The following transcript is from our video “Using a Fixed Annuity to Fund an Infinite Banking Policy [4 Benefits].” You can watch the video and follow along with the transcript below.
Steve Gibbs:
Hey guys. Thanks for checking out this video. So today is going to be a great, well short, webinar demonstration from one of our top Infinite Banking experts, Denise Boisvert. What we’re going to talk about today is a strategy that she’s used with a lot of our clients, and basically it involves using a fixed annuity in tandem with the high cash value life policy. And there’s few advantages and benefits that you get out of taking these two powerful assets, bringing them together to fund a high cash value full life policy with a fixed annuity.
One is, you’re going to maximize your cash value, so the high cash value life policy is going to grow that cash value. The fixed annuity is going to offer guaranteed return. These two assets together are powerful to maximize cash predictably. All right. Number two, compounding growth, really times two. Two assets compound a return on investment, and so that’s going to be heightened when you’re using these two assets together, one to fund the other.
Three, predictable peace of mind. So both assets, we’re talking fixed guaranteed returns, not subject to the downturns in things and particularly the kinds of things we’re seeing today. And number four, this is really a set it and forget it kind of strategy. Once you get these assets in place, you can leave them and both perform independently, and one can feed the other. On the other hand, there are things that can be done down the road to utilize these assets in different ways. Denise is going to unpack all that. Really excited to jump in.
Denise, thanks for joining us. Let’s get into it.
Denise Boisvert:
What really prompted me to bring this out is really, people have sums of money sitting in places that they are not happy with, either with volatility or they’re just not having any exciting returns. So this is a really great strategy to make those hits work for them and really maximize their account value. Basically, what I’ve done is this illustration is a male age 60, who may have an IRA, or an old 401K or even a CD hanging around. It could be qualified money or non-qualified money, and we’re going to take that money and we’re going to put it into a fixed annuity. We could put it in an indexed annuity, a traditional annuity, but we want something with pretty much a guaranteed interest rate, so that we know what we’re going to have going forward.
And we’re going to take that money and we’re going to actually fund a high cash value life policy. By doing that, we can withdraw our 10% free withdrawal every year on the annuity, for as long as we need to fund the life policy. So that’s also flexible. In this case, I’m actually doing this for around seven or eight years, but we could do it for five years, we could do it for six years. Again, all of this is very, we make it how the client wants it done.
So we’re taking this, we’re putting it in an eight-year fixed annuity. We’re taking 15,000. Even though, if we start off at 200,000, is the lump sum we’re starting off with, we’re taking 15,000 a year out of the annuity and we’re putting it into the life policy. So on the left, we have the annuity. On the right, we have the high cash value life policy. As you can see, the 15,000 is coming out of the annuity and going into the life policy. By doing this, one thing we need to remember is that in the annuity, that money is always earning, and it’s still growing the remainder of that fund. So even if we look at the end of each years, that 200,000, we still have 172 left after we’ve funded our life policy.
Steve Gibbs:
Yeah.
Denise Boisvert:
Yeah. It really is like maximizing value on steroid, because we’re earning the 5% in the annuity and then we’re putting it into another policy that could be burning another 6 or 7% tax-free growth. Let’s say we do this, and I always call, I love the set it and forget it analogy, because basically, we don’t have to think about this. Every year, that 15,000 is going to come out the annuity and it’s going to fund the whole life policy.
When we’re funding the life policy, that money, that cash value is available to us. It is liquid to us. So we have the 10% liquidity in the annuity and the liquidity in the cash value that we can loan from. And anyone who knows anything about high cash value life insurance, knows that when we borrow from your policy, you’re still earning interest and dividends on that borrower money. So it’s still compounding, even though we can use it.
Steve Gibbs:
So this is a great example of somebody in their sixties starting a policy. So it just shows that you can be a little bit older and still create some options.
Denise Boisvert:
Right. And the reason I chose a 60-year-old is because if it is qualified money, they don’t have a penalty to not taking that out and moving it over. Whereas if you’re under 59 and a half, you might have the 10% penalty from the IRS.
Just to get to the meat of this, is at the end of eight years, your annuity has $172,243.00 in there that is liquid to you. The surrender charges over. You can take it out of there. You can do whatever you want with that. At the same time, you have $128,000 that is built up into your life policy, and you have a death benefit of $330,000. So basically, you’ve taken a 200,000 investment, at the end of eight years, you have accumulated up to 300,000 plus another 330k death benefit, for a total of around $630,000 in eight years. The annuity death benefit is the amount of cash value that’s in it. If you should pass away, that’s what your family would get, whatever is left in your annuity.
Steve Gibbs:
Gotcha. Yeah.
Denise Boisvert:
What’s great about this is it is so flexible and versatile, is I love this. Want to stop putting 15,000 in? Continue, because I want as much retirement income as I can get, and I only maybe want to drop them at the age of 70. We can continue putting that money in, whether it’s from their 172 or from another source. They don’t have to stop it there. I’m just showing this as an example of being able to, and again, you wouldn’t do, you’re not shutting it off and saying, “I don’t want to pay any more premiums,” then you would not reduce this death benefit. It would just continue to grow, and whenever you want to stop paying, that’s when you would do what we call a reduced paid up, where no premium is any longer due on the full life policy.
Steve Gibbs:
The peace of mind that you have, which is our benefit number three. Right? Predictable peace of mind.
Denise Boisvert:
Yep.
Steve Gibbs:
Awesome.
Denise Boisvert:
Yes. Yeah, I mean the good thing about this is the flexibility of it. Nothing is set in stone here. There are so many different options. Nobody knows what life is going to be like in eight years.
Steve Gibbs:
If you’re watching this, I know Denise’s information will be beneath wherever this video is, and you’re going to be able to schedule a Zoom conference or a phone call with her, to get more specific information that’s customized for your situation. So I invite you to do that. Denise, great stuff. Thank you so much for sharing.
Denise Boisvert:
My pleasure.
