a very high base premium policy with no additional cash value growth or riders, they’re making a large commission. And frankly, that’s why they like to sell it. The death benefit’s nice, but for most people, they’re not going to see any living benefits from that. They have to wait to die and then their family gets the death benefit. And I’m not saying you wouldn’t ever do this. There are cases with an estate plan specifically where someone wants to cover taxes or they want to leave a very large legacy to heirs more so than they have, base premium could be the way to go. But for what we’re talking about today relative to the secret in infinite banking, we want the base premium low.
Steve:
Yep, that’s a good point, Barry. And whenever we’re talking about this stuff, guys, there’s different scenarios for different insurance and we just want you to have a full picture. And so today’s strategy, of course, is talking about how to empower your wealth building and to secure your estate predictability through the secret asset. So there’s certainly cases where you might need a large death benefit. So that’s something to keep in mind.
So diving in infinite banking policy design, how’s that different?
Barry:
The way it’s different, Steve, is the paid up additions rider that you have in the rectangle there, this is what sets an infinite banking policy apart from every other type of life insurance policy out there. The paid up additions rider is a way to stuff more cash into a policy. So if your base premium is $1,000 a month or $10,000 a month, instead of having all that money go into the base premium, we want to see the majority of it 50%, 60%, 70%, 80% of the premium going into paid up additions. Now what’s happening, because the paid up additions rider is a part of the policy, that equals cash value, we’re maximizing the cash value growth, more cash value accumulation, and we minimize the death benefit. That’s the focus.
Now on the next slide, this is really important. I get this question all the time. Well, Barry, what’s the limit? Until you set up a policy and it’s actually in force, there is no limit. I have clients putting in over $100,000 a year into these policies and more, there is no limit. However, once a policy is in force, the policy now has a MEC limit. And that MEC line we don’t want to cross. We keep everything just right to the MEC line or under it because that allows for the cash value growth to be tax-free. Now we have to say tax deferred, but it is tax-free. As long as you keep the policy in force until you pass away and you either take withdrawals or policy loans, all that growth does come to you tax-free. So there’s a little disclaimer, but it is tax-free if it’s done correctly, and I teach you how to do it correctly.
If you cross the MEC limit, now the growth of the cash value is taxable. There is one scenario usually that we will allow a MEC policy, and that is if someone wants to stuff a large amount of premium into a policy in the very first year and then never make another premium payment thereafter, that is an automatic MEC. But there are places to use that, and it works incredibly well. For our purposes today with infinite banking, we’re going to stay under the MEC limit and over fund the paid up additions as much as possible.
Steve:
Good stuff. And the reason for that, right, we just touched on it and I’m always notorious to mention it, is just there’s limits because the IRS doesn’t want you get too much tax advantage from putting money into a policy, I would say. That would appear to be the logic anyway.
Barry:
Yeah, and if you think about it, they know it’s good. The IRS knows this is a good strategy. They’ve basically validated it by saying, we know it’s good. There has to be a limit because of how good it is. So that can give clients a boost of confidence in setting these up in their own plan.
Steve:
Awesome. So Barry, when I started learning about infinite banking years ago, one of the things that got me most excited was just seeing how the numbers can work in action. So I think why not dive into that as an example and let you roll on that? And of course, guys, these are only examples. These are what a typical projected policy can look like, both on the guaranteed and non-guaranteed sides. Barry put this together actually, and we brought it for this and so I’ll let you explain it.
Barry:
Excellent. The first thing I’ll point out is the guaranteed column of numbers and the non-guaranteed column of numbers. Remember earlier we said we use mutual life insurance companies that pay a dividend. So every year these companies pay a dividend back to us as policy holders and we reinvest that dividend back into the policy. There are some other options for the dividend, but you reinvest dividends back into the policy for even greater compounding growth. The reason for the guaranteed column, when we look at the PUA cash value under the guaranteed column with the green circle and the green arrow going down, that does not include a dividend.
I don’t think it’s really a fair analysis, but every state requires it, their insurance department requires a guaranteed column. What would happen if a dividend never was paid? The reason I don’t think it’s fair is because we work with mutual insurance companies that have all been in business for over 140 years. They’ve paid dividends every year. We believe they’re going to continue to pay a dividend. Therefore, the non-guaranteed total net cash value there with the blue circle is more accurate. That includes the dividend. The reason non-guaranteed is because the dividend isn’t guaranteed. We don’t know what the dividend is going to be, but there is a guaranteed rate and then the dividend is paid in addition to that. Did you want to make a comment about that, Steve?
Steve:
Well, I just think it’s exciting because if you guys, for those of you listening, have done a fair amount of research, if you look at a lot of comparison between whole life and say a financial product, they’re usually going to give you life insurance on its worst day and the financial product on its best, so to speak. And so I don’t know if you have thoughts about that, Barry? But that’s kind what you’re saying, right, when you’re talking about how conservative these numbers can be?
Barry:
Yeah, because the insurance company is using their dividend today. They’re not doing a 20-year look back that you see done in an index fund where they’re saying, “Hey, for the last 20 years, the S&P 500 has done this, therefore this is how we’re going to project things forward. And that’s actually how an index universal life works, it’s kind of unfortunate. But yeah, great point.
And what you notice about this policy in the very first year under that blue circle total net cash value is there’s over $8,700 of cash available, $12,000 premium, which is $1,000 a month, and over $8,700 of that is immediately available. In a typical whole life policy that’s all base premium, that number would be zero. But because we’re over funding with a paid up additions rider, the majority of that premium goes directly to cash. And clients will say, “Well, how soon can I access that?” With most companies, you can access that cash value 30 days after your policy started. Very quickly. And by the way, if this person passed away in year one and they’ve paid 12,000 in premium, their beneficiaries truly would get a $710,000 death benefit, which you see on the far right.
And I’m going to say something about that just real quick. If you look up top where it says full pay base death benefit, $260,000, and then it says one year term insurance of $450,000. To keep costs low, this client isn’t purchasing $710,000 death benefit of whole life. They’re only purchasing $260,000 of whole life. We add a term rider to raise the MEC limit. So I want to bring that out because there are ways to enhance the policy’s cash value growth, and minimizing the cost. And that’s the structure we’ve used today.
As you go down that column of total net cash value, you look at the green arrow in say the 15th year, well, we use the 16th year because there’s a green check mark there. $12,000 a year of premiums has been paid and there’s $250,000 of cash value. Again, it’s all liquid. They can use the money throughout their life for their own banking purposes, to invest back in business to buy cars, to buy equipment for their business. They can buy real estate, use it for a down payment or buy the real estate outright. All that money is liquid.
Steve:
Nice. Yep. Fantastic. So a few more little pieces of the puzzle here.
Barry:
Yeah, this is the second page of what we just saw, and there’s a few things I want to point out. Notice right there in the center where you see the two green check marks and it says $3,000. There’s a myth out there that whole life insurance doesn’t have flexibility and you have to pay a premium your entire life. That isn’t true. So the first thing I want to point out is this $12,000 a year premium could be reduced in any year to $3,000. No trouble, no problem. You simply call the company, they reduce the premium amount. We’re showing that happen in the 21st year. But if the client wanted to do that in the seventh year or the 15th or the 30th year, it’s all flexible. For our purposes today, we’re showing that premium reduces to 3000 in the 21st year. And notice, the cash value that year is $366,000. The next year, on a $3,000 premium payment, the cash value grows to $385,000. So there’s $19,000 worth of growth on a $3,000 premium. What do you think of that, Steve?
Steve:
I think it’s exciting. That policy is cooking at that point.
Barry:
Yeah. And it’s because there is true compounding, unlike a stock market investment, a mutual fund, a 401K, IRA, those types of investments, because of the volatility, inherently there cannot be compound growth. If you’re investing money into a volatile system or a volatile investment that goes up and down, there is no compounding. Yet financial advisors will tell you, “Hey, you’re earning compound interest.” It isn’t true. If you can lose money in your market based investment, you’re not capitalizing on compounding. What we’re seeing here is true compounding. There’s never a year either in the guaranteed cash value and the non-guaranteed cash value where you ever see the cash value go down. It doesn’t happen. It’s a true compound growth curve, and that’s why you get a $19,000 gross increase in cash value on a $3,000 premium. So net $16,000. And every year that this goes on, if we look at say year 30 at the age of 70, there’s $574,000 of cash. The next year it grows to $602,000. So that’s a $28,000 gain on a $3,000 premium because of the compound growth, and it is guaranteed.
Steve:
And is this model, Barry, where the dividends are we going back into the cash as well?
Barry:
Correct. Yes.
Steve:
So that’s adding to the compounding every year?
Barry:
Yep.
Steve:
Yep. Cool. All right. Ready for me to move on?
Barry:
Yes.
Steve:
Awesome. So we’ve kind of expanded our diagram. Secret two, the summary using the infinite making strategy for estate planning. So just to give you guys a little picture, predictability is accomplished through this accumulation, basically through the compounding that Barry’s talking about. It’s going to create a tremendous amount of stable predictability in that estate plan, which is amazing. And you have tax advantaged growth that’s helping that and the reinvestment of dividends. And there’s just a lot of reasons for that, guys, that we’re touching on. And you also have the death benefit that’s adding to the estate plan that can go into a trust or whatever and compliment all the rest of how the plan is working.
Barry:
And Steve, I love this next slide you’re going to bring up because as we look at this, the question I have is who wouldn’t want these benefits? Who doesn’t want tax advantage growth and benefits for travel and college and vehicles and real estate opportunity and tax-free retirement? Just amazing benefits that for the most part when I talk to clients, they all want this.
Steve:
Yeah, well, in fact, that client that I was talking to you guys about today, he wanted this, but he wasn’t sure how you can get it. He was thinking of using real estate for it, which most of you guys listening are familiar with trying to leverage real estate to get money for other things. But this is so much cleaner, but I often draw an analogy to real estate. Imagine a piece of real estate that was totally liquid, you can get a loan out of that piece of real estate within a day or two at a fixed interest rate. And that piece of real estate had a guaranteed amount attached to it that it was going to appreciate a certain percentage every year. That would be what we have when we’re talking about this kind of a policy in my opinion.
Barry:
Yeah, great point. Well, speaking of real estate, let’s talk about taking a loan. What would that look like? And that’s that next slide.
Steve:
All right, so there it is.
Barry:
When we talk about policy loans and you becoming your own bank, the idea is you build up cash value and then begin to use that cash value, primarily for down payments on real estate. Could you buy real estate outright? Yes. If you had enough cash value, you certainly could. But in the example we’re going to go through today, we’re going to look at a policy loan being taken in year five. Year five, there’s $55,931 of cash value. So you could access a $50,000 policy loan. Most loans range between 4.5% and 6%. We’re using 5% interest in our example today. And it’s as simple as calling the insurance company, requesting the loan, they have you fill out one paper, but check this out, Steve, I don’t know if you know this. There’s no credit check, there’s no application, and the insurance company does not question you, “What do you need the money for?” They don’t care because what they’re doing is they’re using your cash value as collateral. So that-
Steve:
Right, it’s powerful. And think about the hassle that you have to go through. If you want to get a loan, again, from your real estate, you got to apply. There’s a credit check. I mean it’s appraisal or whatever else needs to go on. So yeah, this is very powerful. I agree.
Barry:
Let’s look at the loan calculator and look at what a payment would be for this particular loan. So up in the left-hand corner, we’re showing a 5% loan rate, $50,000 over 60 months. We do have to choose an amortization time. And because you’re your own bank, you get to choose how you want to pay the loan back. If you don’t want to make a payment back for four or five months because you’re rehabbing a property and you’ll pay the loan off once you rehab the property and sell it, great, you don’t have to pay the loan. But the idea is you get to set up the amortization. In our example here, I’m using 60 months, which is five years, for the loan payback, which means there’s a payment of $943 going back to the insurance company. And that is a principle and interest payment.
But because it’s going back to the insurance company, the loan balance of the $50,000 obviously is going down. That also means that the total interest that’s charged every month is also going down. The circle at the bottom shows us that after five years, there would be a total of $6,614 in interest that was paid to the insurance company. But there’s something really important here, in the next slide we’re going to get into that.
When that $50,000 policy loan is taken from the $55,000 total cash value, it isn’t physically removed. The life insurance company doesn’t take your $50,000 out of your policy. They put a lien against it, and they really truly give you a loan, it is their money that you’re getting from them. So what that means is your full $55,000 is still earning interest and dividends. You’re earning both on the total $55,000 cash value. What I love to focus on here, there’s no lost opportunity cost. Your $55,000 is still working for you even though you have a policy loan. So with my future value calculator in the top left-hand corner, I’m showing the $50,000 loan at 5%. What does that money still grow to? Well over that five years, it would grow to $64,168. So that means the difference between the $50,000 and the $64,000, there’s $14,000 worth of gain on your 50,000 that you still had in the cash value. And Steve, if you go to the next slide,
Steve:
Yes.
Barry:
So there’s the $14,000 we just talked about on the left, the total interest that we paid for the loan was $6,600, but there’s a margin of difference positive, were positive $7,500. And the reason we still come out ahead in this policy loan example is because on the right, the interest that was paid, it was principal reduction, you were paying the loan back, but the balance of the loan was going down. However, on the left, you were still earning interest, compounded on the full $55,000 amount. That $50,000 never was removed. And so not only do we get true compounding happening within the policies, cash value itself, Steve, if we don’t take loans, we even get that compounding continuing when we do have a loan.
Steve:
So Barry, this is true leverage, you call it. We use a lot of terms on the website when we’re talking about this stuff, but creating a financial arbitrage, leverage and liquidity. And really this is leverage, right?
Barry:
Absolutely. Your dollars are doing more than one thing.
Steve:
Powerful.
Barry:
Yeah.
Steve:
All right, so.
Barry:
This is a great slide because there’s a myth out there and you read it on the internet. And unfortunately agents and advisors that sell infinite banking incorrectly might say something like, “Oh, when you take a policy loan, you get to earn all the interest.” Well, that isn’t true. The life insurance company does charge you interest. So the way that you do earn interest, number one is the way that I just showed you, that your cash value is still working for you. But two, what if you did pay the loan back at a higher rate than what the life insurance company is charging? And you might ask, “Well, why would I pay a higher interest rate if I could get a lower interest rate?” Let me make a point to this and I’ll give you two examples.
The first example would be a doctor, a dentist, a chiropractor, someone that leases equipment, even a construction owner, they’re leasing equipment. What they don’t realize is there is interest that they’re being charged on the backend. All they really care about with a lease is, if I buy the equipment for $50 grand and it’s going to make me $500 grand, I have the equipment. I don’t care that it’s going to charge me or cost me $1,500 a month for the lease. They don’t care about that because making money with the equipment. But on the back end, they could be charged 9%, 12%, 18% interest. So my recommendation is take a policy loan from your cash value, buy the equipment with cash, pay yourself back at 9%, 12% 18%. That’s the first example.
The second example is for real estate investors. Real estate investors love the acronym OPM, which is other people’s money. And what they’ll often do is they’ll get bank financing for a portion of the real estate, let’s say 80% bank financing, but the bank wants them to come in with an additional 20% down. A lot of investors use hard money for that. And so they’ll take that 20% from a hard money lender that’s going to charge them three points and 12%. So these are examples. If you were going to take that loan any way and pay higher interest, why not pay it back to your own policy? In this example, the Black Circle is showing paying a loan back at 12% instead of 5%. That 7% margin is now going back into your own policy, which is about $170 a month.
Over the course of the timeframe, if you look at the far right-hand column with the black rectangle, that equals $10,120 of extra money that went into your policy instead of the leasing company’s pocket or the financial institution’s pocket. That $10,120 is actually compounding every month. So it’s a larger number than that that you would’ve earned. This is how you can make more interest in the policy by paying the loans back at a higher rate because you were going to do that anyway in the examples I gave, so why not be an honest banker? Pay yourself back the higher interest, and now you are capitalizing on it as your own bank instead of the financial institution.
Steve:
And just to comment on that, Barry, working with a lot of business owners over the years and investors, and it’s just so ideal for them if there’s a need, additional inventory or capital, this does so much to secure a business, I guess you’d say. If people treat it like another asset it’s just a ready reserve that you can pay yourself back the same rates and then you’re increasing that compounding. Right?
Barry:
You got it. So powerful.
Steve:
Yep. Oh, I was going to ask you, we get questions on, I’m putting extra into my policy, how does that relate to the MEC limits? How do you usually answer people if they have that question?
Barry:
Yeah, we asked the life insurance company to run a MEC test, so give me the idea of how much extra money you want to put in when you do take a policy loan and we simply have them run the MEC test. If they come back and say, you’re good to go, great. If they come back and say, well, we can’t take all that, but we can take half that, then we’ll go with that amount.
Steve:
Fantastic. Awesome. All right. Well, what do we have next in our demonstration?
Barry:
Yeah, now we’re talking income. Now we’re looking at this, not necessarily from using the policy while we’re working, but now what happens in retirement? What about when we’re done working? How does this policy benefit me in the future with income? And this is tax advantaged, tax-free income if it’s done the correct way. So we’re using the exact same illustration, 12,000 a year. You see the total net cash value numbers all the same. We’re going to scroll down to the later years of the policies. So if you’ll click the next slide.
At the age of 60, that is the final year of $12,000 going in. And at the age of 61 where you see the blue line in the middle, the person now reduces to $3,000 a year, but they’re only going to reduce to $3,000 a year for five years. And at the age of 66, they’re done. They’re not putting another dime into this policy. I’m going to click over because there’s a calculator there, but I’m going to just add this up for everyone. If we take 12,000 a year and we times it by 20 years, that’s 240,000. And then those next five years at $3,000 a year, that’s an additional $15,000. So For 25 years, this person would’ve put $255,000 of premium in. Notice the cash value, in that 25th year, it’s almost $450,000 all tax-free. And at the age of 66, they’re done funding, and now they say, I’m ready to begin taking income. And because of the dividends and because of the compound growth at the age of 66, Steve, with your cursor, you see now the $468,000 of cash, this is what they’re going to begin to draw income from.
Steve:
Adding a tremendous amount of predictability to the retirement portion of the estate plan, right?
Barry:
Yeah. And when I talk to a client about retirement, I’m posing several questions. One is, where are you currently saving and investing money? But two is, if you think of tax buckets, tax deferred as one bucket, taxable is the next bucket, and tax-free is the third and final bucket, my question is, where’s most of your money? And guess what most people say?
Steve:
Probably taxable.
Barry:
Taxable and tax deferred.
Steve:
Deferred, yeah.
Barry:
Very few people have tax-free buckets of money. So what this now allows them to do is create a tax-free stream. Because if they’re in taxable and tax deferred and we don’t know what future tax rates are going to be, they’re going to be in a world of hurt. Because it’s like they’re in a partnership with the government when you’re in a tax deferred account, qualified money, 401K. IRA, TSP, 457, 403B, on and on and on. You’re in a partnership with the government. Whether you like it or not, your partner is the US government. And the partnership is, “We are not going to tell you what future tax rates will be.” Why? Well, they don’t know. Well, maybe they know, but today they’re not telling us, right? We don’t know what future tax rates are going to be. So you have all this income potentially that’s 100% taxable in a future unknown tax rate. Man, wouldn’t it be important in retirement to at least have some portion of your portfolio in the tax-free bucket?
Steve:
Of course. And Barry, I’m just going to add to what you’re saying. This is one reason that we just love this kind of partnership setting for folks that are listening is we also, we want to think about some other buckets too, because another bucket would be your asset protected assets versus non-asset protected. And people miss that one. And it’s the same thing. So people don’t realize just how many buckets that this particular asset that we’re looking at right now has the advantage of. So you’ve got the tax advantage bucket, which you also have asset protected at the same time. So it’s pretty powerful.
And also I just want to make mention of the fact that I’ve dealt with quite a lot of people over the years, especially recently, that are agonizing over their having to take distributions from their 401K or IRA. They don’t necessarily need the money, and yet they have to take those distributions and they’re agonizing over the tax consequences of that. So this is sort of another problem solved if people tend to maybe shift over to this kind of planning.
Barry:
Yeah, correct. In the next slide, let’s look at the income. Let’s see what’s actually happening. And by the way, out of that large cash value, the $468,000 that we looked at earlier, if the client wanted to take a large lump sum of $200 grand and go buy the Ferrari or whatever, they can do that. But in this example, we’re just showing a consistent stream of income of $25,000 a year. So in the middle column there, that minus $25,000 is income. Remember, this person is done funding, they’re not putting any more premium into the policy. They begin to take $25,000 a year out. I want to point something else out. Look at the far right-hand side of the death benefit column. The death benefit is $954,000. Remember, we only started with about $260,000 of whole life death benefit, but because of the proper structure, that death benefit grew and it grew and it didn’t cost the client any money out of pocket to get a larger death benefit. And that’ll come into play here in a few minutes.
So 25,000 income. Go to the next slide. I think it continues through the age of 90. We have the blue circle at the age of 90. $25,000. And did we run that for 25 years? I want to make sure we’re correct. From the age of 66-
Steve:
60.
Barry:
… 5, 10, 15, 25. Yep. And we timed by $25,000. So on a $255,000 premium, this client from, 66 to 90, is able to pull out $625,000 completely tax-free. And if they pass away at the age of 90, look at the blue check mark on the right under the total death benefit column, their heirs still get the $260,000 of original whole life death benefit. So when you add all that together on a $255,000 premium, we take the $625,000 of income plus the $266,000, almost $900,000 of benefit to them and their heirs potentially 100% tax-free with guarantees, access to liquid cash and predictability.
Steve:
Barry, which is one thing that’s amazing about this, is the flexibility in it in my mind because let’s say things go better for this person and they decide they don’t want to take the $25,000. They leave it in there and it will continue to compound and create a huge death benefit, which is exactly what probably nine out of 10 of the people out there that are sort of wondering about the tax consequences of dealing with their retirement accounts, if they could do this, they would. They’d just leave it in there and want it to transfer to their heirs. And yet when we talk about these strategies, our job is getting easier because there’s all kinds of problems now even with inherited retirement accounts. So they can’t do this. They’d love to be able to, but they can’t even finagle a way to do it. So this is just so beautiful from an estate planning standpoint.
Barry:
Yeah, great feedback. So we’re doing the example here on Julia Roberts. I just thought it was fun to use her. And in the next slide we’re going to look at, well, what if Julia wanted to get crazy with it? What if she’s like, look, I’m already putting my $55,000 a year into my qualified plan. I’m maxing that out. But I’ve got extra cash too. So she’s going to come in with a $55,000 a year premium, and all these numbers are linear, so if you want to dump $110,000 a year into this, you just double everything. If you want to dump $27,500 into it, you just cut everything in half. The premium amount that you put in is up to you, and then I help maximize that for you.
In this case, additionally, in the first year, this large grain circle that you see here, she’s also going to put in $90,000. A lot of these companies allow in the first year for you to heavily over fund year one, and in this case you add the $90,000 to the $55,000. She puts in a total of 4145,000. You see the circle in the total annual outlay column, $145,000, and her available cash value is $125,324. That’s her money. It’s liquid. Over 85% of her premium is available to her in liquid cash. And oh, by the way, it purchased a $3.6 million death benefit. Now, some of you’re going, “Oh my gosh, Barry, I thought you said you keep the death benefit low and maximize the cash?” Yeah, we do, and I’m going to show you what I did here.
You’ll notice the base policy is only $1.1 million, that $1,139,000. Julia did not purchase a $3.6 million whole life policy. That would not have great cash value growth. The way we get the additional insurance to raise the MEC limit there at the bottom is a 10-year term policy of $1,964,000. Now, this is kind of the nerdy stuff that I work out, but on our webinar today, I really want to be transparent so you can see what we’re doing, but just know I calculate all this, and we don’t have to get into the weeds, but nearly $2 million of death benefit for only $765 a year. That raises the MEC limit and allows Julia to get 145,000 into the policy in the first year. And because of that, her cash value growth is remarkable.
We look at the next slide and we’re going to talk about income for Julia. So same scenario. For 20 years, she would’ve put in the $55,000 plus the $90,000 upfront, and then at the age of 61 where you see the blue square, she’s going to reduce the premium to the minimum, which in this case is $13,558. So that’s about another $67,000. So her total outlay at this point over 25 years is $1.2 million. She’s sitting on cash value of $2.3 million, and at the age of 66, she draws income. And we won’t go into all of the income numbers here, but in this particular scenario, she’s able to pull out over $100,000 a year. I think it’s about $130,000, same scenario, $1.2 million in and on the outlay for her, she’s able to pull out over $3 million and still leave an incredible death benefit. So this is another example of what you could do. Your numbers specifically, that’s up to you. We’ll calculate those for what’s best in your situation.
Steve:
Awesome. Wow. So Barry, you covered the general policy loans for whatever investments, real estate, business, for retirement, which we call pension maximization, tax-free retirement, which I love. And you could also use those loans to pay off higher interest rate debts and to expand business. And for those of you that are business owners that a lot of business owners put everything into their business, this is a way to be able to do that and then use the leverage and to keep the compounding going in your own wealth building. Exciting.
You guys liking this picture a little bit better? So we’ve got your IBC policy, max cash, tax advantaged growth, policy loans to fund all these different areas, right? Got our death benefit, it can go into a family trust. So what an exciting, predictable plan that we have. One thing I did not put in this plan is just that you might have some other traditional life insurance policies out there that are used to secure the buyout of a business, these kinds of things that Barry mentioned earlier. So certainly a factor, but for now we’re featuring this sort of the IBC strategy and how it affects everything else.
Barry:
The other thing I’ll add here, Steve, is when you look at the truly wealthy in this country, they’re using this strategy because you think about permanent insurance, it’s never going to go away. As long as you’re making the premium payment or you’ve funded it long enough, there will always be a guaranteed death benefit there. And again, we’re talking about predictability, but the reason they’re wealthy use it is because they can perpetuate larger legacies from one generation to another. Take the Rockefellers, for example. Every generation that passes, the next generation has more wealth because of these death benefits, but along the way, the family’s able to use that cash to infuse into business, to infuse into real estate, to infuse in their other investments. It’s a very, very powerful strategy when we look at the velocity of money, and you’re pointing out here, these dollars are doing many things at the same time.
Steve:
Yeah, I love it. And we haven’t covered too much of the ways that this money can be used, but the idea of creating a financial arbitrage, be able to take that money that you’re accessing fairly inexpensively and leveraging it toward higher return opportunities that are out there. I guess that’s at the core of all this. And of course, if you’re buying real estate, if you’re putting money into your own business, those are two high potential areas that you could use. So awesome.
Well, let’s see. So to summarize, IBC estate planning, asset protection, predictable, tax advantaged and leverage, I think are four amazing benefits to the strategy.
Let’s see. So we’ve covered sort of adding predictability, lessening uncertainty, increasing, using the secret asset, as Barry has demonstrated, and leveraging your plan toward growth, using it for many different purposes. Certainly want to provide opportunities for people to get started. It’s why we’re here. This is why we’re closely connected with Barry and his expertise. If this has intrigued you. If you’ve got questions about design and about your own estate and how this could fit in or help, please connect.
Who this works for? Business owners, people with multiple moving parts, retirees that have a large nest egg that want to possibly reorganize that or look at creating more in the tax advantaged bucket. That could be ideal. It could be ideal for other professionals that are looking to mentor people, whether it be another estate planner out there, tax planner, or a legal planner, executives with maybe golden parachutes. People that are transitioning out of corporate earning could definitely benefit from this kind of consulting. Entrepreneurs that want to build a nest egg for their businesses or real estate investors that want to pick Barry’s brain on how to dramatically increase your ROI by using your policy money and can actually demonstrate that and we’ll demonstrate that.
Barry:
And think about having this in place. How is it going to make you feel? What’s it going to do for your life overall to have all these things tied together and put in place for you? That’s what I like to think about is the end result of how they’re going to feel once it’s in place, and then the benefits it will create for them and their loved ones for the rest of their lives.
Steve:
All right, exciting. With that, we thank you guys for attending.
Barry:
Yeah. And to find out more about this secret asset, infinite banking, and how it can help your estate plan, click the button below to schedule a call. You’ll be asked to fill out just a short questionnaire. It will help us learn more about you. We look forward to talking with you. Thank you again for attending the webinar.
