70: When to Get Started with Infinite Banking

070 When to Get Started with IBC

[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.

John Perrings: Episode 70, when is the best time to start IBC? And in this episode, every so often we'll talk to people that kind of have some uncertainty about, when is the right time to get started with IBC. And so in this episode, we'll talk about the right time from the perspective of.

Three things. Underwriting and qualification, your financial situation, number two and number three, doing your due diligence. And so John Montoya, great to be back on the podcast with you. Any quick thoughts as we start working through these three topics here? I.

John Montoya: First one, never better time than today to get started.

That, that's the truth of it. 'cause we're not getting any younger. Hitting on the first bullet point that we're gonna tackle here, underwriting and qualification there, [00:01:00] there really is never a better time than today. Nelson always talked about thinking, generations ahead.

You have to start at some point and why not today? We'll get asked questions like what's the, the youngest you can start. And to most people's surprise the youngest that we can underwrite someone for a whole life policy is two weeks. So if you're, expecting and you want to get a policy started not only for yourself, but your thinking generationally.

You can get that policy started 14 days after your baby is born. And then at the, on, on the other end of the spectrum, how old is too old?, When is it too late to get started? And one of my clients got started at age 77. Now this was a 1035 exchange from a variable Universal policy that was imploding on him.

But he got [00:02:00] started at age 77 and he was in really good health and he qualified. But the latest you can realistically start. Is age 79 and 364 days, meaning if if you turn 80 that's like. The struck the clock striking Midnight. Midnight. So you don't wanna wait that long.

Obviously but just keep that in perspective the best time as always today. And not only that, something you and I have said frequently on the show, John, is that life insurance is something that you can't. Just buy, you have to qualify for it. So many people that we talk to, they, they have the best intentions of getting started right away, and we're excited for them.

But we always have to go through this process where we submit an application to find out. Where they get rated, at the best rating, preferred Plus, or whatever the rate, the rating is at the insurance company. Or maybe it's a standard rating, meaning you're an average good health, or it could be a substandard [00:03:00] rating or worst case, a decline.

But there's only one way to find out, and you and I we don't have that gift to, rubber stamp someone's approval. We have to take that application the process is pretty simple nowadays, thanks to technology where, we can submit an application and if everything looks good on that application.

There, there's a automated underwriting approval process where people can get qualified almost instantaneously. No excuse not to see. Where you're at, where you're gonna qualify, because it literally, I tell people I, I just need five to seven minutes of their time to initiate an application and then 10 to 15 minutes on your end to complete it, and we'll find

John Perrings: out.

Yeah, that's a, it's our timeframes are right on, I tell people it's about, it'll take 'em about 20 minutes and it's it's always a little I don't know astounding to me that you still get people out there that won't take 20 minutes just to fill out an application. They'll just let it.

They'll let it fall to the wayside. [00:04:00] By the way, I can't believe you brought up v u l Don't get me started. That, that's triggering. I'm not gonna, we're not gonna go down a rabbit hole on V U L, but the, there's a couple other things to this too where, the underwriting and qualification You're never gonna be younger than you are today, and we, you may or may not be in better health than you are today.

So some of the other things to think about on this are if you're in good health, then there's no reason not to, take advantage of a good health status today. However, if you're in, if you are in bad health, sometimes that can be improved and. So sometimes people will say they maybe wanna put off applying for life insurance.

They wanna quit smoking first or they wanna lose some weight. Those types of things. And those are, It's valid to think that, however we also don't know if things could get [00:05:00] worse to the point where you can't qualify at all. And so even if you have some things like, you're overweight you've, things that can be corrected like smoking, weight again.

It still actually could make sense even though the premiums are going to be higher because your risk class will not be as good as, what it maybe could be. But if you, there are two things there. You could buy a whole life policy. I. Pay the higher premium and then make those improvements to your health, right?

So this is obviously not guaranteed because we don't know if you're actually gonna do it. But if you do, and you can show a track record for say, a year, if you can quit smoking for a year and show that track record, you can actually do a policy change later on, like a year later.

That, and if you can demonstrate those improvements and the change can reflect your. Upgraded health status. So you can go from a standard or a table rated health status, table rating means [00:06:00] below standard. You can go from a standard, below standard or preferred. You can go all the way up to, preferred plus or whatever the carrier happens to call it.

And you can make those changes to the policy and reflect the correct premiums for those the upgraded premiums for those types of policies. And then the other thing you could do is maybe buy some lower cost convertible term insurance where you keep, you keep the pre, the premium price low while your health is, maybe substandard.

Make those improvements. Do a policy change and then convert over to whole life, right? So there are options for you where you don't have to necessarily wait. Even though your health could be like a, something that you'd like to improve first, because again, even though your health is substandard, it could go, no go standard or, no go status.

Depending on what happens. My advice is always to, if you're in the market for life insurance, buy as much as you can when you can. And then, some of those changes can be made. I also wanted to point out just a [00:07:00] subtle thing. John, Montoya just mentioned that a baby can be underwritten as early as 14 days.

Another side of that is what about if you're pregnant? So I've had a few cases where women who are pregnant have started. They're like, Hey, maybe it's not a bad idea to have some life insurance right now and, we can get you underwritten even while you're pregnant up to a certain point.

I think it's a little, I don't know the exact point, but the underwriters, I think I've gotten as late as eight months. Where, someone was able to be underwritten and have life insurance before they have their baby. So that's another little piece to that. The baby story.

John Montoya: And the fancy industry jargon name for what we're talking about is reclassification.

And the reason why that's top of mind on my end, because I'm gonna date myself here, but clients that I've had for quite a while took out what's called juvenile policies on their kids. And guess what[00:08:00] we're recording this first week of June. It's graduation time. I have clients. Who started at a very young age, thanks to their parents.

And now they are 18 And adults. Yeah. Which means that the juvenile rating that they received on their whole life policy, typically it's a, what's called a standard rating, which technically is equivalent to a smoker's rating. That's given to juveniles. Once you reach adult age, you can reclassify that whole life policy to the best rating you, you can qualify for.

Reclassification. Yeah, that, that's something. I'm glad that you brought that up, John, because it's something that I do with my clients. Not like every month or so, but it's, yeah, they it happens I'd say probably five to 10 times a year moving forward because people start off where they start off and either through age or improvement in health and you can start at a standard [00:09:00] rating and then get bumped up to a better rating.

The preferred rating class With improvements, like you said. So reclassification is is something that does exist where, you can make the situation that you're starting with IBC and improve upon it, which is awesome.

John Perrings: That's great. That's a I hadn't I haven't reached that point where I've been reclassifying, children's policy.

So that, that's actually good to know. I just learned something. That's awesome. One final thing in the underwriting and qualification. I just, we've talked about this in the past and so there's no better time than today. I. But what this also applies to is, treat every policy you buy, like it's the last policy you can buy.

And what I mean by that is we want to design our policies so that they give us the best long-term options without. Obviously everything's a trade off. We wanna have good cash value growth, but we wanna design that policy so that [00:10:00] maybe it's our last one. So if it's our last one, do we wanna hamstring it and only be able to pay a premium in there for five years?

Or do we want to create a policy that we'll be able to pay into for as long as we want? So the underwriting and qualification goes into, future planning for what we can do with life insurance as well. Yeah, great

John Montoya: point. Let's jump into the second bullet point when to get started and look at, your financial situation because maybe where you're currently at may not be the best time to get started with IBC. And this could be for a lot of reasons. John, you wanna hit this off?

John Perrings: Yeah, I think the. Probably the number one thing might be your cash flow. So I just talked to a potential client yesterday and we went through all their financials and, we looked at their income and currently there's one spouse earning an income.

The other one is in between right now. So they're on. Kinda less income than what they anticipate in [00:11:00] the future. But we can't really, we have to plan on what's available now. We don't wanna put people in a situation where they're overextended and, maybe the other spouse doesn't find a job yet for a period of time.

So we, we have to. Be responsible for determining what they can do now, and they just their expenses and their income and expenses just didn't leave enough room to pay a reasonable premium. And when I say reasonable, even just a couple hundred, few hundred dollars a month. And We decided that it was not the right time to buy whole life insurance, but because the health rating was so good on one spouse, we determined it could be a good move to buy some lower premium convertible term insurance.

So going back to convertible term where we're locking in her insurability locking in that death benefit, and then now she'll have the option if she decides to buy it, she'll have the option to. Convert that at any time in the next 10, 15, 20 years, depending on which [00:12:00] term they decide to the length of the term they decide to go with.

So I'd say cashflow is definitely a factor where if you, if your cashflow is low, you don't and you don't have any like real emergency funds saved up. We really need to, unfortunately kinda look at that and. We, another commitment may not be the best the best way to to move forward at that time.

John Montoya: Or there's a, there's another. Situation where maybe you have lots of debt, but you also at the same time have liquid assets available. In that situation we would recommend that you would seek out an IBC consultation. That way we can take a look at your current situation and make a recommendation.

Now, it could be, the parameters with where you're at still don't fit. To get started right away with an IBC plan, but we can give you some pointers on what to do as far as next steps so that you can put [00:13:00] yourself in a better position or, maybe if your assets, your liquid assets are sufficient enough, maybe there is a way to design.

A plan that can incorporate a portion of those liquid assets. That way you can start redirecting those debt payments back to your policy instead of building fountains for, the credit card companies. Different situations for different people. But I think the main thing to really stick to there is that it wouldn't hurt you at all to reach out.

And get another pair of eyes on your situation with someone who is an IBC practitioner. That way you, you have, the confidence in knowing that. Okay, I've had someone else look at it. Someone who understands IBC whole life policies and how to use it as a financial system, a Banking system, and, get an expert opinion.

John Perrings: Yeah, and I think, it comes down to the cash flow. So it's we gotta look at your cash flow and we gotta look at your liquid [00:14:00] assets, like John saying and there's there are strategies that I. IBC could help you pay down some of this debt. It just depends on the type of debt, the interest rate of the debt.

All of these things matter. I personally don't think it makes sense to pay down low interest debt, but if you've got some high interest debt, it could make sense to, use IBC and make that more effective. We can show you the math on how you know funding Pol a policy first, if you have the cash flow to do it to help pay down some of that high interest debt.

It. It totally makes sense and you're gonna end up in a much better situation when that debt's paid off. So all that stuff totally makes sense.

John Montoya: Yeah. And the last. Category that we've brainstormed on here is what if you have no debt and you've only just started to build your asset base, but you have the cashflow minimally to contribute to an IBC policy of at least $500 a month.

And that's an adult whole life policy. I know we've mentioned a couple times juvenile [00:15:00] policies which. Can be started at a lower monthly premium. But if you have the cash flow for at least $500 a month minimally then you know that sets up a situation where, we can go ahead and look at a possible scenario for getting you started with IBC.

And again, reach out and talk to a qualified IBC practitioner.

John Perrings: So question for you, Montoya. Is that 500, is that a hard number for you? Or do you have some wiggle room on that? Good

John Montoya: question. It's not a hard number. Generally speaking, if it's like 400, 4 50 yeah, that, that's close enough because the premium, it's we've talked about this in previous episodes where, there's a floor and a ceiling.

So it's not like you're hard capped at $500 minimum per month. You have flexibility in these whole life policies because of the PUA writer. But I also, for me, in establishing that $500 minimum [00:16:00] it's because I want to put my clients in the best possible situation. And if they don't have at least $5,000, Set aside someplace else in a traditional bank account, then you know I really have strong reservations against, Starting a whole life policy because I've experienced it more than a handful of times where, you know, people who are at the lower end of the spectrum as far as contributing premium just because their cashflow isn't Isn't sufficient enough to, do more than $500 a month.

If they have a life event, something as innocuous as their car breaking down and they got a hefty car bill, or maybe they need to replace that car what's the first thing they deem as well? I gotta cut. I've had that unfortunate experience where people lose sight of the value of their whole life policy and what goes.

Their whole life policy. And it just exactly it sets them [00:17:00] down a path where, maybe they'll start later on, but they're gonna have to restart at an older age where the cost of insurance is going to be a little bit more so they're locking in a lower floor on their next whole life policy, or they just never come back to it.

And, they just they don't have the safety net that ends up building organically through this policy to help them get through those life events like a car breaking down.

John Perrings: Yeah, it's like so I think what you're saying with that $5,000 in a account is having some kind of an emergency fund where you can roll with the punches.

So we don't wanna put people in a situation where if one thing goes wrong, all of a sudden, they can't afford to pay a premium. And if that happens in the early years of the policy, they're gonna lose money. There's a, because of the capitalization period of a life insurance policy in the first few years, you're gonna.

We don't want to have a situation where you have to stop paying premiums.

We [00:18:00] also don't want to have a situation where you can't pay the scheduled premium that we designed for you, including the PUA. So John, Montoya mentioned that. There's a minimum and a maximum where you don't have to pay the PUA, but if you get into a situation where you don't pay that PUA for a long time, in the early years of the policy's not gonna perform the way anywhere close to the, where you think it's gonna perform.

Because the PUA is really doing all the heavy lifting on building cash value in the early years of the policy. So those are all the, I think, we're talking about. Monthly minimums, not from a, we're not gonna write a policy if you can't pay 500 a month. It's really more of a benchmark of what's the rest of your financial life look like?

And To me, I don't know if you agree with this Montoya, but I've written as low as 250 a month, but they had some savings, right? So I followed your rule of thumb, but I bent that rule a little bit because I saw that they had some savings and so they just didn't have a lot of income.

So to me I'm like, yeah, 250 bucks no problem. [00:19:00] Because they're, they were set up for their current income so that they could roll with the punches if they needed to.

John Montoya: Yeah. My, my initial minimum used to be two 50. But what I found through experience over time was that the policies that did lapse tend to be the ones that were doing two 50 a month.

Yeah,

John Perrings: that's true. I've noticed that as well. And it's just yeah. And I don't know why that is exactly. It might just be because of, it is harder to scrape by on a lower income as prices are rising and all that stuff, but, I think it's also maybe a little bit of an education thing where in my early years when I wasn't earning, you know, like in my early twenties, a 250 a month premium probably would've been, what was appropriate for me.

But I was also an idiot. And so I didn't know how to save money. I didn't know how to have an emergency fund. I was living check to check. So I think a lot of times those. Lower premiums are some, a lot of times younger [00:20:00] people and they just don't have the education yet, and they can, they sometimes make mistakes and so I think that's what happens sometimes.

John Montoya: I. I totally agree with you. The education on personal finance and just really learning to value these whole life policies. Yeah. And making them a priority. Making a priority. Exactly. The longer you live, the more life experience we, we get underneath our belt the. The better perspective that we have on things.

Yeah. And especially with these whole life policies, it's really challenging when, you've been taught to think about life insurance in a certain way and for most people as a cost, as an expense. Yeah. Yeah. It's a cost and expense, and it's a commodity. I wanna shop for death benefit.

How much death benefit can I get and what's the least amount that I can pay for it? And there, there's no. Additional value that, that that they can [00:21:00] see by that methodology of buying life insurance. And the, as I was saying, the older you get the better perspective on life that, that you gain.

And what's going to happen too is your conviction level will go up because you're gonna have these experiences in life. Where you can lean on your whole life policy and the cash value that you've been capitalizing. Yep. And creating where it's gonna smooth out all the bumpy roads that lay ahead of you.

Yep. And we don't know what's coming around the corner, but if we have, a place, a safe place for cash that allows us to smooth out those bumps in the roads you're gonna be better off for it. Yeah, it's something where, you just have to experience life.

And maybe for those people that are new to IBC hopefully you're shaking your head in agreements saying, yeah, realizing some of the bumpy roads that you've had in your own life. How much better would you have been able to come through and get by if you had [00:22:00] this type of asset in your portfolio?

John Perrings: Yep. Exactly. That's that's a good one. The, I think the last thing we wanted to talk about today was doing your due diligence, as you're going through, I. There's a ton of noise out there. Especially in the last couple of years. Gosh dang. TikTok is crazy right now.

People are talking about doing IOLs for Infinite, Banking, like a lot of crazy nonsense. And I I won't go down that, I won't go too much further. Researching. Researching with the available info a lot of times only leads to more uncertainty. Like I, I talked to a guy today who's just, he's got all these questions.

He's what about IUL? How do you design a policy? All this stuff, and it's like, It's crazy, like how much analysis paralysis you can get into if you're trying to learn everything on YouTube or TikTok and I'm not, I guess I'm not really trying to bash those guys except for the ones that are, full of it.

I will bash them, it makes sense. [00:23:00] We all wanna try to learn and we all wanna try to educate ourselves. We want, we all wanna try to do the analysis. At some point though, there's a little bit of a leap of faith and I actually just wrote a LinkedIn post about this and there's a little bit of a leap of faith.

And if you look at all the financial products that you could buy out there, whole life insurance requires the least amount of faith of all of them. It's the, it's got. Rock solid guarantees. Even if you get the worst quote unquote designed policy, meaning like a straight whole life policy, guess what?

That's gonna be a great policy. Even if it's, even if there's no PUA, Rider or anything like that on there. So the amount of faith that's needed is pretty little compared to other types of insurance products where. You can go wrong with that leap of faith is when you start talking to people who are focused only on cash value and specifically only on early cash value.

That's where problems can come in. 'cause they have to introduce little [00:24:00] components to the policy that can cause the policy to blow up in the future. So the due diligence phase it's a tough one. What do you think, Montoya? Because it's kinda there's so much bullshit out there that. It's hard to know who to trust.

So I always say, go to the Nelson Nash Institute. Those are the people that have taken the time to get the extra education, the extra, philosophical need for, buying life insurance. Why to buy life insurance, how you can use it. It's all there. And all those people have done the actual work, to get to that, to get to that space.

John Montoya: I think the only thing I really can add to that is that the proof is in the pudding. When people contribute to 4 0 1 Ks or bi mutual funds and, they have what I think is grandiose visions of performance that, that, in no way can be guaranteed. Why? Because it's an investment.

And not saying that you shouldn't have investments, but [00:25:00] what I wanna say is build the foundation first. Yes. And how do you do that? You do that with rock solid guarantees. What does a whole life policy provide? Rock solid guarantees. You build your foundation out so that you can go out on the risk spectrum.

Yes. And, choose the different assets investments that you want to make and you assume that risk on that side of things. But this I'm thinking again of what Nelson used to say about his whole life policies. It's just a peaceful. Existence. Yeah. It's a, just a carefree way of living knowing that you've got these guarantees backed by these life insurance companies that have been around for, in most cases, over a hundred years, over 150 years.

Over 170 years. Yeah. Paying dividends consecutively[00:26:00] every single year that, that's who we have. Behind us. And when you get started with IBC you put that same level of performance and guarantees behind you and that's a fantastic place to start. And so doing your own diligence absolutely you should.

But the leap of faith, like what you just mentioned it, there it's a much smaller leap of faith. I. That you have to make and the proof is in the pudding because we'll talk about the track record of these life insurance companies and the performance of these whole life policies.

It it's been around longer than, even the i r s or the Federal Reserve and you can't find a better track record for a place to park your wealth, and that's why Nelson called it a Warehouse for wealth.

John Perrings: And, something you said about, about having them behind you the insurance companies.

Because when you work with a mutual insurance [00:27:00] company, you're a part owner, you're an owner of the insurance company so that all their, all the power is behind you and backing you and everything you're doing. And I think just to add one last little point that's outside the three is, I think John was gonna talk a little bit about it, but it's a little bit of its mindset too.

Like you gotta come into it with the right mindset, where this isn't a a buy life insurance and do investing. You can do that, of course. It's not an either or discussion. You gotta come in with an and mindset, meaning, Life insurance when we're practicing. IBC is our strategic place to store cash, and then we deploy that cash.

And so you gotta come in with a Montoya said it. You gotta come in with a mindset of building your foundation first. You can't have this kind of FOMO attitude where like you're missing out on investments, that kind of thing. By the way, you are, there's gonna be a period where you're gonna miss out on some investments.

But. There's [00:28:00] always gonna, there will always be investments. And if you set up the foundation first Todd Langford founder of Truth Concepts, talks about, if you have at least one place in your life with guarantees, a significant place with guarantees, it gives you a permission slip to go out there and take risk.

And we want to have some of that risk. It's the spice of life, but we wanna set it up where we're not, we don't have to start our whole life over financially, if any, if anything goes wrong. So like having the mindset of that long-term plan and being able to set up the foundation and then we're moving.

We're moving value through the life insurance and back into it, rather than buying this life insurance and then doing something else with it or doing something else with some of the rest of our money. It's just changing the entry point of our financial system from a commercial bank to our own quote unquote bank, which is our life insurance policy.

John Montoya: Yeah. And that could be your reason why, for getting started. And I have my own personal reasons of [00:29:00] why I got started with IBC and, maybe that's a future episode is what we're hinting at, figuring out your why. Why should you get started with IBC?

John Perrings: That's right.

Awesome. Another great talk, John Montoya. Appreciate it. If if any of these ideas are kinda resonating with you and you'd like to learn more about how it could apply to you personally and your financial life, you can head over to the. Fifth edition.com and you can schedule a no obligation 30 minute appointment with us right there.

If you're one of those people that just really likes to do their due diligence and learn online, and you wanna stop trying to piece all the things together, trying to watch different YouTube videos, and you just want to get to the right accurate information, we have an online course that you can get a 50% discount on it, the fifth edition.com, and you can get all the info you need, everything you need to know.

I think that's it. Thanks John.

John Montoya: Alright. Thank you Mr. Parings. And to everyone out there, remember never a better time than today to get started. Yes sir. Do your due diligence and reach out. [00:30:00] Take care.

John Perrings: Awesome. Have a good one everyone.