Five Reasons To Borrow From a Whole Life Policy instead of a Bank

Here are 5 of the best reasons to borrow from the insurance company against your Whole Life policy versus borrowing from a bank: 

* No application process. I ask for the money and I get it. I don't have to qualify...ever! 

* Instant liquidity of repayments. Every dollar I repay on my policy loan is instantly available to be borrowed again without application or qualification, as opposed to a bank loan where payments simply reduce the unpaid principal balance. 

*  Another huge reason for borrowing against your life insurance policy is the flexibility of the repayment plan.   This is especially important if you are business owner with cash flows that fluctuate monthly.  Re-pay policy loans based on your schedule, not the banks.  

* Privacy.  If you have kids to put through college, consider that your bank assets, and even your kid's 529 account, will account against them when qualifying for finanical aid.  You can pay the retail cost of college but wouldn't you rather get a discount?  Strategically placing money in life insurance contracts shields this money from prying eyes.  It also helps you in retirement because policy loans used for income are tax-free and won't bump you into a higher tax bracket.  Retirees with 401k distributions have to report taxable income that potentially reduces Social Security benefits.  Ouch!

* Uninterrupted compounding growth of your cash values.  Simply put, you continue to grow your wealth even when you take a policy loan to use somewhere else.  I call this "Dual Compounding".

Albert Einstein is noted for saying:

"Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn't, pays it."

In summary, total control is in the hands of the policy owner.  You decide how much and when you pay back the loan.  For best results, don't "steal" (borrow without setting up a payment schedule) from yourself.  Maintain discipline.  Paying back your loan re-capitalizes the policy for future use.  

Let me know what questions you have about Infinite Banking.  You can find me here:  www.IBC.guru

You can also hear me talk about Infinite Banking on my podcast here:  www.TheFifthEdition.com

Thank you,

John Montoya

IBC - Which is Better? Direct vs. Non-Direct Dividends ("YOU'RE MAJORING IN THE MINORS!")

Let's start by getting a couple things out of the way when it comes to dividends on a participating Whole Life policy:

1.  You have growing cash value (guaranteed interest and non-guaranteed dividends that become guaranteed once declared) when loans are taken.

2.  One option is not necessarily better than the other.  That said, someone trying to sell you a policy might try to persuade you otherwise for their own purpose (they might only work with one type of company).  

3.  Infinite Banking Authorized Practitioners are (or at least should have been trained to be) completely agnostic.  They shouldn't favor one over the other for reasons explained below.

What follows below is a deeper dive into the world of Whole Life dividends to help further your Infinite Banking (aka IBC) knowledge.  

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There are two types of dividends you can get in the Whole Life world. 

1. Direct Recognition Dividend
2. Non-Direct Recognition Dividend

From a marketing point of view, advisors will “sell” non-direct as the best option because dividends are unaffected by loans. 

However, this is a half-truth. 

There is no free lunch which we all know to be true in life.  Same lesson applies here with direct vs non-direct.  If a life insurance is paying the same dividend regardless of whether a person requests a loan, that means there is something else going on. 

Here is the other half for the full picture on non-direct dividends.  Life insurance companies that pay a non-direct dividend pay out lower dividends to everybody to offset the cost of borrowing from the general fund of the life insurance company for those who do take loans.   

Essentially, those who do not take policy loans are subsidizing those that do.

So the question becomes would you rather have the potential for the highest dividend you can get every year?  Or would you be happy with a lower but level dividend for all years?  With a direct recognition dividend, you have the highest potential for dividends without having to subsidize other people who may or may not take policy loans.  You still get declared dividends when loans are outstanding.   They are not taken away from you because you have a loan.  However, you will get a reduced portion of the dividend if a loan is taken.

Back in 2007 I emailed Nelson Nash, author and creator of Becoming Your Own Banker (the pioneer of IBC) and he surprised me by calling me out of the blue.  He was already well into his 70’s at that time.  I wasn’t expecting an email back let alone a phone call.  I had emailed him about direct vs. non-direct because I wanted to know which was better for my own situation before I started recommending a particular choice to my clients.

The first thing he said to me after introducing himself was to thank me for reading his book and for  helping him to spread his message about IBC by being a professional in the industry.  Then in his thick and sage Alabama accent which I recognized as Nelson’s right away even though we’d never spoken before (no introduction needed!), he said something I have never forgotten.

He said in that kind, old man Alabama drawl, “Now son, you’re majoring in the minors!”

What a thing to say!  If he didn't already have my utmost attention, he surely had it then.

Now you have to know Nelson had a certain way of teaching fundamental truths.  If you’ve read Becoming Your Own Banker (it’s worth re-reading from time to time), you know he uses analogies and euphemisms quite a bit to explain important points that should not be taken for granted.  

That's exactly what he did with me over the phone at 7:53am PST while I was packing my little ones into the car for a ride to their pre-school.  It instantly hit me what he was saying and has stuck with me ever since.

Direct vs. Non-direct ultimately doesn’t matter in the big picture of IBC.  

The whole point of Infinite Banking is to own and control a system of money that you are constantly directing your flow of money into so you can eliminate the middle man (traditional banks).  The freedom of control and use of money for any purpose while enjoying all the perks of an ultra-safe and ultra-liquid cashflow management system where you are guaranteed to have uninterrupted (tax-free even!) growth and access for life is the main point.  

Banks become super wealthy because they rob of us this freedom by fooling us into believing we need them.  We don't!  They are the middle man in the money game that seeks to control the flow of your money for their profit.  

He went on to explain to me that all I need to do is have “a good administrator (life insurance company) to handle administration and paperwork.”  The dividends will be there as they have been for 150+ years and counting. 

So to return to the discussion of direct vs non-direction and understanding the difference… while it may be good to know (especially if the only thing learned is a half-truth), it ultimately isn’t the reason why you choose to go with one life insurance company or another. 

Getting back to Nelson’s bigger picture, if a person is really doing IBC correctly, they are going to have multiple policies (with different companies – direct and non-direct dividends) over time which will eventually incorporate their total cashflow.   

It’s not an either/or proposition on which is better because you are going to receive dividends whether you have a loan outstanding or not.  It essentially comes down to: 

Are you okay subsidizing yourself and others who take loans (non-direct) and therefore take a reduced dividend for all years or obtain the highest potential dividend based on your own loan borrowing and repayment schedule… 

But as Nelson reminded me years ago: don’t lose sight of the bigger picture ("don’t major in the minors!").

Nelson instructed everyone to do 4 things to achieve Becoming Your Own Banker:

1. Think long-term.
2. Don’t be afraid to capitalize (open a policy and max-fund a properly designed Whole Life policy).
3. Don’t steal the peas (repay your loans at a “higher interest rate” – another euphemism meaning re-capitalize quickly so have capital for your next opportunity).
4. Stop working with the middle man (i.e. traditional banks).

If you have more questions you'd like answered about Infinite Banking, let me know!  You can find me at www.IBC.guru.

Thank you,

John A. Montoya

JLM Wealth Strategies, Inc.

Bank On Yourself® Authorized Advisor

IBC® Authorized Practitioner

CA Life#0C42222

Calendar: Schedule Now

RE: Application Denied

Regret to advise that due to the medical history and recent accident noted in the medical records… application has been denied.

You’ve heard the saying: “early bird gets the worm.”  The last thing you want when planning for your future is to receive a message like the one above.  Unfortunately, I deliver a message like this every once in a while.

Case in point, I had recently been working with an individual who I first connected with in 2016.  For two and half years this person was on the fence about the Infinite Banking Concept (IBC) strategy although this was a referral from one of my most successful clients, a client who has purchased multiple Infinite Banking policies for himself and family across different insurance companies for diversification purposes. 

As one of my strongest client advocates for IBC, he has impacted many in his sphere of influence sharing the many benefits of IBC with family, friends, and work colleagues.  Suffice to say, referrals from this client don’t need much convincing.  They have the testimonial to know Infinite Banking works.

However, sometimes people simply struggle to grasp IBC.  They still believe it is too good to be true. It happens and no word of endorsement from a trusted colleague or recommendation from an experienced advisor is enough to spur a final decision in moving forward.

Never quite ready to pull the trigger we lost touch for over a year.  Then from out of nowhere I get an email end of summer.  This individual is now finally ready.

We pick up where we left off only making minor revisions to update the plan.  Application is submitted, exam and medical records ordered.  Then a few weeks later there some issues with medical records.

You see it turns out this individual had a reason for their sudden motivation.  As the message at the top alludes, something happened.  A car accident earlier in the year was suddenly more serious than noted at the time of the application.  By physical appearances, the individual seemed in good health when we met in person.  In this case though, the eye test failed.

The bottom line, coverage was declined.   

Don’t let this happen to you!  Car accidents are one thing, but I’ve seen people wait only to later be diagnosed with life threatening illness.  We are not immortal.

If you’re on the fence about getting started, there’s a simple solution.  Lock in your insurability with a 10 Year Convertible Term Policy.

This is the shortest timeframe available for a Term Policy that will convert to a custom designed Infinite Banking Whole Life policy.  As an additional perk, a few of the IBC companies I partner with will apply as a credit the previous 12 months of premium paid upon the conversion of the Term Policy to Whole Life.  That’s like getting a move-in special of free life insurance for a year!

How much time does it take to pull the trigger on getting started with IBC? 

For most people, they get started with my simple and easy “3 Step Process”.  In fact, for those with an exceptionally clean medical and driving records, they get approved in as quickly as 48-72 hours from the time of application without even needing an exam.  I’ve even had people get approved with an hour of the application.  Simple and easy!

It’s the 80-20 rule.  Most will start immediately, but some will just choose to watch more videos and wait for a better understanding of the strategy, or who knows.   

My advice: Just don’t wait too long and allow life to get in the way.  At least do the sensible thing.  Get temporary protection and lock in your insurability with a 10 Year Term.   You’ll be able to convert that Term to an Infinite Banking Whole Life policy when the time is right (assuming this is done by the end of the 10 year term period).  No need for a future exam to determine your eligibility.

You’ll have 10 years to cozy up to the idea of guaranteed growth, access to your money tax-free when you want or need it without interrupting the growth, and the peace of mind of knowing the foundation of your financial plan along with your legacy is set no matter what happens around that curve in the road called life.

If you’ve been on the fence, let me know.  It costs you nothing to get a quote on a 10 Year Term Policy.  The choice you make from there is entirely yours.

Have a prosperous 2019!

John A. Montoya

JLM Wealth Strategies, Inc.

IBC® Authorized Practitioner

Bank On Yourself® Authorized Advisor

CA Life#0C42222

Contact me here: www.IBC.guru

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.

Banks don't park their reserves in CD's or Mutual Funds!  Why should you?

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 one?

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.

Thank you,

John Montoya

The Very Secret 770 Account That Sounds Too Good To Be True (But Isn't)

So about that "770 Account" you've been hearing about...

Before I get started on the 770 Account, I want to share with you another little money secret.  It's called a "401" account.  It has no guarantees except that you can and will lose money when the market tanks and eventually you will have to pay taxes on it whether you have a gain or not.

Still interested?

It gets even dicier. Your money in this 401 account is illiquid until after age 59.5 and you have to pay fees on the account (even hidden fees that you know nothing about) for life to Wall Street whether they make you money or not.

Can you guess what it is?!?

If you follow the mainstream financial media you likely have one of these 401k accounts.  You also buy term insurance thinking Whole Life is expensive and have been led to believe permanent life insurance is a waste of money.

Madison Avenue and Wall Street know that if you hear the same thing for long enough, you'll actually believe it's true. Those fat cats are pretty clever, aren't they?

In my honest opinion, only a unwitting person completely unaware of a better option would park their money with Uncle Sam and Wall Street in a retirement account lockbox called a 401k because one entity will tax you for life and the other will bleed your account dry while you take all the risk.

If that's appealing to you, please proceed with your regularly scheduled programming...

The only people getting wealthy from mutual funds & 401k's are the financiers on Wall Street!  

My apologies (sort of) for poking fun at the 401k which the majority of Americans use to fund their retirement.  My point in leading off with it is to point out that a "secret" financial strategy like the 770 Account isn't really much of a secret because it's actually been around for over 150 years.  Depending on how old you are, your grandparents probably had one!  They certainly didn't have a 401k and they were smart enough to not trust the banks.

One important difference between the 770 Account and the 401k account is that you're only familiar with the latter.

The 770 Account is the alternative retirement account that you either have never heard of it before or, if you have, chances are you are most likely misinformed or have yet to be properly educated about the strategy.  (The first giveaway is that you're calling it the 770 Account!)

I can pretty much guarantee you don't understand this proven wealth strategy because the life insurance industry doesn't even teach this strategy.  In fact, it's still so obscure that it's now being called the 770 Account by a newsletter putting a new spin on old registered trademark and people are none the wiser.

And if those in the life insurance industry don't know the in's and out's of this financial strategy (sadly,the majority of advisors use the wrong type of contract), I'm absolutely positive the traditional government approved Wall Street advisor knows next to nothing except what they might have heard about it in conversation from another person who might have only heard a short ad on the radio.  So for the lay person, knowledge about the 770 Account is even more obscure, if that's even possible...

The bottom line is this, the 770 Account is very much a secret if you call it by that name.  Lately I've been seeing videos on the internet for a secret investment that of course sounds too good to be true.  It's called the "770 Account" or "the Presidential Account" but it's best known as the Infinite Banking Concept® (or IBC for short) which is the original trademark and the trusted source behind this strategy.

For those that already think they know what the Infinite Banking Concept is about, I'm going to stop you in your tracks.  Infinite Banking is more than a Whole Life contract which is simply a product that combines a tax-favored savings component under IRS code 7702 (get it?) with a death benefit to boot.

Brace Yourself...

The 770 Account is BY FAR not too good to be true because it's actually safer, 100% liquid, and more predictable than any other type of wealth accumulating strategy that exists.

The Infinite Banking Concept® is the only strategy by which you can eliminate uncertainty (Wall Street), usury (bank financing), and taxes (the IRS) from your life forever.

What could be better than the 770 Account (Infinite Banking)?!?

Answer this riddle and you will know:  It's more powerful than God. It's more evil than the Devil. The poor have it. The rich need it. If you eat it you will die.   (Answer below.)

This is what the 770 Account visually looks like (click to enlarge):

As an IBC Practitioner, I teach this strategy in my practice and I've seen the impact it has had in my clients lives.  The "770 Account" is the mother of all foundations for wealth building. Why? Because it can give birth to new investments without opportunity cost.  Your money is always working for you even when you deploy it somewhere else!

Educate yourself by doing your own research about the Infinite Banking Concept.

Don't believe the online jokers on message boards who know nothing about Whole Life contracts.  This includes the typical Wall Street advisor paid to sell you mutual funds or the lay person who only buys term because they've never learned how wealthy people accumulate tax-favored money in these accounts using very specific riders to turbo charge the cash values.

For a better understanding of how the 770 Account works, talk to an IBC Practitioner who can teach you the concept.  You can verify my affiliation with the Infinite Banking Institute by clicking here: http://www.infinitebanking.org/finder/   Best of all, you won't have to pay a monthly subscription to a newsletter for learning how you can benefit.

… the answer to that riddle: nothing.

And by the way, the most common lament I hear from people once they learn the truth about the 770 Account/IBC is that they wish they would have known about this decades ago.  (Just heard it again this morning from a 64 year old gentleman wanting to get started and is two years from retirement.  If this sounds similar to your situation, a different version of the 770 Account is your best bet.  Ask me about it.)

Do yourself a favor and get started today.  You'll thank yourself later (and your kids and grandkids will, too).

Best,

John A. Montoya

JLM Wealth Strategies, Inc.

john@JLMws.com

(925) 386-6639 Office

Bank On Yourself™ Authorized Advisor

Request the free Bank on Yourself™ Report by clicking here

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