Wednesday, January 10, 2018

3 Common Misconceptions About The Best Financial Product In Existence

3 Common Misconceptions About The Best Financial Product In Existence

 in wholelife •  
Stop me if you’ve heard this before.
“Whole Life is so expensive.”
“Whole Life takes so long to build any cash value.”
“Whole Life requires a premium every year until you die.”
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Unfortunately, for so many people and their families, Whole Life insurance is probably the least understood financial product the average consumer owns. This is because very little is understood about the product Even within the industry where financial advisors and career life insurance agents are supposed to be the “experts”, there is lack of understanding of the total benefits and flexibility a Whole Life policy can provide.
As such, owning a Whole Life policy tends to be an afterthought because the general population recycles old, outdated information about Whole Life policies. Little do people know that a properly structured Whole Life policy can actually be designed and implemented for the current generation of millennials, professionals & business owners, and even retirees who are seeking a safe place to grow an asset without any luck, skill, or guesswork otherwise required with the typical investments available today.
Most people will assume all life insurance is solely about the death benefit leaving little to no conversation about the living benefits associated with Whole Life insurance policies. However, those days are gone forever thanks to the flexibility of new Whole Life products that can offer riders like the Paid-Up Additions Rider (PUAR).
This little mentioned rider is the most important rider to include if you decide to set up a Whole Life policy because it not only creates payment flexibility, but it also turbo-charges the growth of the cash value from day 1!
No more waiting years to see any substantial Cash Values in a Whole Life contract. With a Paid-Up Additions Rider, my clients start to see available Cash Value accumulate right away which they can use without restrictions and for any purpose.
Access to Cash Value is a very unique benefit of a properly designed Whole Life policy because when taken as a policy loan, there are no tax consequences and no interruption in the growth of my clients Cash Values.
The life insurance company continues to pay guaranteed interest on Cash Values as if there are no loans allowed for uninterrupted growth. In addition, policy dividends can be paid out on anniversary date regardless of any outstanding loans helping the Cash Values to grow even faster.
The ability for my clients to grow money safely, with no tax consequences (even while they use it someplace else!) is unparalleled by any financial product in existence.
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And the irony of purchasing a Whole Life policy with the inclusion of the Paid-Up Additions Rider is that this Whole Life structure is the most efficient way to own a life insurance policy.
Compare it to a term policy. After years of paying premium, 99% of term policies expire because the insured has outlived the term policy period of fixed premiums (typically 10, 20, or 30 years). All money paid as premium is gone forever making this type of policy a liability in the truest sense because there is nothing to show for it.
With a properly structured Whole Life policy designed with a Paid-Up Addtions Rider, policy owners are now building a full fledged asset that is liquid from day 1, and guaranteed to growth for the rest of their lives while also guaranteeing a legacy for loved ones.
One of the three main simple and easy concepts I teach my clients is understanding the difference between assets vs. liabilities. Owning assets like a properly designed Whole Life policy is one of the best ways to round out a portfolio of assets because it will have none of the pitfalls of a traditional investment (risk of loss, taxes, illiquidity).
And as mentioned a Whole Life policy with a Paid-Up Addtion’s Rider is extremely flexible allowing for a cushion between the minimum premium due annually on a policy and a maximum annual premium set within the policy.
Furthermore, most people think premium must be paid for life on these policies but there is little known option called Reduce Paid-Up or “RPU” for short.
Essentially what RPU does is make a one-time reduction of the permanent death benefit in the policy. This one time reduction offsets all future premium payments making the policy “Paid-Up”. And in some, if not most cases, electing the RPU option will not even reduce the death benefit because the policy will have reached a point of maturity if owned for an extended period of years.
Electing this RPU option is a popular method to finish contributing to a Whole Life policy and removes the misconception that a Whole Life policy must have a premium payment every year to keep it active.
If this article has helped you to think of Whole Life in a different way, I encourage you to seek out a professional who understands how to structure a Whole Life policy as described here.
And for a real-life example of how I structure Whole Life policy for my clients, I encourage you to visit the videos at
Thank you,
John Montoya

Tuesday, May 2, 2017


From the Sales Tempo, Issue of March, 1970

The Requirements of a Good Investment Plan

Those who say that life insurance is not a good investment in times like the present condemn it solely on the basis that it does not provide a big enough return on the money invested.

However, we see people dying every day who are getting a sizable return on their money, don’t we? But no investment can be measured solely by percentage of return. As a matter of fact most investments, which show a high percentage of return, do so because there are considerable risks or speculation attached to them... And generally speaking, a high rate of return is an indication of a more undesirable investment ­­ that’s why it pays the high rate.

There is one good test which can be used to determine just what a good investment is. A good investment should qualify under all of the following seven points:

1. A good investment must have a strong margin of safety.
2. A good investment should free the investor of administrative cares
3. A good investment should produce a reasonable rate of return and should provide a regular, stable income when needed.
4. A good investment should have a stable value and should be readily available when needed.
5. A good investment should be so constructed that it is convenient for a person to save and invest.
6. A good investment should be protected against the claims of creditors and should receive the best possible tax treatment.
7. A good investment should be semi-compulsory and once started, there must be a stimulus to keep it up.

Does Life Insurance meet all these seven points of a good investment?
We think it does.  But what is more important is... "What Do You Think?"

Advantages of Life Insurance as an Investment Property

Most people can very readily see the need for increased insurance protection during period of inflation but many will argue strongly that while life insurance is good for protection in the time of inflation, it is not a good investment.

Following is a list of 28 Advantages of Life Insurance as Investment Property. What other type of investment, of either the fixed period or annuity type, can match these advantages?

1. An immediate estate is created with your first premium.

2. The insurance estate is of a fixed amount specified in advance by you to last for your entire lifetime or of any other period selected by you.

3. There is no fluctuation in the guaranteed cash values regardless of business or political conditions, economic factors or other circumstances beyond your control.

4. The plan is self-completing in the event of disability. Under the Waiver of Premium provisions premium deposits will be made for you if you become disabled.

5. There is normally no current income tax on policy dividends.

6. There is no current income tax on the annual increases in the guaranteed cash value of the policy.

7. There is no income tax on death proceeds. No estate taxes, if the beneficiary/ies are named "irrevocable" beneficiary/ies.

8. Proceeds pass to named beneficiaries outside the probate estate minimizing executor’s fees, attorney’s fees, appraiser fees, notary’s fees court costs or other administration expenses of any kind.
9. Policy proceeds can be made exempt from the claims of creditors of either the insured or the beneficiary/ies.

10. Policy cash values are exempt from attachment by creditors. Life insurance is unique in this respect in that the investor enjoys consideration not given to other types of investments. Cash value of life insurance is exempt from creditors.

11. Full title to a pro-rata portion of the insurance estate is available through the Guaranteed Paid-Up Option if you wish to discontinue premium payments.

12. There is a long-term guaranteed reasonable rate of return.

13. There is no money management or investment worry of either the insured or the beneficiaries. Most investments such as stocks bonds and real estate require not only careful selection, initially both these also require careful management, after these have been selected. The problem of re-investment is always reoccurring and every decision must be right or the entire plan may be impaired. Very few people are qualified to handle the problems of investment and re-investment.

Here again life insurance solves a man’s investment problems. Both at the start and subsequently, all of the investment worry of life insurance is handled by thoroughly trained and experienced investment specialists. Too often we fail to emphasize the high caliber of investment services performed for policyholders as a matter of course.

14. Automatic re-investment of the interest (and dividends puts the miracle of compound interest to work without any single day loss of time.)

15. Solvency is assured by a wide diversification of investments that cannot be accomplished by any individual investor acting alone. Life insurance company assets are diversified by types of investments, number of investments by date of maturity, by time of purchase and by geographical distribution.

16. The investments of a life insurance company are subject to strict supervision by State Insurance Departments.

17. Safety of the principal had been demonstrated in spite of wars, panics, epidemics and economic depression of over a century. In the Great Depression of 1930 in the United States, the life insurance industry was the only financial institution that met its obligations with almost 100% performance. The stock market crashed. Many banks failed, mutual funds melted away and many homestead assets were frozen but no major life insurance company failed and during the Depression years, the insurance companies paid out $28 billion to policy owners and beneficiaries.

A proof of the safety of life insurance as investment property lies in the fact that the safety record of life insurance over the years cannot be matched by any other financial institutions. The investment, which we sell to many, is absolutely guaranteed insofar as it is humanly possible to do.

This is the vital point. Until a man has provided a guaranteed basis of security for himself and his family, he has no business investing in speculative venture because equity investment, which may show a large increase in value during period of inflation, can just as easily decrease to the vanishing point when business conditions tighten up.

Guaranteed cash values provide a hedge against deflation or depression in the last 10 years. Periods of deflation have occurred in 1873-79, 1884-85, 1993-97, 1903-1904, 1907-08, 1914-15, 1921-22, 1929-40, and to a lesser degree in 1946 and in 1949. Periods of rising prices have always been followed by periods of falling prices so that further depressions during our lifetime are not only possible but also probable.

Our complicated economic structure is made of many interdependent factors that recession or depression may very well occur in spite of all our modern controls as a result of forces, which no one can foresee, and the spread in a kind of economic chain reactions. In the past many fortunes have been started during these depressed periods by using the increased purchasing power of the guaranteed savings for investments in equities while prices were low enough to be able to save; then invest (not speculate when prices were low). Instead of investing in equities when the prices are high, in the hope they would still go higher, they planned to have money to invest when nobody else had any.

18. Guaranteed level premium may be said to provide a hedge against inflation. During inflationary times prices rise and so do wages but life insurance premiums remain the same and will represent a small percentage of one’s income.

Because life insurance premiums are paid up over a long period of time the purchasing power of dollars paid tends to average out. Also proceeds may be paid out over long period of time with a similar dollar-averaging effect. The fact that the purchasing power of any investment may be more or less at various times is really important only if one needs to borrow against it and spend it.

Life insurance is a long-range investment whose cash values are more likely needed during a depression than during inflationary times when incomes are high and money is plentiful.

19. Policy cash values are always 100% liquid because there is a guaranteed buyer at its paid value. Many forms of property can be turned into cash only if one is lucky enough to find a buyer.

20. Cash values provide unsurpassed collateral for loans. Banks will loan 100% of policy cash values as against 60% of the appraised value of real estate and perhaps 50% to 60% of the market value of stocks.

21. Policy loans are immediately available for the insurance company on a confidential basis and at very low interest rates. Policy loans are not callable, they can be repaid in amounts and at decided times or can be continued in part or in full to the maturity of the contract.

22. Cost-free administration of the proceeds is available for beneficiaries through a wide variety of settlement options.

23. By the use of the settlement options, the insured can control the manner of payment to many years after one’s death. This cannot usually be accomplished with most forms of property except by the use of a trust and the expense of attorney’s and trustee’s fees.

24. The annuity privilege in a life insurance contract can provide a lifetime retirement income at rates guaranteed in the contract.

25. Although there is never any obligation to continue premium payments, the nature of life insurance encourage thrift and provide an incentive to save on a regular systematic basis. Most of us find it difficult to save without any definite plan.

26. Life insurance ownership is a mark of responsibility and character. Nearly every employment application, bank loan application, or a credit form one fills out contains a question about the extent of one’s life insurance estate.

27. Finally, the continuing service of a qualified life underwriter (that you are provided along with life insurance plans).

28. Your help can be invaluable to a man in setting up his insurance estate, coordinating it with his other assets keeping it up to date and making sure it is arranged to provide the maximum benefit for himself and his family.


Hopefully, this had awakened in the mind of each one of you, the belief that life insurance is one property, for most individuals and their families, which under girds all the others. Make it your mission to make sure that before your prospect become involved in equity products, they have an adequate life insurance program. We urge you to crusade of the promise that whether they live or die and whether their dollar is big or small in value, there will be some dollars always ready to step in and do the job when a family’s world come tumbling down.

The advantage of life insurance as property could be summarized by saying that ‚ life insurance is the only type of property where there is complete coincidence of maturity and need. The real test of a good property is not how much will it be worth in five ten or even fifty years but "HOW MUCH WILL IT BE WORTH WHEN IT IS NEEDED?"

Life Insurance is the most nearly perfect property ever created and the best basic investment proposition available anywhere.

Let’s go out and tell more people about it!

For a private consultation, please visit my online calendar to book an 20 minute introductory call:

Tuesday, April 12, 2016

Infinite Banking Concept: The Ultimate Rainy Day Fund

The Ultimate Rainy Day Fund

Most Americans tend to keep a savings account or what we refer to as an “Emergency” or “Rainy Day” Fund and if you are like the typical American, chances are you keep that savings at your local bank.  For any financial plan, it’s the bare essential so we don’t really give it much thought.

But WHAT IF this little to zero "growth" savings account is creating a cash drag on your overall portfolio?  WHAT IF the opportunity cost of letting money sit idle while it waits to be used is costing you thousands in unpaid interest during your lifetime?  Depending on the size of your emergency savings account, the opportunity cost could reach into the tens of thousands or more over your lifetime, possibly into the hundreds of thousands of opportunity cost if you are in your 20's and 30's!

While it’s a solid strategy to have backup funds parked at your local bank in case your car breaks down, the plumbing in your house goes berserk, or unexpected dental bill comes due, you should be thinking long-term and seeking to optimize this ignored asset for every extra dollar you can safely squeeze out of it.

Did you know all the major banks turn to life insurance companies for safe, liquid, and tax-deferred growth on permanent life insurance policies that can be structured to accumulate cash value from day 1?  Banks don't park their reserves in CD's or Mutual Funds!  Why should you?

Chances are you probably aren't aware that similar type of cash value life insurance contracts that banks utilize are also available to individuals as well.  Oddly enough, in the day of the internet and information everywhere at your fingertips, the best kept secret in financial planning is hiding in plain site!

Over the life of these contracts, the growth can be substantially greater than what your local bank will pay in interest.  Considering that banks are paying close to 0%, earning a tax-deferred and potentially tax-free 4-5% seems like finding a pot of gold at the end of the rainbow!

So if this is so, why don’t most people think about life insurance policies for their emergency “rainy day” funds?  Quite simply, the average person has no idea that life insurance can also be an additional source of long-term savings.  The typical advisor and financial guru (Dave Ramsey and Suze Orman) recommend you buy term insurance only which has no cash value benefit.  While term policies do provide valuable temporary coverage, it’s easy to overlook all the major benefits of permanent cash value life insurance when set up utilizing The Infinite Banking Concept pioneered by Nelson Nash.

Here are a couple keys if you are looking to maximize your safe money account.

First, the type of cash value life insurance policy being referred to here is not your parents or grandparents life insurance policy that was bought for the maximization of death benefit at the lowest possible cost.  That's the old fashion way of buying life insurance and although it's called LIFE insurance but it's all about the DEATH benefit.  That's not primary goal of the Infinite Banking strategy I'm writing about here..

I refer to this updated life insurance savings strategy as a the Infinite Banking Concept but you might also learn about this strategy by the name Bank On Yourself (Disclosure: I'm an authorized practitioner for both organizations). A few popular financial newsletters have even started endorsing the strategy in the past 3 years. Most notably the Palm Beach Newsletter has been referring to it as the 770 Account or 702j Account.  

Regardless of the name, the strategy is the same and the structure of it is simple.  Instead of a maximum death benefit/minimum premium policy design for our clients, we structure a Minimum Death Benefit/Maximum Cash Value policy to turbo-charge the internal cash values of the contract immediately.

Second, in order to turbo-charge the cash value buildup within this policy, you must have the inclusion of “Paid Up Additions Rider”, or PUA rider for short.  For an advisor, this rider can reduce the commission on the policy by 60-80%.  But for the client, it means the cash value will be 60-80% greater because the money that would otherwise pay a commission is now sitting available as cash value for you.  Imagine that... a financial strategy engineered to put your interest ahead of the advisor. 

If you’ve never heard of this type of strategy, don’t be surprised.  It’s probably one of the best financial secrets there is and what’s really interesting is that banks park up to 25% of their Tier 1 assets into similar life insurance policies called Bank-Owned Life Insurance policies, or BOLI. 

Since banks are putting their safe money Cash Value Life Insurance contracts, I think it’s time you consider it for your Rainy Day fund, too.

To ask me questions or schedule a complimentary 20 Minute Telephone Appointment, please visit my online calendar here.

Monday, March 28, 2016

Lafayette Life's Letter To Convert Your Term Coverage

The letter Lafayette Life sends out each year regarding the term coverage is well intentioned but premature for the majority of Infinite Banking/Bank On Yourself policies.  The reason being that the term rider was specifically placed in these policies so you, Mr. and Mrs. Policyowner, could overfund the Paid Up Additions Rider.  If you were to prematurely convert the term rider before the end of year 7, your policy would become a Modified Endowment Contract (lose the tax benefits).  We don’t want that to happen. 

Lafayette will send that letter out to everyone with a term policy or term rider.  It’s a good reminder once you begin year 8 and beyond but definitely premature notice until then.  IF you have any questions about this matter, please do not hesitate to contact me:


John Montoya