Wednesday, February 1, 2023

There is No Secret Ingredient

One of my favorite movies is Kung Fu Panda and the lesson about the secret ingredient applies to Whole Life.

When people learn about Infinite Banking, they feel like they discovered something that wonderfully new and magical.  The truth is though there is nothing magical about Infinite Banking or Whole Life policies other than the perceived newness of it.

There’s a mystical feeling about making a discovery, traveling some place new, and the a-ha moment with Infinite Banking and Whole Life is like that, too.  But there is no magic about it, no sleight of hand.  This is a good thing because if there was something magical or some sort of con involved to distract your attention, Whole Life insurance would be, well, Universal Life insurance.

Same thing with Infinite Banking.  It’s perhaps a novel idea at first until you realize banking has been around for thousands of years.  People who have saved will lend to those who need capital and the cost to the borrower is interest.  

If you’ve ever loaned a friend or family member money, you’ve banked at the individual level.  It’s that simple.  At a larger level, that’s the role traditional banks have filled for people who haven’t saved enough capital for what they want or need.  But the banking function of lending is not exclusive to banks.  We are just conditioned to think it is.

Enter Infinite Banking at the individual level.  The “you and me” level as Nelson Nash used to say.  He would also tell people the banking function doesn’t have to be done with Whole Life.  It can be accomplished with a Bank Line of Credit (Home, business, or personal).  It can be done with a checking/savings account.  However, his conclusion was Whole Life was the best financial vehicle to harness the banking function. Infinite Banking was born and his book Becoming Your Own Banker was written to help people understand a different way of solving for our greatest financial need:  financing.

To be clear, Infinite Banking and Whole Life are two separate things.  The former is a strategy, the latter is a financial product.  IBC requires a financial product.  Whole Life doesn’t require Infinite Banking.  

What Whole Life accomplishes through its guarantees and predictability is make it the best choice to practice the banking function in your own life.  Rather than relying on traditional banks for all the major capital you’ll require in your life, you can instead Become Your Own Banker.  

And Whole Life works so well because there is no magic to it.  Or as say, “no luck, skill, or guesswork.”

Premiums paid result in guaranteed cash value.  Only in a Whole Life policy does the cash value represent the equity you own in the death benefit.  Consider a 30 year fixed mortgage as an analogy:  level payments for all years where each mortgage payment results in an increasing equity position for the home owner.  Same thing for Whole Life where each premium results in a growing equity position of the death benefit until the cash value ultimately must equal the death benefit. This never happens with Universal Life policies.

I’ll explain Universal Life this way:  you lease the death benefit, you never own it.  

The reason why is because the cost of insurance in Universal policies in designed to increase every year and any additional amount paid above the cost of insurance is unbundled into an interest bearing account which is the cash value in a Universal policy.  Since the cash value floats based on whatever interest crediting option available in the product in Universal policies, performance requires “luck, skill, and guesswork”. The cash values must also stay above the increasing cost of insurance or the policy will begin to eat itself.  There is nothing certain about Universal policies unlike a Whole Life policy.  

To sum up, there’s nothing magical about Infinite Banking and Whole Life.  No secret ingredient.  Whole Life is based on guaranteed numbers (math).  As a result, its performance is guaranteed by the life insurance companies that offer it.  Infinite Banking is the idea and strategy eliminating the middle man banking institutions.  

Monday, January 9, 2023

The Biggest Lie About Whole Life Insurance


Text from a potential client:  I was reading that for many whole life policies you don’t get the cash value upon death, is that true?

Thankfully, this is 100% NOT TRUE!  But it is true that this lie is perpetuated around the internet as gospel and people hear or read this so often that they believe it to be true.  

So here’s quick explanation to put this lie to rest and this will help you understand how a Whole Life policy works.

Lets first understand a Whole Life policy operates on a contractual guaranteed basis to accomplish what you want to have happen.  I’ll come back to this.

Second, let’s have a thought exercise to help in learning.

Imagine if you will that you have a retirement goal to accumulate $1,000,000.  How would you do it?

Option #1: Invest

At one end of the spectrum, the riskiest way is to invest because investments entail risk of loss.  While we all no doubt would like to accumulate $1,000,000 using the fewest dollars possible, investing offers no straight line to the end goal.  Look at any valuation chart of your favorite index.  Returns will zig zag and ride the market roller coaster.  There are no guarantees of arriving at $1,000,000.  Past performance be damned (if we’re being honest).

Option #2: Save

At the other end of the spectrum is the least volatile way to create a straight line to $1,000,000 and that is to simply save. To keep things simple, assume no yield on savings and no inflation.  Just save and you will get there but it will require the full $1,000,000 saved on your part in order to equal the $1,000,000 target end goal.  While this is the least efficient way to accumulate $1m, it is also the only “guaranteed” method.

How long it takes to reach $1 million is up to your capacity ($100 a month, $1000 a month, $10,000 a month, etc.) and your discipline level as the saver but with enough time, money, and discipline the $1,000,000 savings goal will be achieved.

There's one problem with both options though.  One unknown variable with both the investing and savings option is mortality which is why I wrote “guaranteed” a couple paragraphs above.  You might die prematurely before you ever reach $1,000,000.  There’s no guarantee you’ll live long enough to save (or invest) enough to equal $1,000,000.

This is where Whole Life insurance comes in.  In order to make certain what you want to have happen, will happen, you require insurance on your life as a hedge.  Only a Whole Life can guarantee you reach your investing/savings goal, even if you’re not alive to realize it.  (The main problem with Term and Universal is that you likely will outlive both because of the fatal design flaw built into those policies... increasing future premiums.)

Whole Life accomplishes an inevitable outcome at the most basic level.  Think of it as a guaranteed savings vehicle with a death benefit attached.  As you pay premiums (save money), you get closer to your end goal. If you pass away before reaching the end goal, the insurance company is on the hook for the difference between the cash value and the death benefit, called Net Amount At Risk.  This is the insurance part of the policy.

Only with a Whole Life policy are you contractually guaranteed the premiums will equal the death benefit at your time of death, or if you live long enough, at the end of the contract (up to age 121).  In layman's terms, if you save the money, you'll reach your goal no matter what.  

Each year as you age you get closer to the cash value equaling the death benefit.  This is called Endowment.  Only a Whole Life policy is guaranteed to endow (cash value equaling the death benefit).  

Here’s the major takeaway:

What people don’t realize about how Whole Life policies work is that the cash value is the present value of the future death benefit.  Read that again please.  Let it sink in.

For proof, look at the death benefit in the final year of any Whole Life illustration.  At the bottom on the left side is the Guaranteed Ledger. Each year the Total Cash Value is increasing and getting closer to the guaranteed Total Death Benefit.  Scroll down to age 121. You'll find the Cash Value now equals the Death Benefit.  This is contractually guaranteed with Whole Life and every Whole Life policy operates the same way or it's not a Whole Life policy.  I've lost count of how many people have a Universal policy thinking it's Whole life...  (The Non-Guaranteed Ledger below on the right includes Dividends.  Dividends are icing on the cake, if you will.)

When you understand that the Whole Life premiums you are paying are creating cash value and that the increasing cash values  represents the present value of the death benefit, you’ll realize the insurance company can’t keep the cash value because the cash value is 100% entwined and part of the death benefit payout.  Actuarial science and contract law makes this a mathematical certainty that the premium paid into the policy will accumulate internally to equal the death benefit.

What you’ve accomplished with your deliciously boring Whole Life policy is to guarantee that you will save your way to $1,000,000 via premiums (some call it “forced savings”) and if you aren’t alive to reach the goal, your beneficiary will be recipient of the $1,000,000 tax-free death benefit.  It’s boring because you know with certainty this will happen.  No luck, skill, or guess work required.  And I'll add a Whole Life policy has been an extremely peaceful and stress-free way to organize my life.

In a nutshell, it’s a guaranteed savings vehicle with a death benefit attached.

Now repeat after me:  

The life insurance company can’t keep your cash value because the cash value is part of the death benefit.

The life insurance company can’t keep your cash value because the cash value is part of the death benefit.

The life insurance company can’t keep your cash value because the cash value is part of the death benefit.

The life insurance company can’t keep your cash value because the cash value is part of the death benefit.

The life insurance company can’t keep your cash value because the cash value is part of the death benefit.

The life insurance company can’t keep your cash value because the cash value is part of the death benefit.

The life insurance company can’t keep your cash value because the cash value is part of the death benefit.

The life insurance company can’t keep your cash value because the cash value is part of the death benefit.

The life insurance company can’t keep your cash value because the cash value is part of the death benefit.


John Montoya

Tuesday, January 3, 2023

Term, Universal and Whole Life Insurance: Price is What You Pay, Value is What You Get

Here’s a simple explanation of life insurance in order of product history with some anecdotes sprinkled in from my life experience.




1. Term is the oldest.  No cash value.  Death benefit has a level cost (premium) for a “term” period.  After the term period (common example: 10, 20, or 30 years), the premium increases annually at an ever-increasing cost.  Hypothetically, one could pay the rising annual premiums to age 95 or 100 (per the contract) but effectively no one ever does because premiums become too outrageous.  Benefit is the temporary cheap death benefit.


2. Whole Life was introduced after Term around 150 years ago because customers wanted a permanent death benefit.  Whole life covers the “whole” or entirety of one’s life up to age 121, if you live that long.  There is cash value.  Premiums are guaranteed level for the life of the contract.  Overage of premium is returned to the policy holder as a dividend.  Cash values guaranteed to increase because cash values must eventually equal the death benefit on the last day of the contract in year 121.  This is called endowment.  Only a Whole Life policy can guarantee endowment.  Benefits (short list): level premiums for life, guaranteed cash values which can be accessed while living for any reason, guaranteed death benefit for life.


3. Universal was introduced about 40 years ago.  It separates the cost of insurance from the interest component so that the cost of insurance adjusts once a year for the life of the contract.  This is known as Annual Renewable Term. Universal policies has the illusion of being cheaper than Whole Life because the cost of insurance at time of policy issue is very inexpensive.  But as the insured ages, the cost of insurance increases annually to better price the mortality risk (closer to dying).  What was once very cheap becomes extremely expensive by late 60’s getting exponentially more expensive into 70s, 80’s and beyond if there is still enough cash value to support the rising costs internally without the policy owner having to come out of pocket to offset the cost of rising premium.  Benefit:  cheap at first, “permanent” death benefit.



Universal is “Permanent” much like how a term policy could be considered permanent.  Technically, if a person were willing to pay the increasing cost of premium every year to age 95 (or the end of the contract), both a term and universal policy would be permanent, indeed.  


The reality is altogether different.  Because only a Whole Life policy locks in a guaranteed level premium, it is the only life insurance contract that is in effect permanent.


Hucksters (Dave Ramsey) and life insurance salesman with limited training will recommend Universal making the common mistake of thinking it is cheaper than the Whole Life but the reality is, like term insurance, being cheap is temporary.  Eventually, the price of the insurance policy will catch up to its true cost.



Having worked at Nordstrom in my college years selling expensive but high quality men’s dress shoes I learned a valuable lesson:  Price is what you pay, value is what you get.


I learned it was easy to buy the $80 dress shoes that would hold up for maybe 6 months but it was smarter to spend $220 on shoes that would last 4-5 years or longer. 


I approach life insurance the same way.  Term insurance certainly has a place.  For my money, I want a guaranteed convertible term policy so I always have the option to covert to a Whole Life policy.  But when purchasing permanent life insurance, I want the best value I can get.  That only applies with Whole Life because I know the guarantees with Whole Life make sure the premiums are locked in.  I’m transferring the risk of ever being unable to afford the policy as I age and I have cash values that won’t be cannabalized by rising mortality costs like with Universal policies.



I think of Whole Life as similar to a 30 year fixed mortgage.  When I’m shopping for a home, I’m going to choose the financing option that will provide a level payment until the home is paid for.  It’s common sense if you’re going to live in the home for a longer time.  Sort of like shopping for a life insurance plan and planning to be alive for as long as possible… I’d never choose a 1 year adjustable mortgage when buying my home.  In mortgage terms, that’s essentially a Universal Life policy.


We all know what happened in the Great Financial Crisis from 2007-09.  The movie The Big Short chronicles it extremely well.  A few individuals saw the writing on the wall with all gimmicky artificially low interest rates that were set to adjust much higher after the initial term expired and they bet against the housing market making millions, even billions, in the process.


Why do you think life insurance companies love to sell term and Universal policies?  They know they are going to be let off the hook of paying a death benefit because people will either outlive the term policy and won’t be able to keep up with the rising cost of insurance.  Like a home going into foreclosure where the bank repossesses all equity and the house, the life insurance company will keep all the premium (term) paid or in the case of Universal, surrender what’s left of the cash value.  The death benefit is temporary is both cases.


Takeaway: a death benefit can only be guaranteed if the policy owner can afford to pay the premiums or there is enough cash value and/or built up death benefit to pay up the remaining policy premiums to achieve endowment.  Only Whole Life makes this possible because the premium is calculated and guaranteed by the underwriters to cover a level cost of insurance for the life of the policy.  


Price is what you pay.  Value is what you get.



Additional note:



Since Universal policies subject the interest credited to either money market like rates (Universal), or mutual fund like securities (Variable Universal), or even ETF like funds with caps and participation rates (Indexed Universal), there does exist for the possibility for the excess premium (cash values) above the rising cost of insurance premium to accumulate and stay ahead of future mortality expenses.  However, as noted, because the rising cost of insurance is never locked in beyond a year at a time with Universal policies, the risk of the policy performing as one hopes for when making the purchase always resides with the policy owner, never the life insurance company.  The insurance company bears no risk for non-performance because the interest component is unbundled from the cost of insurance.  The risk of the universal life policy performing, because cash values aren’t guaranteed to increase to eventually equal the death benefit like with Whole Life, is left to uncertainty.



 Thank you,

John Montoya

Connect With Me Here


Tuesday, November 22, 2022

Trust But Verify

Trust but verify.  This ethos is heard often in the Bitcoin world but the same adage could easily be assigned to Whole Life.

So many people dismiss Whole Life at first mention because of what they think they know.  Most people’s understanding of Whole Life, in my experience, is based on someone’s misunderstanding. 

But there’s a very easy way to determine if Whole Life is what portends to be from those who claim to really know it and those who dismiss it so easily.  Verify.


Easy.  Talk to an experienced and qualified expert in Whole Life. Connect with someone like myself who has 20+ years in the life insurance industry, co-hosts a podcast, licensed in 45+ states, and happens to walk their own talk.  

I can answer all the elusive questions.  I can also go a step further to show you how a Whole Life policy can be structured to guarantee a future outcome:  

Retirement income

Rainy day fund

Capital for investing in real estate and business ventures

College funding for the kids

Excess pool of money to cover a long-term care health event

Tax-free transfer of wealth

And all within a budget you can work with.  All verifiable.  No need to trust me or whoever might be in your ear leading you astray.  See for yourself.  As it’s said:  The proof is in the pudding.

You can reach me here:


Thank you,

John Montoya

Friday, November 4, 2022

The Two Ways To Thrive & Prosper in the Current Debt-Based Financial System

What will be the best way to thrive and prosper in a fiat (debt-based) monetary system?

Answer: Through the use of honest, sound money systems to preserve, grow, and transfer wealth.

Does this actually exist?

Yes, in two places:

Whole Life insurance policies and the Bitcoin protocol.

Whole Life exists within the current legacy financial system and is engineered on a full reserve basis. This is extremely important.  Life insurance companies by law cannot print or create money (credit or IOU’s).  Unlike the banking system that can loan beyond what they hold in reserves, the life insurance industry is restricted from doing so.  As a result, life insurance companies are financially solvent which is a requirement enforced by the legal system.

This is important because what happens when the music (free money printer) stops?  The world enters a liquidity crisis because the credit system must eventually unwind at the end of each “business cycle”. Banks stop lending, asset prices drop, companies start laying off, people are worse off… except for those people who value honest, sound money systems and warehouse a portion of their assets with mutual based life insurance companies via Whole Life policies. 

With a Whole Life policy, there is no liquidity crisis for the policy owner.  Policy owners have access to their cash value at any time for any reason, either as withdrawal or using the cash value as collateral for a guaranteed loan.  Life insurance companies must make the cash value available to the policyholder because policyholders have the first priority to the money within the life company.  Compare to a bank where a depositor is a creditor to the bank and do not have first priority.  

There is a long history of bank runs and credit bubbles bursting.  People unfortunately learn the hard way and/or lessons are quickly forgotten or never learned in the first place.  The history of money is not taught in schools and the majority of adults won't ever read another book after graduating high school.  Throw in what think they know about life insurance which isn't so, and well, Infinite Banking through Whole Life policies is beyond the comprehension of many.  

Be that as it may, Whole Life policies bridge the present monetary system with guarantees of future performance based on actuarial math.  Imagine if you will that Whole Life creates both present and future values; two time lines working together to guarantee a financial result based on the value of your life.  No other financial product does with a Whole Life does with safety, liquidity, and guarantees.

I've found only one drawback to Whole Life that it does not address on its own because Whole Life policies exist within the current legacy financial system that is likely on it's last legs.  I don't believe the dollar is going away anytime soon.

Consider the former reserve currency of the world: the pound sterling.  Called so because the currency in England literally was a pound of silver sterling.  It still exists today but like the dollar, it's no longer redeemable for silver.  Like all political money today, it is debt-based fiat created from nothing.  

The demise of the dollar is inevitable.  Study the history of money.  The question is how much longer will the United States government maintain its "exorbitant privilege"?  It could be 10, 20, 30 more years.  No one actually knows but you should be planning for a move back to sound money.

Gold existed as sound money for over 5000 years before bankers replaced gold holdings with IOU's.  We are likely to go back to a monetary system that is backed by a commodity like a gold but gold has proven to be corruptible by the banking elites.  This is because at the international level, huge amounts of gold is too expensive to protect, audit, and move.  

Enter Bitcoin.  The world’s first and only working answer to a trustless monetary system with no rulers. As Jeff Booth eloquently points out in his book The Price of Tomorrow and I’m going to paraphrase: the solution to a broken system cannot be created within the same broken system.  The solution must be created outside of the existing system.

Bitcoin exists outside of the current legacy financial system.  Bitcoin solves the problem created by debt-based money but in a different way than Whole Life.  While Whole Life policies create a system of money with guaranteed access and guaranteed results in the form of a unilateral contract backed by the full reserves of the life insurance company, the value of our IBC banking systems via Whole Life is denominated in fiat dollars which means the value of those dollars is trusted to the decisions of the Federal Reserve and its board of governors.  Though dollar denominated Whole Life policies can and have kept pace with a 2-4% inflation per year through the use of the Paid Up Addition’s rider and dividends reinvested back into the policy, there is the issue of store of value of maintaining generational value when the fiat monetary system erodes faster than 2-4% for a sustained period of time which is why I believe Bitcoin should supplement Whole Life cash values to further insulate against the continued planned debasement of the dollar.  

Historically all fiat currency values go to zero.  Bitcoin changes this because it introduces a rules based system with no rulers (no central bank, politicians, or CEO's) and Bitcoin has a finite supply that is always verifiable.  The value of all bitcoins cannot be devalued through dilution.  21 million is all there will ever be.  How many fiat dollars were created last year?  How many fiat dollars will be created next year? 5 years from now, 20 years from now and so on?  Nobody knows.

We can answer these questions with Bitcoin.  Bitcoin accomplishes the goal of sound money because the value of how much you own will be the same today as it will be at any point in the future.  A dollar from 1971 is not worth the same dollar in 2022.  One bitcoin will be one bitcoin 2052 or even 2152.  

Bitcoin offers a solution to credit based money that completely eliminates the government’s power to issue and therefore debase money over time.  Americans have the hardest time understanding this because we live in a world where the Dollar is currently king but citizens of other countries like Argentina, Venezuela, Nigeria, and Lebanon (to name just a few) know firsthand the debauchery of government issued money because they experience higher inflation rates (rapid debasement) with more regularity than we do in America.  It’s no wonder the adoption rate of Bitcoin is faster in those countries because it offers them a life raft to preserve their wealth.

Bitcoin is digital gold but so much more.  In world where we are conditioned to accept the prices must inflate in order for the system to work, we now have a technological breakthough that will be as important as the printing press was to breaking the monopoly the Catholic Church had over society 500 years ago.  Bitcoin is freedom mone and it has the power to break the government monopoly on money that exists today which has financed endless hot wars, cold wars, to the "wars" on poverty, drugs, terror, and coming soon... the war on information and free speech.  

To thrive and prosper as a sovereign individual, I invite to go down the rabbit hole with me on Whole Life and Bitcoin.  Follow me on Twitter here.  

Be mentally prepared that you will have to put in the work to eduate yourself about money.  There is a serious learning curve so those who cannot make the time to study and those who are unwilling to learn will see the value of their labor devalued by the current fiat monetary system purposely designed to steal their time (in the form of fiat money) and will be unable to do anything about it.

The terms "red pill" and "blue pill" refer to a choice between the willingness to learn a potentially unsettling or life-changing truth by taking the red pill or remaining in contented ignorance with the blue pill.

In The Matrix, the main character Neo is offered the choice between a red pill and a blue pill by rebel leader Morpheus. Morpheus says "You take the blue pill... the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill... you stay in Wonderland, and I show you how deep the rabbit hole goes." The red pill represents an uncertain future and, unknown to Neo at the time he takes it, the pill frees him from the enslaving control of the machine-generated dream world. The pill allows Neo to escape into the real world, where he lives in a pod and is being used as a battery - and finds that living the "truth of reality" is harsher and more difficult than living in the ignorance which the blue pill offers: continuing his life within the confined comfort, without want or fear, of the Matrix's simulated reality.

Neo chooses the red pill and joins the rebellion.

The choice is now yours.

To connect and get your questions answered, I invite you to book time with me here:

Thank you,

John Montoya