75: Turnkey Profits with Infinite Banking

[00:00:00] Hello, everyone. This is John Montoya. And this is John Perrings. We are Infinite Banking Authorized Practitioners and hosts of The Fifth Edition.

[00:00:12] John Montoya: Episode 75, Getting Better No Matter What with IBC. People are accustomed to markets going up and of course, markets going down because we have no control over it. Whether it's the value of their home the stock market even bond portfolios any number of places where we park wealth there is risk.

[00:00:33] There's opportunity costs. There are trade offs except for one. In this episode we're going to discuss how IBC with a whole life policy, it gets better no matter what we're going to include a thought experiment and some comparisons, at least close comparisons to a guaranteed whole life policy.

[00:00:53] And hopefully you get a lot of value for this episode because. It's all [00:01:00] what you put into it, including what you put into your whole life policy. First off thank you for taking the time to, to listen to the episode. John Perrings here with me feels like we've taken a little break but now we're back at it.

[00:01:10] Thank you for being here and let's kick this off. The first thing I want to do is read from Nelson's book, which we always say you should have a copy of Becoming Your Own Banker. Page 22 of The Fifth Edition of his best selling book, Becoming a Neurobanker, he says, quote, Furthermore, the policy is engineered to become more efficient every year, no matter what happens.

[00:01:35] That is because the cash value is guaranteed to ultimately reach the face amount of the policy by age 100 of the insured, end quote. Right there, that's something that makes whole life, in my opinion, a financial unicorn. It's guaranteed to work out. No luck, skill, or guesswork on your part. John, [00:02:00] what are your thoughts on that?

[00:02:02] John Perrings: You're right. It is a financial unicorn. The... So much of our life is, especially our financial life from a typical kind of financial planning standpoint, is all risk based. And, you hear people talk about, I want to, I want some exposure out there so I can get a high rate of return.

[00:02:20] People will use terms like that. It's you can die of exposure. And they're ignoring the risk part, which is the definition of risk is the likelihood of loss, not the likelihood of gain. I think, we talk about it all the time, that having at least a part of your financial life with guarantees allows you to actually go out there and take some risk in a more responsible fashion.

[00:02:43] We don't want to just eliminate all risk from our life. Otherwise, we just maybe get arrested and live in jail or something. I guess that's risky too, but it's we don't. Part of going through life is we want to take some risks and we want to try some things out and we want to go out there and try to make our dreams come true.

[00:02:59] But. [00:03:00] The way most people do it, they're betting the farm and this is a way to not have to do that.

[00:03:08] John Montoya: Yeah, absolutely. And it starts by setting a foundation. One of the major problems that we encounter is that people don't do a very good job of establishing that financial foundation. And it's because, we're conditioned to think first save money in a bank, and then we're conditioned to save money in 401ks.

[00:03:28] And essentially what ends up happening is that we accumulate wealth that's outside of our own control. So we don't have really any financial sovereignty in our life. But what if you could park a portion of your wealth? In a place that was guaranteed to increase every single year. Like I said, no luck, skill, or effort on your part.

[00:03:49] Where you park a portion of your money, it's going to get better no matter what happens in the economy. No matter what happens to stocks, real estate, bonds, what [00:04:00] have you. This is something that you don't even have to think about. It's on autopilot. What if you could park a portion of your money in a place like that?

[00:04:09] People aren't. Accustomed to thinking like that, right? Because we were just told banks, 401ks, government retirement accounts and off you go. And here we have perhaps one of the best vehicles for money hiding in plain sight. And it's it's, I'll say it's wearing a, put on a Halloween costume with a death benefit, people think of life insurance as like the Grim Reaper. Oh, it's only if I die and who benefits, not me. Here you're missing the bigger picture. Let's start with this, a thought experiment. Imagine you could start a business guaranteed to be profitable and all the work was done by someone else.

[00:04:51] Would you say no to that, John Perrings?

[00:04:55] John Perrings: No, I wouldn't say no to that. And by the way we talk about becoming our own banker. [00:05:00] What you just said, so imagine starting a business guaranteed to be profitable and all the work is done by somebody else. What does that remind you of? The banks, maybe the hedge funds, the brokerage houses, all of those entities out there, that's what they're doing.

[00:05:14] They're starting a business and all the work is done by who? The investors. Those guys don't take any risk. That it's guaranteed to be profitable by them, for them by the way it's set up. They win no matter whether they win, whether or not you win or lose. What we're talking about is becoming our own banker.

[00:05:34] So we're in a special situation where a regular person like you or me can all of a sudden be treated the same way that the insiders are treated at, a hedge fund or VC fund or something like that. We get those same guarantees for things to work out the way that we think they're going to work out.

[00:05:55] And that's what IBC is all about. Essentially creating a business that's [00:06:00]guaranteed to be profitable and it's the business of quote unquote banking, right? It's also interesting, you get on social media and you see the, business gurus on there and they all talk about 10Xing your business or it's all about, who you know versus what you know.

[00:06:16] Meaning... The successful business people out there, they're saying that, that when they start a business, it's about building the team around you so that they're doing the work and you're just leading the charge, right? And that's what's happening. With with IBC and a whole life insurance policy, we're capitalizing it, but we have an entire insurance company that's running the business for us.

[00:06:41] And you talk to a lot of folks that kind of get, FOMO because they think they need to be following what the, TikTok people say of starting businesses, side hustles, all this other stuff. Meanwhile, you can do that with IBC. You're actually doing what they're talking about by starting IBC in the business of banking, where you're capitalizing a business and you [00:07:00] have a whole team of people that the companies have been around for almost 200 years.

[00:07:04] So tons of experience and know how all running this business for you. Talk about a side hustle there.

[00:07:12] John Montoya: Yeah. And I would add the, one of the big differences with being your own banker and having a whole life policy is that the insurance company actually has skin in the game. You know what you were talking about with hedge funds and, managed money in, in, in general you as the investor are taking all the risk.

[00:07:31] And they're going to get paid. And there's nothing wrong with getting paid if they're doing their job when you lose it that hurts and they don't lose anything. What I really like about this IBC system is that these insurance companies all have skin in the game and you're transferring the risk of performance so that you can sleep at night.

[00:07:53] And that's why, we're talking about getting better no matter what with IBC. You can't do that anywhere else.[00:08:00] You're constantly having to check the markets to see what, the Federal Reserve is going to do to see, what what the, CPI is going to be, it's just it's all these things that are completely outside of your control and.

[00:08:15] Here again, you have something hiding in plain sight where you're responsible for one thing, and that is paying premium. And essentially what you're doing is capitalizing your business, the best business that you can be in. Nelson would say that the most important business in the world is the business of banking because no other business can operate without banking.

[00:08:42] And what are you doing in your personal life? Here you're either banking through your whole life policies or you're banking with a third party. You're banking with Wells Fargo, Chase, Bank of America, all the too big to fail banks out there, or even the smaller ones. They're [00:09:00] third parties that really don't have they don't have the skin in the game because you're giving them all the capital.

[00:09:07] To go make bets with, and you can strip that away from them. And by doing so, give yourself a ton of peace of mind, knowing that what you want to have happen will happen because it's all guaranteed. You can't get that anywhere else.

[00:09:22] John Perrings: Yeah. Talking about hedge funds and banks and everything and insiders. With a whole life policy, you're the insider because you're an owner. We want to talk about ownership where, you know, the managers of these financial firms, they're the owners, right? And we don't really get ownership.

[00:09:39] We get whatever we get with our investment. With whole life insurance, you're an owner. So by default you are an insider and you get treated like an insider. What better way to set your foundation than starting from that place of strength?

[00:09:53] John Montoya: Absolutely. Let's talk about closest comparisons to a guaranteed whole life. [00:10:00] And by the way, using the word guaranteed to describe whole life, I feel is redundant, but it does need to be emphasized to highlight just how set in stone a whole life policy is. Why is it redundant?

[00:10:13] A whole life is the only type of life insurance policy. That will endow meaning the cash value will increase every single year to ultimately equal the death benefit on the day that you die or all the way out to age 21. Now, in the quote that I read to start off this this show Nelson wrote that the cash value is guaranteed to ultimately reach the face amount of the policy by age 100.

[00:10:39] When he wrote that book most of the insurance contracts then. Were engineered to go out to age 100. Nowadays, they're engineered to go out to age 121. People are living longer, so life insurance companies have have adjusted the length of the contract. But same thing still holds true. The cash value [00:11:00] will ultimately equal the death benefit.

[00:11:02] That's the endowment. A guaranteed whole life. That's redundant. You can just say whole life. It's guaranteed. No other life insurance policy is going to be guaranteed. Not a term unless you happen to pay the premium all the way out. To the very end, which who can afford that? Or you buy IUL.

[00:11:21] Guess what? You're basically doing the same thing with a term. He, cause that cost of insurance is going to increase every single year. So you have to keep up with those premium payments.

[00:11:33] John Perrings: I think you hit the nail on the head. The endowment piece of it is the most important. Peace. John and I were just talking about a a client that I inherited today who's 94 years old and he has a UL policy and if he doesn't keep paying those premiums the, he'll lose the death benefit, but the policy never endows.

[00:11:53] So he has to keep paying that premium in order to maintain that death benefit and eventually. It won't be [00:12:00] worth paying the premium anymore because you'll end up paying more than what you'll get in death benefit. So now they're in this position where they have to try to guess how long he's going to live.

[00:12:09] So that endowment is a huge piece where, a lot of folks will talk about how UL products will go to whatever age, 95 or 100 or whatever, but the one thing we know right now people are living longer and I don't think it's, I don't think it's correct to try to plan for age 85 or 95 or 100.

[00:12:30] And then if it, if you happen to live longer than that, you don't get anything, right? So it's a, it's something that I think gets overlooked quite a bit when it comes to, some of the differences between whole life where there's a guaranteed future cashflow, no matter what happens.

[00:12:48] John Montoya: Yeah. And we said, or I said that we're going to talk about the closest comparisons to guaranteed whole life. I think we just did the opposite of that, but good to cover the other end of the spectrum,

[00:12:57] John Perrings: Yeah. There you go.

[00:12:58] John Montoya: So what would be [00:13:00] a close comparison to the guarantees that you get in a whole life?

[00:13:04] Meaning, in other words, what's going to be as predictable as a whole life policy? The first. Financial product that comes to mind is a 30 year fixed, 30 year fixed mortgage. That is, and this is actually an analogy that I use quite often in comparing, the difference between a whole life policy and a universal life policy.

[00:13:27] Cause every once in a while, people will ask me what's the difference between the two. And I just like to share real quickly. In your situation Mr. or Mrs. potential client do you have a mortgage? What type of mortgage do you have? A 30 year fix is typically the answer. Why did you buy that 30 year fixed mortgage?

[00:13:46] Generally the answer is because it's predictable. And I know that the payment is going to be the same for as long as I own the house. Perfect. That's a perfect answer. It's that same predictability that you get with a 30 [00:14:00] year fix is the same predictability that you get with a whole life.

[00:14:04] Once you qualify and accept a whole life policy, that base premium is guaranteed never to increase on you. And so you need to apply the exact same thinking to the way that you buy life insurance, to the same way that you buy real estate. If you are leveraging or you're taking a loan to buy it, you got to have that same mindset.

[00:14:31] You want to go with something that is predictable, that is guaranteed to work exactly how you think it's going to work. In fact, you get the amortization schedule, exactly, what your payments are going to be. In the case of a 30 year fixed, for all 30 years here with the whole life policy, you got the same type of guarantees.

[00:14:51] John Perrings: That's right. And it works like a mortgage in another way, where another analogy where this fits is every time you make [00:15:00] a payment, it builds equity. I find that analogy helps people understand, what's happening with a whole life. It's not exactly the same, but it's close enough that we can at least understand the fact that, you're buying an asset.

[00:15:12] And every time you make a payment towards that asset, it builds equity that can then be used to parlay into something else. Yeah.

[00:15:20] John Montoya: Yeah, 100%. So another close comparison, and I, use the word close loosely, is a certificate of deposit. And you get those from a bank. It has a guaranteed return for a set period of time, but I use the word "closely" compared to whole life, simply because there, there's a lot of trade offs that, that money that you put into a CD it's a Illiquid, it's not like you can leverage it.

[00:15:49] You can't take a loan against it. The interest is also taxable with your whole life policy. No 1099s, right? That money is going to grow. The cash value [00:16:00] in your whole life policy is going to grow tax deferred. And another note here is that if you do want to surrender a certificate or deposit there's going to be a small penalty.

[00:16:11] So the next one we have is treasuries. So treasuries basically is another form of debt. Issued by the government. Now, treasuries have a guaranteed return, right? The government and they I don't advise you to watch the news, but if you happen to catch a snippet of it you'll likely hear a politician boast about how the government never, default on its obligations. That's true because, they have a printing press that backs them up. So you get these treasuries that get issued with a guaranteed return of your money. But again, trade offs now. Treasuries happen to be perhaps the most liquid market in the world.

[00:16:54] But there, there is a risk of loss involved that most people don't think [00:17:00] about and it's not that you're not going to get money. You're not going to lose money. You're eventually going to get that money back if you happen to invest in treasuries. But like the, what happened in March with banks collapsing the three largest bank failures, I think in our history what that proved is that treasuries really aren't as safe.

[00:17:22] As people think they are. And what happened basically, the Fed hiked rates by 500 basis points, the fastest in history and Banks were all of a sudden, who were told by the Fed to to, the Fed was going to keep rates low for the long term. They were buying billions of dollars worth of these treasuries and thinking that rates aren't going to go up for, any, anytime soon.

[00:17:50] All of a sudden they did 500 basis points, fastest rate hike, rate hikes in history, and now banks are looking at 30 to 40 percent losses on a perceived safe asset. [00:18:00] So it's you will get your money back, but how much are you going to be able to buy with your money once you do get it back?

[00:18:08] So there, there's trade offs with having treasuries with the whole life policy. There, there is the value of your cash value. And what you can do with that you're free to do whatever you want with that value. At any time to get back to, investing and the whole reason why people.

[00:18:27] Should have some portion of their assets invested is because, we have to stay ahead of inflation, right? So the number one thing you do want to do though, is have that foundation for wealth building and be able to sleep at night, knowing that you have all your bases covered for the short term. And also for the long term too, and a whole life policy is not going to trap your money like it will with a CD create an opportunity [00:19:00] cost where you have to debate whether or not to surrender in order to recoup your value . That you don't have the short term mindset with with treasuries where, you're essentially locking that money up for two, five, 10 years. I certainly wouldn't ever buy a 30 year treasury obligation from the government, any government.

[00:19:23] But that's as close as it's going to get for peace of mind, so what would you rather have? CDs, treasuries, or cash value in a whole life policy? And I'll be redundant, a guaranteed whole life policy.

[00:19:40] John Perrings: Yeah. And it, the other, another thing to. Think about with this discussion is, a lot of people, whatever the financial entertainers and all that stuff they often mistakenly compare life insurance to investments. That's where all the by term investment difference nonsense comes [00:20:00] from.

[00:20:00] What you should compare life insurance to are other cash assets, which is basically what we just discussed today. So from a growth standpoint, Life insurances are cash equivalent asset, just like treasuries or CDs, mortgages. If you own the paper on a mortgage, that's could be considered a cash equivalent asset, but the that's this is really what the performance of whole life should be compared to. Not like a mutual fund or an ETF or, your real estate, because what we're, this is just the place where cash lands first to strategically capitalize. And then we deploy that cash to then go actually invest. So this is a cash asset.

[00:20:45] John Montoya: Yeah. And something I heard recently that I absolutely love cash is for today. Capital is for tomorrow. And if you think about what you're doing with these whole life policies. You're accumulating capital. [00:21:00] You've got the present cash value that you can use today for any reason, but the capital. It's going to be there tomorrow.

[00:21:09] And if you're applying the principles of being an honest banker, taking loans and repaying them and recapitalizing your policy, you're going to be able to do this in, into perpetuity just over and over again and, build your own fountains rather than the banks. And it just, again, establishes a foundation that gets better, no matter what, a concept that people just aren't accustomed to wrapping their brain around because they don't know where to find it. And here it is hiding in plain sight.

[00:21:40] John Perrings: Nice. I like that. Cash for today, capitals for tomorrow. That's good.

[00:21:46] John Montoya: So why would you ever surrender a whole life policy? Do you have any good answers, John?

[00:21:51] John Perrings: No, not really. The, I could, maybe I could think of some, I guess when you say surrender, you just mean give it up for the cash [00:22:00] value. So the only reason you would do that is because you didn't you didn't plan very well in terms of like how much premium you were paying or you borrowed too much, you got over your skis and didn't, You've seen this stuff.

[00:22:10] weren't responsible. You weren't a good steward of your banking system. It's really only negative that I can think of why you would surrender a policy because it... Here's the note right here, it just gets better every single year.

[00:22:24] John Montoya: Yeah. Yeah. And I would perhaps add financial education. Because oftentimes people don't know what they don't have or they don't know what they have with a whole life policy. And I can speak to that with my parents because they had life insurance specifically for my dad. He had a very small whole life policy.

[00:22:45] But. They didn't really understand what they had. In fact, they had a Gerber baby life policy on me that they cashed out when I went away to college and I pocketed a [00:23:00] nice, 1, 200 at that time. And I was pretty happy, but I didn't understand, what that. Could've grown to or what perhaps an additional banking function that would have been beneficial for me in my twenties and thirties and so on.

[00:23:15] You don't know or appreciate the true value of whole life. Until you either have someone come into your life and sit you down and say, you got to have one of these. And here are the reasons why maybe you just come into it by dumb luck, maybe you come across our show or a show is like this, or Like I did back in 2007, I just happened to come across Nelson's book, Changed My Life.

[00:23:40] That's dumb luck. But financial education you I think a lot of people just happen to to fall into becoming your banker one way or the other. But at that, on that same sort of vein, you can fall into it and it's nice and shiny in the beginning. [00:24:00] But then you don't, get past page 10 and, you don't keep going and then while you might get started and you pay your premiums for a year, two years, three years, but then you forget what it's all about.

[00:24:15] We talked about previously in another episode, your reasons why if you don't take the time. To really understand how your whole life policy is creating, can create value, more value in your life you're going to lose it. The reason why you got started and there's even what Nelson would talk about, use it or lose it.

[00:24:35] And if you weren't taking advantage of the cash value to finance your life to put yourself in a better position for the present, for the short term, the next five to 10 years for thinking long term generations ahead, which You can do this with a whole life policy. You can't do this with any other place, safe place for money.

[00:24:58] If you don't [00:25:00] grasp everything that comes with, all the value that gets created in a whole life policy, you'll lose it. You'll eventually lose it and you'll question why you even have it. And that's no one's fault. I think other than yourself or for anyone who, just doesn't take the time to really appreciate and understand what they have.

[00:25:23] John Perrings: Absolutely. The... It's pretty boring at first. And stay tuned for episode 76, where we'll talk about FOMO after getting past page 10, you implement it and then people forget why they're doing it and start doing other things because they get a little bit of fear of missing out and they skip the capitalization stage.

[00:25:43] So we'll talk about that in the next episode, but the from the perspective of this episode. It gets better every single year. And if you can have the patience and the stewardship to fully capitalize your infinite banking [00:26:00] policy, I think 100% the people that are, that do this always say, I wish I would have started a little bit bigger because they just, now it's like a rocket ship, every dollar you pay in premium creates more than one new dollar of cash value.

[00:26:18] And, from a capital asset or a cash asset from that perspective. You really can't, you cannot beat the liquidity of a whole life policy from a, a paying premiums perspective. Once this thing, once these things get off the ground it just blows anything else away. From a growth, if you compare it to other cash equivalent assets from a growth perspective and from a liquidity perspective and from a leverage perspective and a control perspective, nothing else even touches whole life insurance.

[00:26:51] It's crazy.

[00:26:53] John Montoya: Yeah, there, there is no second best when it comes to life insurance. There is no [00:27:00] second best as far as the best place to park cash. And we're beating the drum here, but it gets better. No matter what, if you have come across something that you think is superior to a whole life policy in those attributes, let us know.

[00:27:21] Cause I've always been on the lookout and I, for as long as I've been doing this, I still haven't found it.

[00:27:28] John Perrings: by the way, a real infinite, a true infinite banking professional and authorized practitioner will tell you, you don't need whole life insurance to practice infinite banking. Don't need it. You can do it with other things, but guess what? Find something better than whole life. That's why we do it with whole life.

[00:27:46] There just isn't anything better.

[00:27:48] John Montoya: Perfectly said.

[00:27:50] John Perrings: All right, John. I think that's a good stopping place for us. After a busy July, it was great to get back on on the internet with you and do another podcast [00:28:00] episode.

[00:28:01] If for you guys out there, if any of this is resonating with you first thing is we'd sure appreciate a five star review in whatever podcast app you're using. That really helps us get the word out. If you'd like to learn more about how this could apply in your specific situation, you can head over to our website, TheFifthEdition.com, and you can schedule a free consultation with us right there. No obligation. And lastly, if you're one of those people that likes to just learn and do all the research before ever talking to anyone. We've got a course just for you, online course, you can find it right at the top of our website, TheFifthEdition.Com. You can sign up right there.

[00:28:36] All right. Thanks, John.

[00:28:37] John Montoya: All right. Thank you. Take care, everyone.