Sunday, October 24, 2021

MYTH: Whole Life Premiums Are Due Forever

I'd like to clarify one detail about Whole Life policies and it’s that the death benefit in a Whole Life policy (and ONLY a Whole Life policy) has a cash value component associated with it.   In doing so I’m going to squash the common myth a person is stuck paying premiums every year for life or they lose their Whole life policy.

Since what the majority of what people think they know about life insurance is based on someone else’s misunderstanding, let’s start with this critical error in thinking:

99.9% people (including nearly all people licensed to sell life insurance) believe the death benefit is just that… a death benefit that only has value to the beneficiary.  People have no idea that the death benefit in a Whole Life policy has additional benefits while you are alive!  MAJOR MISUNDERSTANDING.

Let’s take a look at a 5 pay policy design funded for a client from existing banks assets into a Non-MEC IBC Whole Life policy to quickly illustrate the point:

(Note: a 5-pay design should only be used if a person already has existing assets to fund a policy.  It is not an ideal long-term funding strategy for IBC because one of the important concepts about IBC is that money needs to reside somewhere.  Paying up a policy after 5 years means you will need to find a home for additional dollars elsewhere and you’ll need to open a new policy, if you medically qualify, to fund contribute additional premiums.)

Please first look at the Total Premium column (third from the left).  

You will notice that in years 6 and 7 there is premium due in the policy of $26,148 and $25,398 respectively.  This is because of the 7 Year Pay Rule which is an IRS test to help determine if a life insurance policy design meets the minimum requirements at policy issue to be classified as Non-MEC (tax-free access to cash values via policy loans) like the illustration above, or as MEC which will be treated as an investment (gains taxed as ordinary income) which we want to avoid.

So to bypass too much premium going into a life insurance too soon, premiums are needed to be spread out for for at least 7 years to support a minimum amount of death benefit and achieve Non-MEC status.  

However, if you scan to the Premium Outlay column (fifth from the left), you’ll notice $0 is needed to satisfy the Total Premium owed in both years 6 and 7.

How can the death benefit be used to offset the policyowner paying premium dollars out of pocket?

The answer lies in the true value of the death benefit.  You should now notice that the death benefit has decreased in both years 6 and 7 to offset the Total Premium due in the policy.

By offsetting the premium (or reducing the death benefit), the policy owner is able to satisfy the minimum premium required in years 6 and 7 with no money out of pocket (premium outlay).  

The Big Takeaway

This is possible because the FUTURE death benefit in a Whole Life policy has a PRESENT cash value component.

The point bears repeating but in a different way:  the death benefit is the future value of the present cash value.

In the ledger above, this future death benefit is paying the premium.  In year 6 and 7 is an annual reduction in the death benefit to offset the minimum annual premium.  Then beginning year 8 (7 Year Pay Rule has ended) the policy owner can make the election for a permanent reduction in the death benefit.  

This rarely discussed policy election, known as “RPU” (Reduced Paid-Up), permanently offsets the minimum annual premium needed for the remaining contract years.   No more premium due for the life of the contract.

One of the biggest myths and misconceptions about Whole Life policies is that you have to pay the premium forever.  Not true because the death benefit has a cash component and it’s this cash component that can be used to offset future premium.

Do you still believe the myth that when you buy a Whole Life policy that you must pay the premiums forever?

Let’s quickly review the additional benefits of a Whole Life policy death benefit:

  • The obvious benefit:  tax-free inheritance
  • The little known benefit:  cash value can be accessed tax-free via policy loans when policies are designed and funded properly
  • The not-so-obvious benefit:  the death benefit in a Whole Life policy can provide premium payment flexibility to offset premium due either temporarily (one year at a time) or permanently. 

To learn more about Infinite Banking, message me or book a consultation here:

Thank you,

John Montoya

Friday, September 10, 2021

What's the Difference Between Guaranteed vs Non-Guaranteed Cash Values?


Guaranteed Vs. Non-Guaranteed:  Understanding Whole Life Values

I'm to going to discuss the difference between guaranteed vs non-guaranteed values within a Whole Life policy, why having a foundation of guarantees is arguably the most important detail in setting up a “family banking system”, and revisit what distinguishes a contract from an investment.

Guaranteed vs Non Guaranteed

Guaranteed Values:  this is the year by year performance guarantee in detail out to endowment (typically age 121).  It’s based on math and actuarial science.  Life insurance companies provide a blueprint based on worst case projections should a dividend never be paid during your lifetime.  Something to keep in mind:  All the life insurance companies we use for IBC have been around for at least 100 years, are A rated, and most importantly to me, they have never missed paying a dividend… ever!  So the guaranteed values reflect a scenario of no dividends for the life of the contract yet it’s a scenario that’s failed to material even for one year.  Let that sink in for a moment.

You essentially have a fool proof system that is guaranteed to increase in value without any luck, skill, or guesswork during your lifetime.  No other place for money exists with the same level of guarantees that what you want to have happen, will happen, even if you’re not around to see it.  The last part of course speaks to the tax-free death benefit bestowed on your beneficiaries when you graduate to the next level.

Non-guaranteed values:  Take the guaranteed values and now add non-guaranteed dividends from the surplus profit of a mutual based life insurance company.  That’s it.  Life insurance companies are highly profitable but legally they cannot guarantee the dividends they will pay out next year or, 5 years from now, or ever.  By law, they have to project future values based on the current dividend scale.  They can’t assume interest rates will increase in the future and project higher dividends.  So the non-guaranteed projections are IMO conservative estimates of future performance.

The most important detail in setting up a “family banking system”

For banking purposes, this is a one of a kind “turn-key”, ready made financial system that is created with the purchase of a Whole Life policy.  IBC practitioners who have been around will recall that Nelson Nash was fond of saying: “Every time a person buys a life insurance policy they are starting a business from scratch.”  That business of course is a private family banking business between you and the life insurance company at what Nelson would call the “you and me” level.  

Of course, you do have to read between the lines of the contract to fully grasp the idea of Infinite Banking.  This is where the majority of people who first stubble upon IBC get stuck in the weeds.  They see a life insurance policy and get stuck.

I once heard Nelson say that calling this financial system a Whole Life insurance policy is one of the worst things the life insurance industry has ever done.  Right from the start, the life insurance industry provided a label that continues to confuse the masses to this day.  The smallest minds see life insurance policy and that’s all it will ever will be.  

Those of you who take the time to read Nelson’s book “Becoming Your Own Banker”, listen to our 30+ episodes now all related to Infinite Banking, and speak to an Authorized IBC practitioner, will realize what Nelson said from the beginning.  The Infinite Banking Concept is an idea.  It is not about life insurance.  It’s about controlling the banking function at the you and me level to root out rent seeking traditional banking system that will have you believing their “lies, lies, lies”.  

And what is the biggest lie of all?

That you need Traditional banks to finance all the major capital expenditures in your lifetime.  Simply not true but this of course is not what we are taught.  12 years of government schooling, 100’s of higher education degrees, and none of it teaches you the history of money and the importance of banking?

Why?  It’s about control.  Control the flow of money, create debt, and traditional banks have a client for life.  It’s parasitic relationship that need not to exist.

To bring it back to Guaranteed Values, a whole life contract provides the legal framework for a financial entity that is guaranteed to increase in value every year of your life.  The contract also provides you with guaranteed access to the cash values.  You can never be turned away.  

Imagine the peace of mind knowing you have posited your labor into a system protected by contract law, is considered an asset available for your use with no questions asked, and it is only solely by you.  Nothing else in the financial world like it.  No 401k/IRA or asset class can replicate the guarantees of a Whole Life contract.

Contracts vs. Investments

We'll refer to this as "Contractual" Wealth vs “Statement” wealth.

Statement wealth is when a client gives their money to an institution or organization in the hopes that they can get their money to grow. In this arrangement, the giver of the money assumes all the risk for the growth of the money. The organization sends a statement 1-4 times per year, telling them how they are doing at that time. 

Contractual wealth is when a client gives money to someone else as part of a contract. The recipient of the money assumes the risk.


IBC working is NOT predicated on dividend performance and chasing rate of return like you would with an investment.  It is a financial system, period. 

In order for a financial system to work, there must be a framework for money to move through it.  That’s what we are establishing with IBC Whole Life policies.  These contracts provide a framework for a financial system that allows you to control the flow of your money back to you where it can grow uninterrupted and so that we may continue to use that money repeatedly in our lifetime to build generational wealth.  

Think of it this way:  Instead of building beautiful fountains for the traditional banks, we can build our own.

If you have questions and would like to schedule a consultation with an Authorized Infinite Banking Practitioner, please visit the calendar here:

Thank you,

John Montoya

Wednesday, August 25, 2021

5 Reasons Why Infinite Banking Makes More Sense Than You Realize

There's a reason our education system doesn't teach you about money.  There's a reason our education system doesn't teach how the banking system works.

Until you understand the reasons why, you are simply a pawn on the chessboard.  Limited in movement and the least important piece in the financial game we are living.

To help you grasp the bigger financial picture, you need to understand WHY Infinite Banking?

If you don't understand the reasons why, you're like a rudderless boat drifting whereever the current moves.  So here's 5 reasons to help you understand your financial WHY the Infinite Banking Concept (IBC) should be examined for your situation to determine how you can benefit:

1. IBC is a financial system that guarantees what you want to have happen, will happen, even if you're not around to see it happen.   An IBC Whole Life policy (designed with a Paid Up Addition's rider) comes with the strongest contractual guarantees that can be found anywhere.  Uncorrelated compounding asset growth materializes every year without any luck, skill, or guesswork (even when you leverage policy loans to buy more wealth producing assets!).   

Whole life policies are the only type of permanent cash value life insurance contracts that endows meaning the cash value will eventually equal the death benefit regardless of whether that happens next week or at age 121.  The financial success of a Whole Life plan is reverse-engineered to provide an annual blueprint of increasing value.  No other place for money does the same.   Think about it.

2. IBC is full reserve system.  Unlike a traditional banking fractional reserve system where your deposits are leveraged to make new money to lend at interest, the life insurance industry is afforded no such money printing luxury.  By law, all liabilities must be equaled by assets on the balance sheet of a life insurance company.  This is called solvency.  The life insurance industry has it and must maintain 100% solvency by law.  This means money held by a life insurance company is with the safest financial institution and industry in the world.  This alone is reason enough why banks place up to 25% of their reserves with life insurance companies in permanent cash value life insurance contracts called "Bank Owned Life Insurance."  No life insurance company would ever risk more than they possibly have to in a traditional bank account.  Think about it.

3.  You 100% control it.  A Whole Life policy is considered an asset because it appreciates in value every year and it is owned by the policyholder.  There is government or 3rd party custodian with overriding control of a Whole Life policy.  401k/IRA's are created by the government meaning you partner with an ever changing landscape of politicians in Congress who in most cases fail to represent your best financial interests.  A Whole Life policy in comparison is simple because it is a unilateral contract (grandfathered in place) between two like minded parties:  you the individual and a privately owned mutual-based life insurance company.  No rent seeking 3rd parties needed.  Think about it.

4.  It cannot be taken away from you.  Money in a banking system can be confiscated at any time.  While it is your money, you must follow the rules set by the banks.  Banks can censor any of your financial transactions and are required to report anything deemed suspicious no matter how inoccuous.  The IRS can put a lien on your bank accounts and restrict your access without warning.  

A properly designed and funded IBC Whole Life policy is a private contract existing outside the realm of bank and IRS reporting.  Considered private property, it cannot be seized from your grasp (unlike a house).  In short, you have to abide by bank rules and be on good terms with the IRS to have access to your own money.  Think about it.

5.  You can live life on your own terms.  Infinite Banking is a strategy that creates an alternative financial system that protects you, your family, and your labor (translated into money).  Whole Life policies have existed for nearly 200 years largely unchanged because the contract law that protects it as an asset along with the actuarial science that guarantees the financial performance have been proven to work since they were first created.  

Although Whole Life policies were not created to function as an alternative banking system, if one examines the banking function of a traditional bank (and the true reason why people bank... we all need access to large amounts of capital throughout our adult life) and compare it the banking function with a Whole Life policy, you will discover a far more robust system for money that not only puts individuals and families first, banking with Whole Life (the IBC strategy) also provides long-term benefits for the economy with less of government meddling or "aid" from your local and federal overseerers.  Ultimately, the Infinite Banking strategy is about regaining your freedom from a top down system that doesn't ever want to be fully in control of your own life.  Think about it.

Elevate your understanding of money and banking, you will elevate your financial status.  No need to be a financial pawn.

To learn more about Infinite Banking, schedule time in my calendar at

Thank you,

John Montoya

Monday, May 31, 2021

Comparison: Whole Life Policies and Tenet

Whether you care or not for the movie Tenet directed Christopher Nolan, it is for certain a unique film.


If you’ve heard somewhere that the movie is about time travel, it’s not.  At least not in the sense of jumping to points in time in the future, past, or even sideways (thank you Lost).  

Nope, this story offers something different.  In a word: entropy.

Generations into the future a scientist has invented a machine capable of reversing the flow of time.  It’s this machine that the future of mankind and the world hangs in the balance and it’s up to the protagonist to stop a doomsday event from happening.

The strategy chosen to combat the antagonist is a called Temporal Pincer Movement.

Essentially, there is a (RED) team in the present moving forward and a (BLUE) team in the future working backward to and from, respectfully, the same point in time.  

This gives the distinct advantage of knowing what will happen and how to achieve the outcome desired.

What’s the popular saying?  

“Hindsight is 20-20”

A temporal pincer movement gives the advantage of hindsight which is what makes the strategy so compelling and a juggernaut to overcome.

If that sounds a bit confusing, watch the movie.  As a fan of Inception, another film by Christopher Nolan, Tenet ranks up there with movies that are meant to be enjoyed multiple times.  

Here’s where Tenet is similar to a Whole Life insurance policy.

A Whole Life insurance policy is the ONLY financial product that gives you the hindsight of 20-20.  It works moving forward and backward at the same time.

I call this a “Financial Temporal Pincer Movement”.

Quite literally, the cash value in a Whole Life policy is INCREASING every year at the same time that guaranteed death benefit has been solved for at age 121, the last official day of the policy contract.  Once the policy is issued, the death benefit at the future age of 121 starts to unwind, or work backwards (entropy) to the original face amount from the policy issue date, or day 1 of the policy.  

Each year in a Whole Life policy is a reference point when looking at your own illustration.  The cash value each year gives the present value of the future death death benefit.  

The unknown variable is the year of your eventual passing.  The end of your life is the point the cash value then blossoms in value to equal the death benefit.  If you live all the way to age 121, the cash value has now become equal to the death benefit on the final day of the contract.  We call this Endowment.  

Essentially, what you desire to happen financially is set in a blueprint (fate, if you will) and the outcome is certain.  No other financial vehicle offers this.

What advantages would you have if you knew your financial fate 10, 25, or even 50+ years into the future?

How much of peace of mind would you have knowing that everything you wanted to accomplish (nest egg for retirement, guaranteed income options, a proverbial tax-free mountain of cash to use for any purpose) will be available to you no matter how the stock or real estate markets perform?

Do you have questions about Whole Life policies and Infinite Banking? Schedule time here.


John Montoya

Note, you may want to put on captions because there were points in the movie where you will attempt to read lips and rather than guess at what’s said and ruin the flow of the movie, captions will eliminate the need to wonder what was mumbled.  

Wednesday, April 21, 2021

How Do Life Insurance Companies Invest?


Every so often I'm asked how life insurance companies invest their assets.  The concern centers around the safety of life insurance companies relative to what the typical consumer knows about banks and investment firms.

Can life insurance companies actually be trusted with your hard earned savings?  

Banks have FDIC insurance.  What do life insurance companies in comparison have to protect the assets and benefits promised to policy owners?

Let's start with the headline question:  

How do life insurance companies invest?

You can see from the graph above from the annual report of an A rated life insurance company that 76.9% of this company's portfolio of assets is held in Cash, Short-Term and Investment Grade Bonds.  Less than 1% is dedicated to Common Stock.  

In other words, life insurance companies do not bet the farm on speculative assets and once they invest in debt maturities like corporate bonds, they do not buy and sell.  Life insurance companies collect interest and then recoup the original principal.  Rinse and repeat.  Boring but safe.  

Also, quite effective given the performance history of life insurance companies in the United States through the Great Depression and too many to count economic crisis that have imperiled the savings of Americans held with bank and investment firms in comparison.

Furthermore, there are additional levels of safety to know and appreciate about the life insurance industry.

First, all life insurance companies are regulated at the state level (sometimes by multiple states) and audited by independent credit agencies to ensure they maintain 100% solvency at all times.  Industry average is 105% solvency meaning life insurance companies maintain more assets than liabilities at all times.

In comparison, the fractional reserve banking industry can lend the money you keep on deposit 10x over.  This is the reason traditional banks have FDIC to “insure” customer deposits and no such government entity exists for the life insurance industry.  Simply put, each life insurance company is 100% solvent at all times.

By the way, did you know FDIC insures over $10 trillion dollars in bank deposits with barely $100 billion dollars in assets? It doesn’t inspire confidence but that’s government planning for you...

Additional levels of safety exist.  Since all life insurance companies are regulated at the state level, if a life insurance company falls below 100% solvency, the state can take over and run the company until 100% solvency returns.  

In the rare case where a life insurance company cannot return to 100% solvency, other life insurance companies have historically taken over trouble companies by buying the book of business to ensure policy holders remain whole and contracts are honored.  This is done to ensure promises to policyholders are kept.  The life insurance industry operates based on trust and the industry knows there would be no reason to buy a life insurance policy if the public did not have trust in the system.

Finally, there is a last safety net. If no insurance company steps in to buy the book of business of a troubled life insurance company, there does exist a safety net provided by each state varying between $100,000 to $300,000 per policy.  

In summary, due to the strict solvency regulation imposed on the industry and safety nets provided by the industry. policy owners have the peace of mind knowing their hard earned savings held in an annuity or permanent cash value life insurance policy is safe in the hands of the most disciplined and trusted industry in the world.

How do I know this? Even banks park up to 25% of their reserves with life insurance companies.

My advice: Do as the banks do, not what they advise you to do.


John Montoya


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Wednesday, March 17, 2021

Underwriting Guide: Table for Height and Weight

This is one insurance companies table but all insurance companies are going to be within the ranges provided below.

Based on your height and weight alone, what rate class would you qualify for?

If you have questions about your health and are curious about whether you can get approved, schedule a consultation here:

Saturday, March 13, 2021

IBC Mailbag: How Does A Policy Loan Create Positive Arbitrage?

Question from a client:  I believe I saw that the current interest rate to borrow on our policies is 5%.  I also believe I saw or heard somewhere that the current rate of growth within our policies is 2-3%.  Are these numbers correct?

First, a correction.  The cash value growth on Infinite Banking whole policies funded with the Paid-Up Additions (PUA) rider are in the 4-5% growth range.  Maybe a just a tad higher depending on age and health rating.


Where you might hear 2-3% talked about on the internet is specifically on the guaranteed interest portion of the policy which does not include dividends.  That portion of the policy grows at 2-3% over the life of the policy, then add dividends and that’s where you get to the 4-5% range.


Interest rates are relative.  When borrowing rates are higher, so is the savings rate, vice versa.  Right now with interest rates being historically low, dividends are also historically low.  The reason why all life insurance companies tie the borrowing loan rate to the Corporate Moody Bond Index is the because they are attempting to match the yield they are receiving on the majority of their investments.  So if interest rates rise, so the will the dividend performance to maintain parity within the policies when borrowing.


Going just a bit further, if the growth is 5% and the borrowing rate is 5%, we would say it’s a wash.  In actuality it’s not because 5% is compounding on the full growth whereas 5% simple interest is being applied to only the portion of cash value borrowed.  There is a positive arbitrage there.  If fact, there’s even a positive arbitrage 4% compounded against 5% simple interest.  Plus as loans are repaid the positive arbitrage spread grows further still. 

Here's why:  100% of each loan repayment you make is applied to principal first, the loan interest is only calculated on your policy anniversary date.  Remember this is way more consumer friendly than any bank loan where the bank will always make sure they get paid their interest first!  


Appreciate all the questions.  Please let me know if you have any other!

Thank you,

John Montoya

Thursday, February 25, 2021

Retirement Planning 101: The Income Trap

What if the biggest risk to your 401k isn’t risk of loss or unknown fees dragging down your returns over time?

What if the biggest risk is you might have to live off of 3 to 4% withdrawals per year in retirement?

If you’re within 10-15 years of retirement and not familiar with the “Safe WIthdrawal Rate”, you should be.  This is the percentage amount Wall Street recommends you withdraw each year to avoid running out of money in retirement.

You’re being told to max out retirement contributions but it’s only half the story.  As you get closer and closer to retirement, the real story is how much income will you generate and how?

Let’s face it, if you’re not retiring with a pension, you need an income plan more than you need a savings plan.  The biggest 401k/IRA asset you accumulate still leaves you stuck surviving off a “safe” 4% withdrawal rate. 

Every $1,000,000 you save would only net you $40,000 a year, and this is before taxes! 

Do the math for your situation.

How much will you need saved to generate the income you need?

Here’s Wall Street’s retirement plan for you.

Save more, work longer, take more risk, or make sacrifices to retire sooner.

Or it's some combination of those options.

Which option do you choose?

None, right?

Hopefully, you’re starting to get the picture.

You see, if you’re within 10 to 15 years of retirement, every dollar you save for your retirement must now be allocated as efficiently as possible to produce as much income as possible.  

Instead of following mainstream financial advice and building the largest 401k or IRA possible in an all market based approach, you should be learning how to create the largest and most predictable income stream for your retirement with the least amount of risk and with as little money as possible.

This means having a retirement plan that is ruthlessly efficient in obtaining the highest and most desired retirement end goal:  Income and as much of it as possible!

Sadly, here’s the reality you'll face when you go to retire unless you get your retirement income conversation started now:  

All your retirement assets in the market is the riskiest retirement strategy you can take unless you know the answers to these 2 questions:

How long will you live?

How much income will you need?

If you don’t know the answers (and who does?), should you really be risking 100% of your retirement on the probability of lasting at least 30 years at a 4% withdrawal rate?

Risk of loss isn’t the biggest threat to your retirement plan.  

The risk of not having enough income each month should be your #1 concern but you’ve been led to believe having the biggest balance sheet is all you’ll need to have a worry free retirement. 


That’s why retirement income planning is on the verge of the biggest changes in over a generation.

Ask any retiree with a pension if they would trade their pension for a 401k.  It’ll never happen!

Fun fact:  people retiring with pensions live longer than those retiring without a pension.

The reason why is simple.  Financial stress and anxiety is eliminated when you know you have more money arriving next month no matter how long you live.

Have you ever noticed the mainstream narrative is to build the biggest asset possible instead of the largest income?  Who benefits from that?  The answer shouldn’t surprise you.

You’ve been told for the longest time to max out your 401k, take the employer match, and you’ll be able to retire with a lot of money.  It’s good advice but only until you realize you still have to figure out how to create the largest income possible which no one ever teaches you how.

Let’s face it, you can’t take your brokerage statements to the grocery store.  Those numbers don’t buy the groceries!  You have to turn it into income first!

So the question that you should be asking yourself is:  How can I generate the largest and most predictable income for ALL years of my life?

Imagine retiring with more income each month and never having to worry about running out of money or that you’ll leave your kids with little to pass on. 

If you’re looking for simplicity, efficiency, levels of guarantees, and leaving a legacy is important to you, we invite you to schedule a strategy session to learn how you can create what we call a “Pension 2.0”.  

We’ll show you how to maximize your retirement nest egg to generate income on average 50% greater than your current retirement plan while still staying invested in the market.

Use the link here to schedule your strategy session:

Thank you,

John Montoya