[00:00:00] John Montoya: Episode 67, 1035 exchanges and IBC. In this episode, we're gonna talk about 1035 exchange. What is it? How does it work with an IBC policy? We'll talk about how to complete a 1035 and really the most important piece. Why is it done? What are the trade offs when you are considering exchanging? One policy for another, which happens with a 1035.

[00:00:27] John, good to see you again this week. Let's jump right into

[00:00:30] John Perrings: it. Yeah. This will be a good one. When we are, when we talk to people about Infinite Banking, it's fairly common that someone already has a policy and they're interested in exchanging it. They hear about a 1035 exchange and they're like, Hey, can I, I don't have an IBC policy, can I 1035 into an IBC policy?

[00:00:50] So we'll talk about, we've talked in the past and we'll talk about again what is, what's an IBC policy? And it, by the way, you may not think you have one, but you might [00:01:00] have one that's working just fine for IBC, right? Let's just talk about what a 1035 exchange is. If you're a real estate person out there, you've probably heard of a 10 31 exchange where you can exchange like for like assets and.

[00:01:14] Move the tax obligation for that down the road. And it's very similar with whole life insurance or other types of life insurance where you can 1035 exchange and it doesn't create a taxable event. And with the life insurance policy, really what you're doing is you're essentially moving the cash value from an existing policy into.

[00:01:36] A newly designed policy, and that's a crucial piece to understand there, a new policy. And so those just like everything with life insurance that we talk about here all the time, everything's a tradeoff. There are tradeoffs to everything we do with life insurance. Everything's a trade-off between cost and risk.

[00:01:52] And so there are trade-offs to doing a 1035 exchange.

[00:01:57] John Montoya: Perfect. Let's talk about how [00:02:00] it's done. How do we complete at 1035? If that's your prerogative, you want to exchange one cash value policy for another? John, you want to jump into that?

[00:02:11] John Perrings: Yeah. When you want to exchange a policy, obviously we just mentioned you have to buy a new policy, and so there's an underwriting process for buying that new policy.

[00:02:21] You have to do the application, they have to check your suitability for health and financials. All that stuff is happening just like normal. When you apply for the new policy. One of the big differences is when. As you're applying, you're going to have to state that you intend to replace another policy.

[00:02:38] So there's a policy replacement involved, and there's some, there are state regulations around replacing policies because one of the, one of the things that the. Regulators want to do as they want to protect the consumer and the buyers of life insurance against any kind of fraudulent activity or sales pressure to replace policies.

[00:02:59] [00:03:00] There's all kinds of regulations about placing policies for commissions and all that stuff. So there's a little bit of regulatory stuff that you gotta go through, and one of them is making it known that you intend to replace one of the policies. One or more policies. And then once that's done, there's a notice that's sent to the current insurance company that currently has your policy of an intent to exchange and replace that policy.

[00:03:26] And then that the current insurance company has to provide a bunch of information, including what the cash value would be, and then All that has to come back to the new insurance company. And then that becomes all part of the total underwriting. And then once the new insurance policy is approved and assuming you wanna move forward with the exchange, the cash is then sent to the new insurance company.

[00:03:50] And it the, there's a lot of timing involved depending on when that actually happens.

[00:03:55] John Montoya: Yeah. A typical underwriting process, if you need an exam, [00:04:00] Full underwriting, that's typically four to six weeks. Once we have the approval, then that request for the cash value will go out to the existing life insurance company and there's typically a 30 day window to, for the existing life insurance company to attempt to conserve that business.

[00:04:19] And that's typically where the advisor gets notified that an exchange is happening and they will try to reach out to, Ask questions as far as what's changed and figure out what's what. The reason is for the 1035 exchange and 30 days that can be waived if the advisor who sold that policy basically says, yeah, go ahead and let this go through, or hold onto it for 30 days because I need to reach out to this client.

[00:04:48] This is someone that I've worked with in the past, and hey, I want to try to figure out what's going on here, and that's the process. It can be. Anywhere from I, I would [00:05:00] say six to 12 weeks in order for the proper timing to go down with a 1035 exchange.

[00:05:09] John Perrings: Yeah, and you brought up a couple good points like the existing advisor or the old advisor, the old insurance agent can't really gate keep this there.

[00:05:17] There is an amount of time that they're given to just try to do their due diligence and calculate everything and try to find out if this is the right move, but they won't be able to gate keep it. And so you're in control of everything. And then it's just a matter of time, of a matter of how long it's going to take to execute everything.

[00:05:33] Some of the things that can hold it up are if you live in a state that allows electronic signing, some carriers don't allow electronic signing. They need a wet signature on the exchange documentation. Some of the little details like that, that can make it take a little bit longer than it really needs to necessarily, but those are just the little nuances of going through an exchange.

[00:05:56] John Montoya: Yeah. So let's focus in on. Why an exchange is done [00:06:00] and what are the trade offs?

[00:06:05] John Perrings: Yeah. The why it's done is really a suitability question, right? It's like what additional benefits is the new policy providing that the old one is not right? Maybe the same premium buys significantly more death benefit. Maybe the new policy has. Some non forfeiture options that the old policy does not, or maybe it has some riders, like a terminal illness or chronic illness rider that the old policy doesn't.

[00:06:34] Maybe the new policy has a term writer and a PUA rider that the old policy does not. And so essentially changing. Significantly the policy mechanics. And so the suitability question is going back to the regulatory piece of it, the regulators are going to want to know that there's a legitimate reason and or the client fully understands what they're doing, replacing the policy.[00:07:00]

[00:07:00] They just, they don't want to have a situation where the client doesn't realize that they're getting a policy that actually. Could be worse for them. So those are all the reasons that we have the regulatory pieces surrounding doing an exchange. And then of course, we didn't mention maybe one policy has better cash value accumulation, and that gets down to sometimes the PUA rider, some carriers don't even have a PUA rider.

[00:07:23] Someone may learn about that and say, Hey, maybe I ought to redo this, rethink this, but. I think John, Montoya, and I agree that our general rule of thumb is that we don't automatically recommend doing a policy replacement. And there's, there are several reasons for that. One of them is if you have a whole life insurance policy with a good mutual insurance company, guess what?

[00:07:47] That's a good policy. And so even if it doesn't have a PUA rider on it, any of that stuff, it's still a great financial asset. And are not in the business of going out and saying, Hey, oh my gosh, that policy doesn't have a [00:08:00] PUA rider on it. You are getting ripped off. And that is just not the case, especially if you have a long-term outlook on this, which we always recommend having the longest term outlook that you can have that's correct for you.

[00:08:13] A whole life insurance is a great financial asset. And then one of the things I wanted to bring up before I turn it back over to Montoya. As you're considering this and one. Part, partly the reason we don't automatically recommend exchanging is because it's not automatically clear what the right move is, right?

[00:08:34] Because if you have a policy that you've been paying into for 10 years and then you're thinking about exchanging it, one of the things you have to understand is you're exchanging it into, like I said before, a brand new policy. Brand new means you've got all those new costs to overcome. So yes, you are putting in a, an upfront PUA payment relative, relatively speaking.

[00:08:58] However, all of those costs [00:09:00] of a brand new policy are still there. And so how do we analyze what the best way, how do we, what's the best way to analyze if that's the right move? And what most of the time happens is people. Will take a look at an enforce illustration of your old policy, and then they'll design a new policy for you and they'll do a side-by-side comparison of what would happen if you kept your old policy or if you exchanged into the new policy.

[00:09:23] And that's not actually a correct way to compare this because it doesn't compare equal timeframes. You have to actually go back and look at All the premium payments that were made on the old policy. And look at the IRR of that policy. This is one of the few areas where I think IRR internal rate of return is a valid metric because normally we don't.

[00:09:48] Pay attention to that if you're just buying a policy, like a brand new policy, because that's not what we're trying to do. We're not trying to get an internal rate of return. Of course, just listen to the previous episodes. Of course, all things being equal, a better IRR [00:10:00] is better, but with life insurance sometimes.

[00:10:04] A better IRR comes with a bigger trade off down the road. Going back to the exchange, an IRR is useful in this scenario because it allows you to actually see what's happening using equal timeframes, and so you can actually find out if this is a correct move from, just from a financial perspective. So again, not everything is always about the numbers when it comes to life insurance.

[00:10:26] A lot of it is about the control and the options, and sometimes the numbers aren't. Exactly what's written on a page. It's what you can do in the future. So understanding all of those things still internal rate of return is a valid thing to look at when comparing, exchanging, doing a 1035 exchange to a policy.

[00:10:45] John Montoya: Yeah, and if I could dumb it down a bit, I like to use the analogy of real estate and mortgages when talking about whole life policies and what I liken a 1035 exchange from one whole life to another whole life. [00:11:00] Policy, which I'm not a big fan of. Like you mentioned, John th this is essentially like refinancing a mortgage that you've had for years and locking yourself into a new 30 year mortgage at a higher interest rate.

[00:11:14] Now, if that sounds ludicrous to you, chances are it is with regards to your existing whole life policy, it's one of the big reasons why. I'm just not a big fan of exchanging a pol. A mature whole life policy that premium has been going into for years has been locked in that health, that age. The cost of insurance has been locked in at a younger age, and now you're essentially thinking, I can refinance into this newer whole life policy and it's gonna be so much better.

[00:11:48] Is it really, we have to look at the entire bigger picture, but if you think about it just in those terms, relate it to refinancing into a mortgage at a higher interest rate, [00:12:00] a new 30 year term, you're probably gonna pause and think about this a little bit more deeply than maybe you initially have. So that's the way I look at it.

[00:12:12] And it's, it still does happen. So I think a good exercise would be to try to understand why people will consider a 1035 exchange from one whole life policy to another. And from my own experience, I will share that there's a lot of misunderstandings and misconceptions. About whole life. Yes.

[00:12:38] And it feeds into why people think they should 1035 exchange. Now, not all 1035 exchanges are bad, but here's some of the confusion that I've come across in conserving policies that I have underwritten for a client before. One of 'em is this new company pays a bigger dividend versus the [00:13:00] existing company.

[00:13:01] A large part of the confusion or misconception there is based off the dividend interest rate, which people will look at the dividend interest rate and think, I'm getting a 6% dividend. My policy is growing at 6% versus five point. 5%. And that's really not how a whole life policy works. And we've probably covered that in a previous episode.

[00:13:23] The reason for exchanging one whole life to another, because the declared dividend scale is slightly larger, doesn't really work out. And that brings it back to your point, looking at the IRR internal rate of return on your existing policy versus the new one. You're better off looking at that metric than what's published as the current dividend scale.

[00:13:45] That's not a good reason for a 1035 exchange. Another one is Company A is a larger company, and I've heard of this company before and I get it there. There's warm and fuzzy feelings with companies that you see advertisements [00:14:00] for, and that's when people tend to. To do business with big name companies that spend a lot of dollars on advertising, and that's just the way of the world.

[00:14:10] But the reality of it, a lot of these companies that we use for IBC are companies that you may never hear of because they don't focus their marketing dollars on commercials, whether that be tv, radio, or print. These are companies that they focus their dollars elsewhere and. To, to each their own. But just because you haven't heard of a company doesn't mean that they aren't really phenomenal at what they do.

[00:14:41] It just happens to be the reality that there's over a thousand life insurance companies. Yeah, domiciled in the United States, and if I were to quiz you, I can guess that you probably failed to come up with more than a handful of 'em on the next 30 to 60 seconds. It's just [00:15:00] life insurance companies are not sexy, so if they are advertising, it's likely because they're.

[00:15:07] Not a mutual, if not mutual, in some cases they are, but they have a career driven agency, which means that they have to do a lot of the legwork because the majority of their advisors may not have the industry experience, have not been around long enough. They have to market and get that mind share where people are like, oh, I've heard of that company, and they feel comfortable working with that company and it's not.

[00:15:33] To circle back. It's not the reason why you want to do a 1035 exchange, because company

[00:15:38] John Perrings: A had this really great out there that have been around for 150 years that don't do any marketing. That's not always about the most well-known company out there for sure.

[00:15:48] John Montoya: Yeah, I was thinking commercials like Super Bowl commercials, which I can't ever recall a life insurance company doing a Super Bowl commercial, but they do commercials every once in a while.

[00:15:57] But the companies that we work with, [00:16:00] I can't think of one commercial I've seen ever. Yeah, in over 20 years. And another reason now, this is something that's come up just recently, I had a 1035 request come through and I reached out to. This person who I'd worked with to set up the policy and she got back to me right away.

[00:16:17] And she just explained to me, this company A has higher cash accruals. And I scratched my head a little bit and I'm thinking back on what is the cash accrual? And I, yeah, what does that mean? So there are dividend options. And usually we don't really talk about the dividend options because it's always set up all the IBC policies that we do set up to reinvest the dividends.

[00:16:43] That just helps drive the cash value up along with the death benefit Simultaneously, we want to have those dividends reinvested, but there are other options You can elect to receive the dividend in the form of cash, or you can elect to have the dividend paid into a [00:17:00] cash account where it accrues.

[00:17:01] Hence cash accruals, but you miss out on the benefit. Of that PUA Rider and what the PUA Rider does, and the email that I received from my client was that this cash accrual is 6% versus 4%. And that was her basis for the 1035 exchange. And the explanation to her was obviously being driven by the other advisor.

[00:17:26] And there's something

[00:17:29] John Perrings: not regulations are in place. By the way, this is a completely, this is an abusive, misleading. Conversation for replacing a life insurance policy. I'm like, I'm actually flabbergasted right now. That's crazy. This

[00:17:43] John Montoya: stuff happens. Yeah, this stuff happens. So it's really important that.

[00:17:48] You completely understand the reasoning behind doing a 1035, and I've run the numbers and the cash accrual aside, which it's not even argument for the [00:18:00] exchange once you understand what it is because if you're doing IBC right, and obviously she didn't understand what it what, where the cash accrual. Is because you're not gonna want to elect for cash accrual.

[00:18:12] You're gonna want to elect to have your dividends reinvested. But running the numbers aside, the existing policy outperforms a new policy on a long-term basis. And yeah, that's the whole reason for having this policy. That's unreal. It's just, yeah, it's sadly it's real. It's these misunderstandings and misconceptions that people have, including other advisors.

[00:18:33] I don't want to throw this other advisor under the bus. I would like to, I'll do it for you maybe. Maybe it's their misunderstanding, but Yeah, all the same. I'll say it this way, you have to be your own personal advocate, right? Yeah. And you have to really do your best to understand and ask questions and.

[00:18:58] We tend to [00:19:00] lean on advisors as the trusted party in the transaction, and what they say is golden. But here's an example where the advisor is attempting to move existing cash value from a perfectly. Designed policy. And even if it wasn't a well designed policy, and what I mean by that let's say it's an older policy without a PUA writer, and it just, it's a mature policy. They're doing it based off of erroneous information. You have to be your own advocate and you have to do your research. If this is the sole reason why you're doing an exchange, you better make sure that you understand what you think to be true actually is true. And. It wouldn't hurt to actually go back to your existing advisor.

[00:19:51] And just say, Hey, is this right? Yeah. One of the things that my mentor shared with me a long time ago is that a client is really [00:20:00] never your client. And what that means is we all have free will. You can work with anyone that you want to. You may like our podcast, and you reach out to us and you may decide the relationship is, for whatever reason, it's not the right fit.

[00:20:16] And so you work with someone else and that's fine. You have free will to do that, but I, what I would recommend is if you're thinking about a 1035 exchange and there's a reason it's been given for it, why not go back to the existing advisor? You trusted them enough to get you that first policy. Ask them, verify. Is this right? Or could you take a look at this, right? An open dialogue goes a long way, and if the advisor is truly a consultant and not a salesman, they're going to look at both policies and say, you know what? Okay, I can see why you're considering this. I wasn't aware of maybe something [00:21:00] changed.

[00:21:00] This looks like it was designed right, or I can see what I can do about maybe not exchanging this policy, but looking at an additional policy. And we've talked about adding to portfolio or creating a portfolio of policies. The, I guess the thing I'm trying to get at is give your existing advisor the benefit of the doubt and also, yeah, be your own advocate and if you feel you lack the confidence in researching what it is you need to know.

[00:21:26] You need to get a second opinion and a good place is to go back to your original source for that policy.

[00:21:34] John Perrings: Yeah. And the something to think about, this is an interesting case because replacements are not usually, it's not even usually for a reason like this was, that was given on this one. So if someone's.

[00:21:49] Need to replace a policy based on a, an option that's not currently part of how your current policy is designed. That would definitely be a good one [00:22:00] to really take a, give a couple extra brain cycles on that one and talk like John was saying, talk to your advisor because Life insurance is simple, but there's a lot, there is a lot to it and there are a lot of options.

[00:22:15] And so those can get a little confusing if you're not in the business. It's like how do you keep track of all that stuff? And so this one in particular is pretty interesting and just using an esoteric policy option that almost no one uses by the way, to convince. It's Hey, look, my number's higher than your this, than your number.

[00:22:35] And that's not how. That's not how it works all the time. And I'll just say one last thing about it. Unfortunately, or fortunately, I don't know, I don't know if I have a, an opinion on this, the, to get into the life insurance business, pretty low bar. And it does, all you gotta do is pass a life insurance exam.

[00:22:54] It's about as hard as the real estate exam, which is not hard. So the. [00:23:00] You wanna find people that are taking their training and education and ex and developing experience seriously? I don't know. A better place to do that than the Nelson National Institute. These are all advisors who have taken extra time to go through a training program that provides a much higher level of a much bigger picture view of how life insurance can be used.

[00:23:26] We always recommend looking at the Nelson National Institute for Authorized Practitioners. Those are just. The fact that they are one is at least one extra step that they've taken to show that they're serious about understanding the big picture view of everything. Yeah,

[00:23:42] John Montoya: and I'll add one other tidbit of information when there's a 1035 exchange.

[00:23:49] Cash value goes to a new policy. There is a small commission that gets paid to the new advisor. And because [00:24:00] the life insurance industry is a sales industry you get a, I'll just say it a lot of people that come into the business with heavy commission breath and. It's unfortunate, but especially on these small commissions on a 1035 exchange, but that they're just looking out for their own pocket rather than what's best for you, the client.

[00:24:30] And so you have to take that for what it's worth, if they're recommending a 1035 exchange, realize that this is not free advice. They're gonna get paid something for moving that money over. That's gonna come outta your pocket. So that should really behoove you to make sure that all the trade-offs in the long run are really in your favor, because for [00:25:00] maybe the majority, I don't want to be too cynical, but.

[00:25:03] For the, like I mentioned a few minutes ago, we got a lot of salesmen in this industry and we're lacking consultants. And I think to what you just mentioned about the Nelson Nash Institute, and I'm grateful that you brought that up. This is an extra step that we as practitioners have to go through in order to be in good standing with the institute.

[00:25:24] And these are the type of individuals who, Speaking for both of us. I can confidently say we have the code of ethics with the Nelson Nash Institute that we take very seriously. And I know when I'm working with my clients and I'm considering their situation, I'm always thinking, is this something I would do myself?

[00:25:49] And if it's not, I'm not gonna recommend it. Yeah. And it's just one of the bigger reasons why. I don't automatically recommend. [00:26:00] Going from one whole life to another whole life. It just, it's not something that I personally feel good about knowing that I'm taking one, I'm taking bread off the table for an existing advisor because there, there are small renewals that happen on the book of business for these whole life policies.

[00:26:18] But also too, for the clients, it's generally not a good move to exchange a mature whole life policy. For a new one, for reasons we explained, but let's transition a bit, John. Yeah. I think we've been harping on this, the misunderstandings and misconceptions that people have for doing a 1035 exchange.

[00:26:36] What are some good reasons for doing an exchange?

[00:26:42] John Perrings: Some good reasons in this, what we're talking about here is a whole life to whole life exchange. We'll talk about some other types of permanent insurance here in a second, but for a whole life to whole life, some things. The company may no longer be meeting your [00:27:00] requirements from a principal's perspective anymore. So one case might be the de mutualization of a company where they go from being a mutual company to a stock-based, stock owned company stockholder owned company with, especially with IBC, one of the. Things we wanna make sure we're doing is working with mutual companies because we're the owner, the policy owners are the owner owners of the company.

[00:27:25] That could be a reason. Now, just keep in mind, just because they're a stock insurance company does not necessarily mean they're going to do wrong by you. However, we do have to analyze now. They have two mouths to feed per se. They've gotta meet the requirements of the policy owners and they also need to meet the expectations of the stockholders.

[00:27:45] So it does put a little bit of pressure on that type of company, but it's not necessarily something you wanna run out and do by default. But it would take some consideration and thought, and if it's a princip matter of principles for you, then it could make sense to do an exchange [00:28:00] in that case. Another one is the historical results are different than what's going to be happening moving forward or what's happened in the near future where you've seen a market marketed decline in the performance of the policy.

[00:28:16] Something like that could justify it. Or just the, if you notice, you've been paying into a policy for 10 years and nothing's really happened 20 years. Nothing's really happened. So there are some cases where it has happened, where the whole life performance has been so low, or it's been designed to, in a way that has prevented you from paying any more premiums because of the, of your age and income at the time.

[00:28:43] Usually though, We would probably leave those alone. We'd still leave those alone. But those are all just a coup. A couple of examples of something you may wanna look at for replacing. As John mentioned though, it's like you're now buying a policy at your new age in health, and so it's do you want to [00:29:00] take a policy that you've been paying into for 10 or 20 years to go even further that has all of the built in actuarial discounts, so to speak, of your then current age and then blend that in with your new costs.

[00:29:15] So you really gotta pay attention to what's going on when you're exchanging whole life, the whole life.

[00:29:23] John Montoya: Yeah, nothing more to add for me on that one. We do have some notes here on your personal experience on 1035 s, so maybe you can share a little bit of that.

[00:29:33] John Perrings: Yeah. I haven't done a ton of exchanges on purpose, but when I do, there's a really good reason that we already talked about from doing a whole life.

[00:29:40] The whole life. I think I've maybe only done one of those, or maybe two, but their exchanges are from. IUL Index, Universal Life or Variable Universal Life, those types of policies where after reading becoming your own banker and researching The Infinite Banking [00:30:00] Concept and understanding the principles of the of IBC, they're really starting to feel exposed somewhere down the line because they understand, and if you wanna.

[00:30:10] Get our take on IUL and why it's not appropriate for Infinite Banking. You can go back to episode 37 where we do a whole episode on that, but the short version of it is, There are a bunch of non-guaranteed elements in a, in an IUL and VUL that you don't know what's going to happen in the future, and the rising costs of those types of policies can create some significant problems to the point of ha losing the policy altogether, along with all your cash value and death benefit, and so that they're not appropriate to.

[00:30:43] Be the place where you're accumulating capital. That's the long and short of it. And the, some of the things that happen with people with IULs and VULs is that they recognize that and they simply want to move to something that has more guarantees baked in. To the [00:31:00] policy, which is what whole life is. All of the costs are baked into the policy.

[00:31:03] We don't have any outside forces raising, potentially raising the price of any of the, of any of the death benefit in the future. It's all right there in black and white in the illustration. So the other side of it is when you have an IUL VUL, that's like the control part of it is is eroded a little bit where if you have a situation where you are borrowing against the cash value and then all of a sudden you have a negative experience and the costs rise at the same time.

[00:31:37] We've talked, we talked about this in episode 37. It's like the, I think Montoya called it the trifecta of bad luck and you could have a pretty bad situation on your hands where you've got an outstanding policy loan and now all of a sudden you. Have exceeded the cash value. The cost of the policy have exceeded the cash value.

[00:31:54] Now you don't have a policy anymore unless you pay a big premium. So anyway, the, it's [00:32:00] like IBC is about control, controlling the Banking function, bringing that back into your life. And so we can't use products that take away the control and transfer the risk back onto you. It doesn't make any sense.

[00:32:13] Those are some reasons and. I don't know if I should even say this on the podcast, but sometimes it's a good move. Cause a lot of people have some decent cash value in an IUL because they do perform fairly well. All things considered, if you fund the, if you fund the policy and pay your premiums, they perform pretty well in the early years.

[00:32:31] It's really those later years that cause a problem. And Some of the folks that are exchanging from IUL or VUL to whole life working out to be a good move for them cuz they've got some decent cash value in there that they exchange over to a whole life policy. And then, and now you've locked in those gains that, so to speak, that you got when you were young and now it's locked into a whole life policy that it can never go down.

[00:32:56] It's, again, I don't always do an [00:33:00] exchange with an IUL or VUL either. It's not. Always the case that has to happen. So it's very individual I think is what we're trying to say, and it you really need to examine what's going on. There are a lot of different types of IUL and VUL out there. Some of them have guaranteed death benefits for a little bit.

[00:33:17] Some of them don't. It's very much the devil being in the details, so to speak.

[00:33:24] John Montoya: I feel like we should run a a Dos Equis commercial. We don't always do exchanges, but when we do there to IBC,

[00:33:31] John Perrings: it's awesome. Yeah, that's good. Yeah.

[00:33:35] John Montoya: I think for me, what I'll add to what you're saying there, the element of control, definitely a big point with IBC, one of the biggest points is that element of control.

[00:33:51] If we think of what we're trying to accomplish, we're trying to take back the Banking function [00:34:00] and with a whole life policy. You talked about the guarantees and the cost, but also I'll throw in the guarantee on performance, right? You can sleep at night knowing that this whole life policy, it's got a guaranteed ledger.

[00:34:18] That is spelled out every year for the rest of your life how it's gonna work. And then you add the dividends on top of that and that comes from the surplus. So again, this is the track record of these companies that we work with. Some going back as far as 170 years, paying a dividend every single year.

[00:34:36] Th this lends to a very. Peaceful state of mind knowing that what you want to have happen will happen even if you're not around to see it, because that death benefit ultimately is guaranteed. And if for some miraculous reason you live out to year 1 21, the policy will endow, meaning that cash value does equal the death benefit.

[00:34:59] That can only [00:35:00] happen with a whole life policy and back to becoming your own banker. What are we doing with these cash values? We're creating opportunity for ourselves to leverage this asset as safely as possible. And you really, in all honesty, you cannot do that with any type of Universal policy because the underlying cost structure is so very fragile, and in fact it's increasing.

[00:35:32] So if you're going to practice IBC, if you're going to be your own banker, there is really only one type of policy and in our opinion, I know we share this John there, there's only one true permanent type of policy. You can Google it as much as you want and drives me crazy when I see Universal is listed as a [00:36:00] permanent policy.

[00:36:01] Yes, only if you can afford to keep it.

[00:36:05] John Perrings: That's it. Yeah, it's it's crazy that it's called permanent cuz it's absolutely not permanent, but, That's how it is. So lucky for everybody. You and I are out here trying to clear things up for the folks and make things a little easier. Yeah. I like everything you just said there, and it all is about, it's all about the principles.

[00:36:24] It's not about the product when it's only about the product in that we use whole life. But by the way, you don't need insurance to do Infinite, Banking, right? You just have to understand what the trade offs are. If you don't, I think. When just wrapping up this idea of exchanges, it's the devil's in the details.

[00:36:46] Like I said, it's all about trade offs, just like everything else with insurance, and you really want to try to find someone that is looking at the big picture and looking at things long-term. That's, those are the IBC principles, so [00:37:00] if you're listening to this because you're interested in IBC, that's really what you should be looking for, not.

[00:37:04] Little details, little gotchas. Hey, the dividend accumulation rate is 2% higher than your current policy so that those are majoring in the minors, and it's not even the minors for that one. Anyway, I won't go on tie rate. We're trying to wrap up here. John, this is a great talk. I think we've been going on long enough about it and

[00:37:22] John Montoya: longer than we probably anticipated, so yeah.

[00:37:24] Yeah. Thank you listeners for hanging with us.

[00:37:28] John Perrings: All right Like always if this is resonating with you and you like the information we're putting out, and you would like to see how this could apply more directly in your particular situation, you can always head over to TheFifthEdition.com and you can book a 30 minute free consultation with us right there.

[00:37:46] We're happy to talk to you, or if you're the type of person that likes to just learn on their own and do all the research before talking to anyone, we have a free, not a free, a online course that does cost something, but it. You get a 50% discount [00:38:00] right at the 50, TheFifthEdition.com. So head over there and hopefully we'll get to talk with you soon.

[00:38:06] All right, thanks John. Thanks everyone. Thanks everybody.