93: Hidden Agenda: When Life Insurance Agents Wear Two Hats

093 Hidden Agenda

[00:00:00] Hello, everyone. I'm John Montoya, and I'm John Perrings. We're authorized Infinite Banking Practitioners and hosts of the Strategic Whole Life Podcast.

John Perrings: episode number 93, Hidden Agenda, When Life Agents Wear Two Hats. Welcome everyone to the Strategic Whole Life Podcast, formerly The Fifth Edition. I'm here with John Montoya. And in this episode, we're going to talk a little bit about a trend that I've seen over the last, I don't know, five years or so, of something to just be aware of.

Along with the kind of hack culture that I talked about in episode number 78, that sort of tries to attach itself to IBC. Like There's some kind of financial hack involved here. There are also, different clubs or groups that offer strategies that are used in the sales process of buying whole life insurance for IBC.

And. What it ends up being something that is [00:01:00] purchased over and above IBC or whole life for IBC itself. So it's like this add on that you'll see very often that's used as part of the overall sales process. It's something to make note of, and it's something to be aware of. And the reason I want to bring it up today is it kind of has three different things that I think people should be on the lookout for it.

Number one, it gets away from the core message of becoming your own banker. And it steers the buying process more towards a reason to buy into their, their system that they're selling their investment system or whatever it might be, and because of that, it tends to number two, focus, have that, have a hyper focus on early cash value and maxing out loans that John and I just talked about in episode 88.

And this can cause an overextension on premium. And, all of this [00:02:00] sort of results in. A higher likelihood of policy lapse and worse if that happens, especially in the early years, losses on top of that.

And I want to say Close to the beginning here that we're not bashing any of this stuff. And these are, these can be completely legitimate clubs or strategies or practices or, what have you. And so the purpose of this is not to say, don't do any of this, right? It's just to say that, be aware that if the whole thing is packaged together, in my opinion, it's getting away from, potentially the core principles of why we're starting to practice IBC in the first place. Montoya, anything you want to add before we jump into number one here?

John Montoya: I would say that, it's a blessing that people find IBC any way that they can um, you know for, for a lot of people, it feels like dumb luck once they truly understand and grasp what IBC is all [00:03:00] about. Um, You can't, you kind of have to find it a little bit by luck. But that said, I think the biggest takeaway is the core principles of IBC and realizing that becoming your own banker, it takes precedence over whatever these other clubs or, whatever strategies that, bring you to IBC and, people tend to put maybe a little bit more priority on, on.

On those those sources that brought them to IBC without realizing becoming your own banker is the central most important perspective that you need to lock down on. And the, like Nelson would say that, you know, the rest is just noise. And we really want to highlight that because If you take the time to study Nelson's book, read it, practice it, you come to realize that, there, there is [00:04:00] so much grounding and foundation in IBC that if you get this down, everything else will fall into place, the debt pay down strategies, the opportunities to invest to do the private lending if, if, you know, that floats your boat but.

You need to establish a foundation and IBC is the foundation not what brought you to IBC. And so I would just start off by saying, realize the noise that's out there and you have to break through it. And hopefully this episode will help you to realize that IBC is the foundation and that's where you start.

John Perrings: That's a great point. And that gets us right into point number one, where the core message is to become your own banker. So Montoya was just saying, basically, don't put the cart before the horse, which is, what we're trying to do is. Start to add a layer of strategic capital accumulation as,[00:05:00] Ryan Griggs talks about it very eloquently in a lot of the IBC think tanks that we attend annually.

We're talking about strategic capital accumulation. And so, If you want to be strategic, I think I mentioned this in the last episode, you're either going to start the process or you're not. It's not a, it's not a one time thing where bam, all of a sudden I'm I've just decided to invest in this thing.

And I added life insurance to it. Now I'm being strategic. IBC is not meant to be a pathway to a specific investment or strategy. It's not a hack where, I just put this thing in front of it one time and now I've been strategic. Do we want to be strategic with our capital? Just once, or do we want to be strategic for the rest of our lives?

And that's really what we're trying to get to. And so if we have the goal of becoming our own banker, the golden rule that is mentioned in Becoming Your Own Banker, the book, [00:06:00] is he who has the gold makes the rules. And so when we buy whole life insurance to just be a part of another system we haven't actually created the golden rule for ourselves. We just put a layer into somebody else's rule book again. . And so what we want to do is we just want to. Unlock that capability. Unlock the Infinite Banking Concept. We want to unlock that capability for ourselves.

And, another thing that's said in the book is, when you have capital, opportunities have a way of finding you. And those are the opportunities that tend to be the kind that you can't really hunt down necessarily or that you can't find a lot of times it's you're in the right place at the right time, rather than just jumping on to like an investment band bandwagon, because it happens to be there [00:07:00] and um, That's the core message of infinite banking is to create more control over over your capital. So that you have the ability to make a move when it's right for you rather than just because it happens to be there.

John Montoya: To build on what you're saying, you had just said a layer of capital, and I would probably rephrase that to say a foundation of capital, because IBC is not a pet rock. It's actually the bedrock. It is the foundation of everything that you'll be able to do in your life. But if it's, if you [00:08:00] treat it like a layer, then you're not going to realize its full value.

In your life so it is the bedrock of what you should be building your financial plan on. And that, that's just, again, the core of what we're trying to maybe proselytize or preach in this episode, build your foundation. Um, more to one of the points that you were just making too, John you're talking about low time preference.

 And the problem that we see is that people discount the future so much that they get into this mindset of chasing investments and, they become part of these clubs where it's like, Oh, here's an opportunity. And, actually just working with someone recently, and he was asking about how the underwriting is going.

John Montoya: And it's a typical four to six week underwriting process. And he's I've got this investment opportunity. And, I need to move the money. And I'm like, what are you talking about? This is not if you're,[00:09:00] putting the premium in here to, exactly what we talk about to just take it out, as soon as you can, 30 days later, you're missing the entire picture here. And so I had to call a timeout and say, look, you need to get grounded. This is not the reason why you do IBC, but this is where that noise and the outside influences really. have an impact on people because they have that high time preference where they're chasing investments.

And it's like the next shiny investment is here and they got to take advantage of it. And the thing about becoming your own banker is that you start to develop this low time preference where you don't discount the future like the typical investor does nowadays where, They have to just chase yield because, they got to do something with their money.

As one of my buddies who likes, he loves to gamble. And we're polar opposites on this. He talks about it as an itch and I'm just like, man it's noise. Don't text me this stuff because like he said, he'll send me some YouTube videos and I just, I don't even [00:10:00] bother opening them.

And I just tell them, that's not my speed. It's I'm low time preference all the way. I don't care about these YouTube influencers. I'm not going to be part of their algorithm that helps spread the word, that they're trying to spread because ultimately they're making money off of you.

You, you are the yield. And you should realize that and most people don't, and, everyone's out for their own. And you gotta, like I've said previously probably most recently in the last episode, you have to be your own, best advocate. And the best way you can do that is by thinking long term as Nelson would say and developing a low time preference.

Cause all good things will happen in time. Um, If you're in a rush to make it happen. I will tell you right now you need to sit down with your, the best version of yourself and come to grips with what's actually important. It's not chasing some shiny yield that if you're in a rush to Make money hand over fist.

John Perrings: Yeah. And I would say, [00:11:00] you can make money hand over fist, but with IBC, it's step by step. It's not. It's not all at once. It also leads us to point number two, where, you know, these types of things often lead to a hyper focus on early cash value. And then, as we mentioned before, just maxing out loans immediately to get the money out as quickly as you can. And, the reason it leads to this is because. Or I should say the reason it tends to lead to this or has the potential to lead to this is if the goal has been, if the goal of buying whole life insurance is to get into an investment, just the story Montoya just told, if the, if it's been perverted for the purpose of getting into an investment of course you're going to want to be able to get.

Get into whole life insurance as quickly as possible with as much cash value as possible right off the bat. And then of course, you're most likely going to borrow everything you can to get into that investment. [00:12:00] And so it just, it, it leads to some poor practices around IBC when all you're doing it for is to immediately get into that investment that you've been coached on.

To as a reason to start The Infinite Banking Process, and it's, um, you know, we talked about maxing out loans in episode 88, and it's really just, whole life insurance, Montoya calls it a unicorn asset, and it's just, it's this asset that It's so powerful. You have to qualify for it. And more often than not, when going down this path, it just turns into something that you want to bleed dry as quickly as you can, rather than cultivate it.

Rather than, grow your orchard. You're just, trimming that first plant down to the roots of the second you got it in the ground, just harvesting all the fruit before you can, plant more trees. So, um, I think that's a darn shame.

John Montoya: Yeah. And [00:13:00] to finish up on that, I'll just say I, I value and prize my liquidity. over, the sleepless nights. Of, I don't, it's been so long since I've been to the point where all my money is invested and I can't sleep at night. Those were the 401k days in, in my twenties where, the market was, was um, going south during the great financial crisis.

And, everything that I had was basically stuck in the walls of my house. Or in the market and, what little money I had in the bank. It wasn't much, it was all, predicated on whatever the markets were going to do. And I'm just so far removed from that, but it just gets back to what do you value most?

And is it being able to sleep at night? And having liquidity, knowing that you can ride out the financial storms, however they may become or however they come in your life. [00:14:00] And, if there's an opportunity, okay, great. You're not putting all your chips on the table and risking your financial livelihood.

There, there's always going to be opportunities. So I. If you're of the mindset that you know, because you can make money hand over fist, or that's what the opportunity seems to be take a deep breath. This is a marathon. It's not a sprint.

John Perrings: We're talking about early cash value and maxing out loans. And another thing that happens going on to point three here is if you're coached that you can. Get as much early cash value as you can, which we've talked about before, always has significant trade offs when you do that.

And then you're coached to max the max out policy loans to get as much of that cash value to leverage as much as that of that cash value as possible. What ends up happening is it's not a, you don't have to take much of a step further to get to a [00:15:00] point where it seems like you can pay. Way more premium than what might be reasonable for you at this point in time.

If it feels like you're getting free insurance by, getting whatever, 90 percent of your cash value available, and then maxing out the loan against that, it's almost like, Hey, I didn't even have to pay a premium here. This is like free insurance. It's, free money. And I'm getting all this leverage.

A lot of times that will lead to people being either coming to the realization themselves or being coached that they can pay a significantly more premium because they're just getting the money out anyway. And I can tell you right now, I've talked to several people just even in the last few months who were coached in that, in that fashion um, not necessarily actual.

IBC authorized practitioners, but they were coached in that manner. And then now they're in a position where it's not working anymore because something happened, they lost their job or they had another major expense come up, and now they can't pay that [00:16:00] premium, and now they've got this big loan outstanding, and it's probably going to lapse their policy, and it was all just a wasted effort.

I think that's, another, really big problem and it's really irresponsible to, lead people down a path of thinking that they can pay a big premium just because you can borrow the money right back out.

John Montoya: Yeah. I don't really have. Too much to add to that, maybe from the advisor standpoint in that as an advisor, you always want to submit good business because, we're tasked with the responsibility of being an advocate for our clients, but also as a field underwriter for the insurance companies.

And we're all working for these mutual based companies and. If we submit good business that stays on the books then that means that ultimately these insurance companies are going to be more profitable and the more profitable they are, everybody wins. But if you, as an advisor, need to put [00:17:00] food on the table and you're.

You're taking shortcuts to get there by appealing to people who, who want to have that hyper focus on the early cash values. And you're creating a pipeline. And not only that a referral, a potential referral business where these people are going to refer you to more people like them, who think like them.

And you're building a practice, on a house of cards. And, it can all come crashing down, excuse me. And what ends up happening is whether you realize it or not you have a persistency level of performance that all insurance companies track, and if you fall below that persistence level guess what happens to your contract?

They pull it, they cancel it, and you're not able to write business with those insurance companies anymore. So as an advisor you want to make sure that you're working with [00:18:00] people who understand IBC, know that it's for the long term and build a practice that is sustainable.

John Perrings: What we're buying here is a life insurance policy. It's not an account. And by far the number one thing that I see leading to lapsed policies is. over borrowing and just not being able to keep the value in that policy to keep the policy going. And so to Montoya's point, it's a marathon, not a sprint.

What we're doing is we're strategically capitalizing. And the more you try to just squeeze the turnip and Make a whole life policy be this thing that you don't care about. You're just using it to extract as much value as you can. If you extract all the value in something, it's just like anything else, you can have problems when value in other places of your life also goes away.

And so, [00:19:00] um. I just want to reiterate that, again we're not saying investment clubs are bad. We're not saying investing is bad. We're not saying investing in real estate is bad. We're not saying private lending is bad. We're not saying debt payoff strategies are bad. We're only pointing out that I think the best road to success is to set up The Infinite Banking Concept for The Infinite Banking Concept, not for a predetermined purpose that has all these trade offs.

And by the way, we're not saying that high cash value is bad, and we're not saying necessarily, we're not saying maxing out loans is necessarily bad. It's just something you have to be aware of what the trade offs are and what can happen if you. Lose all your liquidity by borrowing all the money out of there.

So, you know, The, there's no like one way of doing anything. But um, a lot of times whole life insurance is positioned as there's some [00:20:00] certain correct way. And, there are certainly principles, but there's no one correct way of doing it. It depends on what the situation is for the client.

But I can tell you that the least risky way to buy a whole life insurance is to buy it for whole life insurance, not just something you're going to ring dry the second you have it in force.

John Montoya: Yeah. And to that point, I would just remind people that there has to be an insurable need. For these whole life policies and for really the majority of people that we work with, they have families to protect. And if that's you, but you're getting into this because you were told by someone else that you have to do this in order to, create wealth through the system or to pay down debt just a reminder, don't forget your number one priority is protecting your family and you [00:21:00] jeopardize doing that in the worst way by starting a policy that you cannot sustain.

Thank you. And the death benefit, it's an incredible, it's an incredible thing to have as part of this plan because it guarantees that what you want to have happen will happen even if you're not around to see it. And until you've had experiences in your life where you've lost a loved one or potentially have lost a loved one, we kind of all take it for granted.

And I get that. It's human nature. I would just say that uh, keep in mind that this also has a bulletproof protection for your family that is guaranteed to pay out. That's that future value. And don't discount that talk about the low time preference and high time preference earlier in the episode.

We don't maybe spend as much time [00:22:00] thinking about the death benefit. And the value that it brings and the peace of mind that it brings, but once it's gone, you're setting up a a potential disaster because our health is something that we shouldn't take for granted because we don't know with any certainty.

That our health is going to be guaranteed next month, next year, 10 years from now. These whole life policies that we lock in, they're locked in for your entire life. So to discount that future death benefit, because you want to take advantage of a certain strategy, I would say think about it, put some emphasis on why why you're doing this.

And if it hasn't dawned on you that you're also doing this to leave a legacy and to protect your loved ones. Then you should refocus that priority and realize the values that you're creating for your own family.

John Perrings: Yeah. And if, if strategies are your, are the [00:23:00] thing you're most worried about and the protection doesn't resonate with you don't forget having that permanent life insurance death benefit unlocks. Many strategies in the future that aren't available right now, but will become available later on. Especially as you get into that retirement phase.

All right, everyone. Hopefully this was helpful. And if it was resonating with you, and you'd like to learn more about how this can apply in your life specifically, you can head over to strategicwholelife.

com. You can book a free 30 minute consultation with us right there, no obligation. Or if you're the type of person like I was that just likes to do all the research and learning they can before you have to talk to anyone, you can head over again to strategic wholelife. com and you can find an online course called IBC Mastery just for you.

All right. This was a good one, John. Thanks a lot.

John Montoya: All right. Thanks, John. Take care, everyone.

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