Thursday, July 30, 2020

IBC: Planning For Your First (or Next) IBC Policy

Sometimes it's not possible to get started with an Infinite Banking designed Whole Life policy right away.

One of the main reasons could be due to cash flow but it’s possible a convertible term policy would be an option to consider if the minimum monthly contribution of $500 is not in the cards just yet to get started with IBC.  

Instead you could budget $20-50 a month for a 10 year term policy now.  Your age, health rating, and amount of death benefit will ultimately determine your monthly premium.  This would guarantee you have the ability to start an IBC designed Whole Life policy by locking in your insurability today so that you can get started anytime in the next 10 years. 

There is also a credit for the previous 12 months of premium when the term policy is converted to an IBC designed Whole Life policy.  If you are married and/or have kids, the death benefit from the term policy gives your family added protection.  If you are single, then the convertible term policy is merely to guarantee your health so that you qualify for the IBC Whole Life policy when ready.

I started in the life insurance industry in 1998.  I’ve seen a number of people wait to get started for various reasons only to lose their health (prostate cancer, stroke, diabetes, complications from a car accident, etc.). I’ve seen a lot of bad luck happen to good people.  For that reason, I believe you should at a minimum consider a convertible 10 year term policy.

This type of pre-IBC planning is what I refer to as "Future Planning".  It also works great if you already have one or more IBC Whole Life policies.

I keep a $2m term policy on myself despite owning multiple IBC designed Whole Life policies.  I keep it available so I know with 100% certainty I can open my next IBC policy even if my health changes for the worse.

And when I eventually convert my existing term policy to Whole Life, I'll also look to obtain another 10 year term policy so I can repeat the same process for the next 10 year window of my life.  

You may ask yourself why a 10 Year Convertible Term? The reason is that in my experience, people who undertake to practice IBC convert all of the death benefit in their term policy on average by the 5th year. Unless you feel a need for a substantially longer term period, a 10 Year Convertible Term works extremely well for it's ultimate planned use which is conversion to an IBC designed Whole Life policy.

If you would like to learn more about getting yourself set up for your first or next IBC plan, let me know.  You can find me here:

Thank you,

John Montoya

Sunday, July 12, 2020

Are You Thinking About Retiring Early?

Life doesn’t always go as planned, and if you’re currently navigating a new set of circumstances that has led you to consider an earlier retirement, it’s important to proceed carefully and thoughtfully.

Is it possible for you to retire early? If so, what’s the best way to go about it?
To start, take a look at these basic considerations and reach out if you’d like to check in.

Strategize Social Security

You may be able to start collecting Social Security at age 62, but many people choose to hold off if they’re able to. Waiting until your full retirement age (which depends on your birth year) or up until age 70 will lead to an increase in benefits.

Rebalance as Needed

Whether it’s by re-examining your portfolio or shifting more assets to cash (or both), try to make sure you’re finding the right balance and reducing risk as needed.  

One of the best ways to reduce risk is to consider an indexed annuity as part of your overall portfolio.

Indexed annuities do 2 things extremely well:

  1. Principle protection with upside growth
  2. Offer guaranteed lifetime income streams

Create a Withdrawal Approach

While many retirees aim to withdraw around 4% of their investments in the first year of retirement and adjust the amount for inflation going forward, there are no set rules for success. 

In fact, most fiancial pundits are now saying because of market volatility you should withdraw no more than 3% per year in retirement to avoid running out of money.  You may decide to withdraw more or less depending on your budgeting habits and age. 

To see where you stand now, multiply your current savings by 4% and divide by 12 to find what your monthly income amount would be.

If you are needing a withdrawal rate greater than 4% to ensure you won't run out of money in retirement, this is another reason to consider an annuity which typically have withdrawal rates greater than 4%. 

Other Factors

Don’t forget about additional considerations like health care and taxes. Overall, it’s important to sit down and calculate your anticipated monthly expenses (including a cushion for anything unexpected).

Do you need assistance mapping out your short-term, mid-term and long-term goals? It's extremely important that you make sure your guaranteed income in retirement covers all expenses.  Reach out anytime to discuss your questions here:

Thank you,

John Montoya