115: Infinite Banking For Every Stage of Life

115: IBC at Every Stage in Life

[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 115, an IBC timeline for every stage in life. Hello, everyone. Welcome to the Strategic Whole Life podcast. I'm here with John Montoya. And have you ever wondered what infinite banking is for and how it can be applied in your stage in life? Ever wondered? If it's too late to get started, we'll tune into this episode because we're covering all the stages in adult life and how IBC can fit in. John, good to be back with you again. It's been a couple of weeks, so I'm looking forward to going through this. And if you want to really dig into every age bracket, be sure to listen to Episodes 26 through 30, where we actually have specific episodes that dig into IBC in your 20s, [00:01:00] 20s, 40s, 50s., Looking forward to going through this one.

So the idea behind this episode is to really just go through the timeline and hit on some points. You can use this strategy as you go through life. And we want to just make a note that it doesn't matter when you get started. You can get started really. Almost any time. The only times you can't, or when you're, before you become an adult, and then there is an age bracket where you can't buy life insurance anymore, but just because you can't buy it on yourself doesn't mean you can't buy it on some loved ones.

But what we're saying here is that don't worry too much about whether or not the milestones we're discussing match up with your age in particular. I'm 50 and just. Just had my first baby a couple of years ago, so I'm like late on that side, but it doesn't matter because the it's less about the age bracket and more about the milestones.

So I wanted to say that up front.

John Montoya: And one, one thing to add there too we'll probably mention it towards the tail end, but [00:02:00] minors can have a whole life policy as early as two weeks. The focus here though is as an adult. And depending on where you're at, what decade of life we want to give you a condensed version of, where you're at and, why you would get started with a whole life policy, what are you going to utilize it for, and just give you the full spectrum for each decade of your life.

So let's, Jump into it.

John Perrings: Awesome. All right, let's start with our twenties. How about I have a few clients that started in their twenties some youngsters getting out there into the workforce, into the world and already have the correct mindset of saving. I wouldn't say I have a ton of clients in their twenties.

I certainly was not in my twenties the type of person that was, being as responsible as I could be with my money. When it comes to being in your twenties, one of the things that happens that I really dislike in the working world is, you're a 24 year [00:03:00] old right out of college.

You'll get your first job, and the benefits lady, or the HR person, sits you down to go through your, sign all your paperwork, and they tell you, here's your, here's the 401k paperwork, which by the way, you now have to opt out of instead of opt into, here's your 401k paperwork, you should put as much of that of your money as you can into this. You should really try to max this out. And I think that's I really dislike that happens, but people are basically taught to, give up control of their money right from the start. And then the other thing is they're coached that because they're young, they can afford to take "risk." They can afford to take risk because you're young and you have time to bounce back from any losses.

And I think this is really a kind of a tragedy that people are taught this because they're not taught about the other side of that loss, which is they have so much longer to go where that, where the [00:04:00] lost opportunity cost of that loss has so much time to become a huge loss by the time they, get into their sixties, seventies and eighties.

So, In your twenties, this is a perfect time to get started just like all the other times. Because. What better time to start taking control of your capital right as you're figuring things out and giving you the ability to handle problems that you don't even know about yet because you're young and have the capital and liquidity to handle those problems and then start building the foundation for your financial future.

What do you think, John?

John Montoya: From my own experience in my twenties and getting my first job, this is the one time in life where, if you don't yet have you don't have a spouse, you don't have kids, your expenses are likely to be as low as they ever will be. So it's a great time to establish the discipline And establishing time preference, low time [00:05:00] preference, where you're starting to think decades out into the future, as Nelson would instruct us to do.

And when you take the ability. and discipline to save you need to start thinking about capital formation and where's the best place to formulate capital. The number one thing that people don't think about is the control of that capital. And just what you mentioned, you have to opt out of that 401k.

Because as soon as you get your first W2 job with a 401k plan, you're automatically now enrolled into it. And what you have to realize is that's not a great place for four decades worth of capital because of all the rules and restrictions. You compare it to a whole life policy, and this goes for whether you're in your 20s, 30s, or whatever age you get started, you have total control.

Over this money. And one of the best things that you can do at any stage in life is be self sovereign. How self sovereign are you if you don't [00:06:00] have access to your own capital? And if you really start to think about what IBC is for. It's so that you can give yourself more options in life. The earlier you are when you get started, the more control you have over your capital, the better off you're going to be long term when, the people in your life, maybe, you look at your top five friends, there's a saying that, who you are is probably represented in the, in, Five Closest Friends.

Take a look at your five closest friends and, if you're really close with them, ask them where they formulate capital and can probably make a pretty good bet that most of them never thought to formulate their capital and whole life policies. But if you're the one out of five who does that, especially in your twenties, imagine having a compounding asset that is growing tax free that you can access whenever you want without interrupting the growth of it.[00:07:00]

For decades for really your whole life. And that gets me to another thought. These policies they're called whole life and it'll cover you for your whole life, but it is not meant to be your whole plan. I really want to throw in a caveat there that this is not a one size fits all.

This is not the only thing that you should be doing and, you're done. This is the foundation. This is where you get started. And again, it doesn't matter what decade you get started. It just matters that you get started because the most important thing is having control over your capital and formulating that capital in a place where it gives you more options and the ability to really Be self sovereign and just make decisions that benefit you and potentially your future family as it grows.

John Perrings: I love it. And I think the main takeaway for your 20s is start with the foundation, like John's saying, it's not going to be the only thing, but in your 20s, it might [00:08:00] be. And that's okay. We have to start with the foundation.

All right. Into our 30s. So now capital is starting to grow. Your income is starting to grow. If you did happen to start in your twenties, you now are probably, accumulating a significant amount of capital and now you can start investing. So to Montoya's point, we're not saying whole life insurance is the only asset you should ever own.

It makes every, all the other assets you own work even better. And so now you're in your thirties and you might want to start investing, just have to, I'm going to have to steal your line, Montoya. You can't build a house by starting with the roof. And so now you've built the foundation. Now you've built the foundation of your house, and now you can actually start going out and investing.

Some other things that, that might be happening. Your family you might be starting to build your family. Maybe you're getting married and having kids by this age. Maybe you're buying your first house. Maybe you're starting a business. All of [00:09:00] those things, one of the, one of the great things we can accomplish by being well capitalized is we can take advantage of the changes that come our way as we start going through life rather than reacting to them.

And now we're in a perfect place to you know start taking advantage of those things because we've started capitalizing 10 years prior.

John Montoya: And one thing to look at when you're in your thirties is to also assess where you are with your life insurance. You really want to do that, in your forties and fifties. Fifties too, but in your thirties, that's where you're going to see a significant most likely increase in your income and you got to double check.

If your income has gone up, two times, three times from where you started in your twenties maybe more has your life insurance protection increased with it. And, if so, what type of combination of coverage do you have? We're talking about whole life, but it's really important that you take a look at the type of other [00:10:00] coverage that you would have and that, that would be convertible to, Term and convertible being the key word there, because as your income increases, as your savings discipline hopefully has hardened, you're going to want to realize that if you're maxing out your first policy, or first two policies, depending on how young you got started maybe, if now is the time, you should be locking in more insurance, convertible term, and potentially Having the ability to give yourself the option for even more policies in the decades to come because in your thirties let's face it.

And from my own experience too this is likely, and I say this Kind of holding back because I'm fighting with with my best mile times and my best three mile times as I approach age 50. And I realized now that in my thirties, I was probably at my. Peak health and to be [00:11:00] able to lock in that health for the next 10, 15, 20, maybe even 30 years on a convertible term.

It's really advantageous for you to be thinking in that way because the one thing that does tend to go by the wayside, if you're not managing. What you eat, how much you exercise it's your health and you just want to be cognizant of that. So I think probably one of my biggest takeaways in my thirties now that I'm a decade out from it is don't take your health for granted.

Because this is likely the time, especially if you don't take the time to prioritize it. Your health will likely never be. As good as it was in your thirties. So take that for what it's worth. We have no time machines. We can't go back in time, but if you are in your thirties, the one thing you can do is lock in your health for a set period of time so that you can ensure that what you want to have happen is [00:12:00] guaranteed to happen.

And what I mean by that is if you're building out your portfolio of whole life policies, you're going to guarantee that you have the ability to do so. in the decades to come.

John Perrings: One other last thing about your 30s is it's such a good time to really start digging into your education. Really learning how money works, in your 20s, you're, you're out having fun. You may not be prioritizing that yet, but your 30s is a great time because you still have a lot of time left and going out there and getting educated on how money works I think is a.

One of the best things you can do in this decade as well.

All right. So now we're in our forties. And what I see in this decade is a lot of people are really hitting their stride. They're starting to become a lot better in whatever profession they've decided to enter.

Their income is starting to increase and that income is starting to reach a significant level, so to speak. So the question is, where do you store it? Also, People [00:13:00] tend to be especially in the urban areas, I would say the big cities, this is actually where people are starting to get married and having kids as opposed to their thirties.

It's probably more common in their forties. And as all these things are happening, where do you, where are you going to keep your capital? Where are you going to store that? And where is it going to do the most for you and create, start really creating some efficiencies? It's really just like a build, everything's getting better in your forties. And it's a great time to start prioritizing, where you can have the most strategic use of your money.

John Montoya: Yeah, I would just add that it's really a decade in life where with your profession, you really should be doing your heavy lifting. We can also apply a little bit of that to uh, Some heavy lifting with your whole life policies is really where you want to take advantage of that experience from the prior decades of savings.

And now you hopefully have the ability to be maxing out. Those deadlifts, [00:14:00] so to speak, right? And really capitalizing in a, in not only a strategic way, but capitalizing in a way that you're now starting to see, 20 years down the road for retirement and how the extra capital that you're putting into these whole life policies in your forties, it's given you opportunities in this decade of life, but it's also going to help set you up for your golden years.

And the earlier you can really get started with overfunding your whole life policies in your forties, the better your retirement is going to be once you hit your sixties and definitely beyond.

John Perrings: It's a great point, because in your forties, you still have You know, early 40s, you still got 25, 30 years left, depending on how long you're, planning on working. I don't think we, either of us really liked the word retirement. We're probably going to be doing something, for as long as we can, but that's still a long ways, a long way to go.

And the more strategic you can [00:15:00] get, the more it's going to really accelerate everything. Everything else that you're doing. All right. So in your fifties, what's going on in your fifties? So that's where I'm at. A lot of times people have kids going off to college. Kids are getting married sometimes around this age.

By the way, It's also an awesome time to start IBC. I love talking to people in their fifties because they've already done a lot of other investing. If you haven't already started IBC, a lot of times they've got a bunch of money and other types of, typical retirement account type assets, stock market type assets, and so they tend to have a little less.

FOMO, Fear of Missing Out, and they're more willing to allocate a significant amount of their income towards building the IBC side. So I love talking to people in their 50s because it's a pretty easy discussion to have because it's easy to see the numbers. This is a great time to get started, or if you've already been going, now you've got [00:16:00] you probably have a significant amount of capital accumulated to start covering some of these expenses that come a little bit later on, like kids getting married, sending kids to college, things like that.

John Montoya: I think one of the points I want to make here is that for most people who are getting started for the first time with a whole life policy, because this is just where, you discovered a whole life policies. You're thinking I wish I would've got started, two decades ago.

And yes, that's always true. But you're also thinking it's going to be more expensive now. And that's not necessarily true. There was a colleague of mine that I worked with over 10 years ago now, and he ran the numbers and he actually showed the most efficient All right. So the first time to get started was right about age 50 and a half.

And that really blows people away because they're thinking, Oh I want to get a policy started on my kids and my kids eight years old, 10 years old. And we've discussed that in a [00:17:00] different episode that it doesn't work out that way. And that's a whole nother topic by itself, but getting started for yourself in your fifties, if you're thinking that it's going to be too expensive.

That's not necessarily the correct way of thinking about things because the way that we're structuring a policy, it's not so much primarily for the death benefit. The death benefit is extremely important, but the way that you're thinking about life insurance is actually the opposite of how we're thinking of it because we're thinking of solving for your need for financing and what's one of the major.

If you need to finance in your life, moving forward, it's your retirement, you need to finance your retirement. And most people never frame it that way, but when you start to frame it that way, and you start to go down the rabbit hole on whole life policies, and maybe, we've got over a hundred episodes now, you go through our episode [00:18:00] lists, you do the IBC mastery that's available the link is on our website.

And, you ask us questions, you reach out to us we're going to educate you and put together numbers that will show you that what you thought to be true when it comes to the cost of these whole life policy just isn't so. and , that's, that's the biggest takeaway I want to share with people out there is that if you're getting started in your fifties. like you said, John, it is a great time to get started. You just need to have it framed so that you can understand all the benefits that you're going to reap. By getting started in this decade. And yeah, I'll leave you with that on getting started in your fifties.

John Perrings: Really great points on the retirement side. I think, starting in your fifties, you still have a runway to build up significant capital using IBC. And what it does is it essentially creates a scenario where you can double the amount of [00:19:00] retirement income you have because you've created that certainty asset and you can, the numbers are pretty easy to see.

Once you get get into your fifties and sixties The new money going into your retirement accounts actually is not creating a whole lot of value for you because it's all the money you had in there before. That's really doing all the heavy lifting on the growth. So it's really easy to justify moving your money into a different type of asset, a certainty asset, whole life insurance, and having that.

Combined with your growth assets creates massive improvements in the amount of income you can have in retirement with guarantees. So it's a great time to start looking at IBC and whole life in your fifties. So now we're getting into our sixties and retirement is right around the corner. This is a crucial time.

 There's this little window A few years before retirement and a few years after, and I say a few more like, you know, five years before, five years after, there's this window that any, major [00:20:00] market corrections that happen or any losses that happen in typical retirement planning accounts are going to have a very significant effect on your overall, how much you end up retiring with and how much you actually have to get through the rest of retirement. The later you get negative returns on the accumulation side the greater the effect it has on how much you end up with and then negative returns in the early years of your retirement when you're pulling money out, creates massive. Losses in your account because you're pulling money out.

You have to liquidate more shares to get the same amount of retirement income you need when the markets go down and you have a loss. So this is called sequence of returns risk. And people are really at a dangerous stage right around this time. And having some kind of control and certainty around what you're doing, it's also a great time to start looking at whole life insurance and you can start looking at things like [00:21:00] Montoya was talking about, single premium whole life insurance, if that makes sense.

But you can also just look at funding, whole life insurance, just like we normally recommend doing. The, what's great about that is at 60, you now have the flexibility to start moving some assets from your retirement accounts with no penalties. And so you actually do have a source of funding without coming out of your pocket.

It's a really easy, simple retirement strategy that you can start building some of your assets. So the sixties are also a great time to start looking at IBC and whole life insurance. And again, , creating that d distribution asset, which comes from insurance products. You can significantly improve what's happening with your retirement income situation by having both of those types of assets.

John Montoya: Yeah. You hit on a key point and that for me, I'll call it taking risk off the table. And if you have assets that have accumulated [00:22:00] in in such a fashion that now is a time where you want to cash in on those assets. Where are you going to. Keep that those capital gains. Are you going to keep it in someone else's bank or do you want to establish your own family banking system through whole life policies?

And it's a way to take some of that capital, some of that risk off the table and now put it into a generational plan where you still have access to it and access it, access to it via policy loans, tax free, but you're setting up your next generation with generational wealth. That is also going to be tax free.

Whereas if any other type of assets there, there's going to be some sort of taxation there. So you're really putting a plan in place where it's going to allow for a really smooth transfer of wealth from one generation to the next, but do so in a fashion that's going to allow you control over that capital while you're still alive and this is [00:23:00] also a decade where you, if you haven't in your fifties, you're also starting to think about how are you going to cover long term care expenses or chronic illness expenses? And here you have whole life policies nowadays that come with these chronic illness riders, which will give you access to the death benefit while you're still living to cover a long term care like event, where if you're.

You're certified by a doctor that you can't do two out of six activities of daily living. Here's a pool of capital. so much for joining us today, and I look forward to seeing you in the next one. experience. The average long [00:24:00] term event experience is about three years. And so if you do the simple math up to 24 percent per year, that's about four years to cover a long term care like event through one of your whole life policies at this point.

So things that you don't think about, but. We, we've talked a lot about getting more economic value in our show and here's something that doesn't really get discussed much because, the eyes are always on the prize of retiring as soon as possible, but you don't take into consideration of what your health is going to be like going into your seventies, eighties and beyond, and how are you going to cover that type of event in your life?

TheFifthEdition. com here's some planning that you can do. And, oh, by the way, it it's automatically included as an additional benefit if you're able to qualify for these whole life policies in your 60s. Yeah, that, that should that should be discussed too.

John Perrings: Yeah. When you're in [00:25:00] this stage of your life, even in your fifties where's your next best dollar? Going, where should it go so that it's doing the most work. And I would argue that going, just putting more dollars into your retirement account is not actually doing a whole lot for you because it's all the old money that's doing all the heavy lifting.

Meanwhile, if it's going, if it goes into whole life insurance, for example, You're getting an actuarially discounted dollar. You're creating, multiple dollars in death benefit for every dollar that you put in it. So not only is that going to help you in retirement, but when you, once you get into your kind of fifties and especially sixties it happens every time.

I talk to young people, and they're not worried about the death benefit. They're like, eh, I don't care about leaving anything behind. Something happens when you get into your 60s, and that becomes the number one priority. I know if you're not in this area, you're probably not going to really appreciate the point I'm making here.

When people are in their 60s, if you're listening to [00:26:00] this, that, I guarantee that's on your mind. It becomes a very important thing to pass something along to the next generation. What else can do that better than creating a life insurance death benefit? I'll say one more thing about this in this age bracket.

If you have IUL or VUL policies sitting out there and they have a cash value this is the age where, Montoya mentioned 50 and a half was a very efficient time to buy life insurance. Once you start getting into your 60s, that's where that mortality curve really starts to hockey stick on us.

And the cost of insurance starts to increase. If it's still worth buying, if you can get it, But if you've got some, like old IUL or VUL policies with a bunch of cash value in there, to Montoya's point earlier, when's the best time to actually lock those in? So if you can still qualify for whole life, it might be a good time to take, start taking a look at a 1035 exchange to lock in the cash value that you have and create some guarantees around that [00:27:00] rather than let it sit there and let the, let, The winds of change affect the cash value where if the costs of those IULs or VULs start to increase, and especially if you can no longer pay a premium on those policies what better time to lock in those the gains you've earned on your cash value by putting it into a whole life insurance policy, and that's just called a 1035 exchange.

It doesn't always make sense, but it could.

Go

John Montoya: And you're being too polite there when you say if the cost of insurance starts to increase, they are guaranteed to increase on a universal life chassis. So if you do not realize this yet you need to realize it and you need to request an enforced illustration. And what you want to look at is 1030 1035 in what available cash value.

You do have into a guaranteed product, that way you can preserve the cash value that you have remaining and still be able to [00:28:00] have a death benefit that you're not going to outlive because the potential with those policies is that your policy could lapse while you're living.

And that's in my book, not the definition of a permanent policy. But unfortunately the life insurance industry does generically categorize any form of universal life policy as permanent. So be your best advocate, request the in force illustration. If you have an IUL, VUL, and if you need help, we can certainly help you.

Crunch the numbers so you can come to your own conclusion, but I think what you're going to find when you do look at those in force illustrations is that your policy is going to lapse. At a certain age in your late seventies eighties certainly somewhere in there. And if you ask yourself what's my life expectancy?

And you expect to live longer than than what you see the policy, what year you see it lapsing you need to do something about it pronto.

John Perrings: [00:29:00] Yeah. All right, let's get into our last category, which is like 70s and beyond. So number one, you can still qualify for life insurance, in your early 70s. It still may make sense, especially if you're, on the higher income bracket, it could make sense to start taking a look at having some permanent death benefit for estate planning purposes.

 There's still no better way to cover estate taxes than life insurance.

If you're in higher net worth categories you're going to get to a place at some point and your estate planning attorney is going to recommend you buy some whole life insurance.

Why wait until you're in your seventies to do that? So going back down the ladder of our age brackets here Start now, get that in place because what better way could you have to cover a possible future estate tax situation than to start buying life insurance as young as possible because it never gets more efficient than today.

 You can basically have your estate plan [00:30:00] completely figured out if you just own a significant amount of permanent life insurance.

So that, that's number one, but number two is no matter what, even if you don't qualify or you don't want to do it, anything like that, this is the perfect time to maybe start funding a minor child.

So we're going full circle here and going back to the beginning of life, the best People to buy permanent life insurance on children are grandparents using some of the extra income that you may have, because a child's policy is usually cannot be very big. It's a, it's always a percentage of the highest insured parent.

And so a few hundred bucks a month even could come from grandparents and they could start buying policies on their grandchildren and now their grandchildren are set up with, decades and decades of uninterrupted compounding and setting them up for success starting from day one, really.

John Montoya: Yeah, that's perfect. I've got nothing to add there other than in your seventies, this is pretty [00:31:00] much the last decade to buy life insurance. Every once in a great while I'll have someone reach out to me and maybe it's someone in their fifties and sixties and they're calling on behalf of their parents and I always have to break the bad news that you know, age 79.

Essentially, as the last year you can buy life insurance, the mortality costs and expenses just prohibitive to do so beyond age 79. And furthermore 99 percent of the life insurance companies out there don't have a product for someone older than 79.

 All right, everyone.

John Perrings: Montoya, this was a good one. Thank you very much. And again, for those of you listening out there, just a reminder, you can go to episodes 26 through 30, and you can, hear our thoughts as we dig further into more detail in each one of these decades and take a listen there. If any of this is resonating with you, and you'd like to learn how this could apply, In your life specifically, you can head over to www.StrategicWholeLife.Com and you can book a [00:32:00] free 30 minute consultation with us right there. And we can talk exactly about you and your situation. Or if you're the type of person that just wants to keep learning and learn everything they can before talking to someone, you can go to www.StrategicWholeLife.Com. And right there at the top is a link to our online course, IBC Mastery.

All right, Montoya. Thanks. Good to talk to you again.

John Montoya: All right. Likewise. Thanks everyone.