IBC Mailbag: How Safe Are Life Insurance Companies?

The following is an email I sent to a prospective client with nearly $500,000 in bank CD's who was requesting assurances on the safety of his money if he purchased a contract (life insurance or annuity).

I’ve attached an article I’d like you to read about the solvency of the Life Insurance industry.  (Here's the link:  https://bit.ly/LMR-Report-How_Safe_Our_Life_Insurance_Companies)

Regarding the FDIC, it has an interesting history if you study it.  It was created during the Great Depression to alleviate people’s fear for a “run on the bank”.  Banks don’t keep the money you deposit in a vault.  They lend it out right away to earn interest.  Furthermore, banks have the ability to create money out of thin air.  This is called Fractional Reserve Banking.  Banks basically keep no more than 10% of your money on deposit, lend the rest, and thru Fractional Reserve Banking can even create more money out of think based on your deposit.  (Sidenote: due to the pandemic the Federal Reserve has actually lowered bank reserves to 0% meaning they don’t have keep any of our deposits on reserve!)

Think of how mortgages are created.  Banks don’t actually have the money but a signature on a mortgage note creates that money out of thin air.  Then people pay interest to the banks on money that has never existed before.   This is the true definition of inflation (the creation of new money).  Most people confuse inflation with the price of things but that’s actually the end effect when there is too much money in the system which forces prices up over time. 

So FDIC is a government created agency to backstop banks in the event there is a run on the bank panic.  However, the FDIC is actually insolvent.  It has maybe only a $100 billion in assets and this amount insures over $10 trillion in bank accounts across the US.  That said, the government could have the Federal Reserve print more money for the FDIC to bailout people’s bank accounts so there is that.  But for assurances, think about a bankrupt government with an agency (FDIC) that does actually have enough assets to provide a full reserve (that is restore all your money in the event of a bank failure).

The point is that FDIC is sticker of confidence and FDIC doesn’t actually have the money.  The government could make a person’s account whole but if it actually came to that, the money would not be worth as much because of the mass inflation it would cause with all the money printing.  On the positive, people trust FDIC and government to back up a failed bank system and that’s a good thing.  Otherwise, everyone would be running to get their money out of the banks and that would be a very bad thing for the economy.  So it works but it’s built on a very flimsy premise of trust. 

You can read more about how Fractional Reserve Banking works by reading a book called The Creature From Jekyll Island.  Great book.  You can find a link to the book on my website here:  https://jlmwealthstrategies.com/recommended-books/

The life insurance industry in comparison puts the banking industry to shame because the life insurance industry operates as a Full Reserve system.

By law, all life insurance companies in the United States must maintain 100% solvency (more assets than liabilities) at all times.  Industry average per life insurance company is 105%.  That means if every life insurance company had to pay off what’s owed, it would still have money left over to continue business operations. 

Also, life insurance companies cannot create money out of thin air.  They are inherently a safer place for money because of this but because people don’t know how the life insurance industry is regulated by law to be a full reserve system, people don’t think of a life insurance industry as a place to park money when it absolutely should.

Since 100% solvency is required by law for life insurance companies to operate, there is no federal safety net like FDIC required for life insurance companies.  In fact, no one who has ever purchased an annuity has ever lost a dime.  That is a fact the life insurance industry goes to great lengths to ensure because the life insurance business is based on promises to pay claims and benefits.

All that said, each life insurance company has a state safety net of minimally $100,000 and as much as $300,000 that works just like FDIC does for banks.  Life insurance companies are regulated at the state level which is why the government safety net is determined by the state you live in.  When you purchase an annuity, you instantly have this safety net guarantee.

Hopefully this gives you some food for thought.  I’ve included an article from Forbes which discuss the safety of the life insurance industry here:  https://bit.ly/Life-Insurance-Safety

Please let me know if you have any questions about assurances or any other topic I can help answer.  You can reach me at www.IBC.guru.

Thank you,

John

Diversification is for Idiots

Diversification is for idiots.  Don't take it from me.  Take it from a successful investor and businessman, Mark Cuban.  He says the best thing to do is put your money in cash.  He believes "buy and hold is a crock of $%#!" and diversification is for idiots.

Does he know about Bank on Yourself? 

 He never mentions it but all the same principles of safety and liquidity he cherishes are available by holding cash in a Bank on Yourself policy, not to mention the numerous other benefits only available from a personalized Bank on Yourself policy.  The Bank on Yourself policy is the most secure place for cash to reside.  Like Mark said, investing your cash is foolish.  The game is stacked against you.  If you're in the stock market and you don't know who the fool is, IT'S YOU!  "Unless you know something specific, put it in cash.  You can't diversify enough to know what you're doing."

This is where Bank on Yourself comes in.  A Bank on Yourself policy is the only place where your cash is guaranteed to increase in value by contract every year for the rest of your life and it'll do so with favorable tax treatment and numerous other benefits!

You know I highly doubt Mark keeps his cash under the mattress.  He likely has it spread over numerous bank accounts but the best warehouse for cash is not a highly leveraged, government backed bank account earning next to nothing.  The best place for cash to reside is with a mutual life insurance company that is 100% solvent and has never required FDIC guarantees because the entire life insurance industry is regulated by the government to have more capital reserves than liabilities AT ALL TIMES! 

This means unlike the banking industry, the life insurance industry is completely self-reliant and abides by the principle of personal responsibility which of course is a very American characteristic.  No government bailouts required for 100% solvent life insurance companies.

For more information on how to save your cash and avoid being someone who Mark refers to as an idiot, get in touch with me so you can start sleeping like a baby, too.  And remember, the highest form of ignorance is to reject something you know nothing about.  I look forward to hearing from you.

John A. Montoya

JLM Wealth Strategies, Inc.

john@JLMws.com

(925) 386-6639 Office

Authorized Advisor-Bank on Yourself®

CA Life#0C42222

DRE #01390017

NMLS #342818

Watch the new video at www.CashValueBanking.com!

Get Your Money Out Of The Bank

Every evening I get an email from Lew Rockwell and they are eye opening.  I highly encourage you to subscribe on his web site at lewrockwell.com to get your daily dosage of what's actually happening in the world.  The email I received last night was in particular interesting to me given what I do for a living which is teach people about safe money solutions and how to implement the Infinite Banking Concept into their financial life.

At the bottom of the email is the link from Lew Rockwell which contains a list of banks here in America that have failed in the past 10 years.  The list is alarmingly long.  In short, your bank could be next and you'd never know it.

I know there is a great deal of faith placed in the money we deposit at our banks.  Unfortunately, this faith is misplaced and I want to you to be forewarned.  As I have written before, banks are highly insolvent institutions because of the fractional reserve banking system.  When over 10,000 banks failed during the Great Depression, there was a need for the government to step in and provide assurance that accounts would be protected from bank failure.  FDIC was created and it's done exactly what it was supposed to do: restore confidence.

But it's just a sticker of confidence.  Another depression will wipe out banks again and this time the FDIC along with it. The FDIC doesn't actually have enough assets to insure the repayment of all accounts in the event of another systemic bank failure like what occurred during the Great Depression.

If you are going to keep money domestically, the safest institutions to house your savings are with mutually held life insurance companies which are 100% solvent.  They survived the Great Depression as did their policyholders who had access to their money during this crisis.  The same cannot be said of those who kept their life savings at the bank.  Indeed, those who do not know their history are destined to repeat it.

If you have not heard of Bank on Yourself or the Infinite Banking Concept, I highly encourage you to do your own research.  You can create a safer financial system for your money without the sleepless nights others will experience when their bank fails and they discover that the FDIC sticker confidence was just an empty promise.

Click here for the link to Lew Rockwell's failed bank list.


John Montoya
JLM Wealth Strategies, Inc.
john@JLMws.com
(925) 386-6639 Office
Authorized Advisor-Bank on Yourself®
CA Life#0C42222

What's Going On In The United States These Days?

Glad you want to know. Click to read this article by Jim Willie at Financial Sense.

Mr. Willie provides an excellent summary of all you need to know about the financial chaos going on in our country. If you watch the evening news or read the newspaper on a regular basis, this is likely to be news to you (and real news at that). Stay informed. I encourage you to read alternative sources of news such as:

www.Mises.org

www.Lewrockwell.com

www.FEE.ORG

www.DailyReckoning.com

www.Sovereignman.com

www.Shadowstats.com

www.Elliottwave.com

If you think your bank is safe, think again.

Mr. Willie says that $7 trillion is sitting in FDIC insured bank accounts. If the government actually had that money, don't you think they would have found a way to spend it and replace it with IOUs by now?

The safest place you can have your cash is in a mutual whole life insurance policy. The money is backed by capital reserves that exceed the life insurance company's liabilities. In other words, these institutions are solvent! They are regulated to be this way.

Banks operate under the fractional reserve system meaning they keep a fraction of your deposit, lend the rest, and then inflate the money system by creating up to 10x the amount of your deposit in new money to lend out. In short, banks are highly leveraged and the main culprit in creating that nasty destroyer of wealth: inflation.

What about FDIC insurance? The FDIC inspires confidence. Just like Bernie Madoff did... and just like Bernie Madoff, the FDIC is insolvent.

Stick with what works.

A participating non-direct recognition whole life policy has been around for nearly 200 years. It'll be around for another 200+ years because it simply works. It is the safest place you can warehouse your cash.

Combine the fact that you can make $1 do the work of $2 by saving money with the same dollar being used to pay off debt, and you'll realize you're the smartest person in the room once you learn about the Bank on Yourself.

Despite all the uncertainty in the world today, one thing is certain. The business of banking is eternal and will survive what happens politically and economically in the decades to come. For that reason above all else, it's crucial that individuals have their own banking system. The sooner we, as individuals, control our flow of money through the creation of our personalized Infinite Banking system, the safer and wealthier we will become.

Go to www.CashValueBanking.com to learn more or call (800) 208-6141 to request a free analysis by a Bank on Yourself certified advisor. All appointments can be done over the phone and in front of your computer. Let your cash find a safe place before the storm clouds on the horizon gets any closer.

(Note: If you have a preconceived notion that this is like your mom's or grandma's whole life policy, you're sorely mistaken. A short online meeting can put that notion to rest quickly. And if you think you're too old or have health issues, we can look at insuring your spouse, child, or grandchild.)

John Montoya
JLM Wealth Strategies
(800) 208-6141

The Truth About The Federal Reserve

The Federal Reserve is not Federal and has no Reserves. The existence of a central bank occurred 3 times previous to our current one and failed each time. The accepted opinion of the Fed is that it resides to stabilize our economy. The results since 1913 when it was created show it has failed miserably.

Since the Federal Reserve was created, it has presided over the market crashes of 1921 & 1929, the Great Depression of 1929-39, the recessions in 1953, 1957, 1969, 1975, and 1981, "Black Monday in 1987, the dotcom bubble in 2000 and recession of 2001, and the real estate bubble and Great Recession we are currently experiencing. And don't forget ...the 1000% inflation which has destroyed 90% of the dollars purchasing power since 1913. If that is not failure, I'm not sure what is. So don't believe the mainstream press and politicians who will have you believe the Federal Reserve's role is to stabilize our economy. Sure, it is one of the goals. However, it's primary objective is to serve commercial interests. If you look up the definition of a cartel, then learn who was behind the creation of the Federal Reserve and how it operates, you'll understand the Fed's true objective. It sounds crazy. But it's all been written about, but just totally ignored.

The Fed has the ability to stabilize the economy but it's not its primary objective. The Fed in its current form was created to serve the interests of major commercial interests by allowing the money supply to become more elastic which creates the need for financing and ultimately, a reliance on large commercial interests.

There is no free ...market discipline when the banking system is allowed to create money out of nothing versus having to make wagers against its actual capital. If banks were forced to take responsibility for it's actions, it would mean bankruptcy for not managing money properly and not bailout by taxpayer money. Having the endorsement of the government under the guise of protecting the American public allows banks to take risks no other business is allowed to make and have those risks ultimately secured by taxpayers. The Federal Reserve was created to do just this. It ensures the stabilization of the banking industry and allows big banks to become even bigger (which of course means "too big too fail". The reason why the economy is what it is right now is largely due to the market manipulation of the Federal Reserve and its ability to set interest rates and create fiat money that is no longer tied to gold.

FDIC is ultimately a hoax, too. The guise is to protect depositors, but all one has to do is deposit a $100k in multiple accounts in order to get around the system. Furthermore, the FDIC operates on it's own fractional reserve system meaning it doesn't have the money to secure all deposits. If banks, like life insurance companies, were regulated the same way, there would be no need for the "insurance". FDIC ultimately protects the banks from taking large risks with the imaginary money. The loans created by banks from the money created out of nothing (fractional reserve system) ultimately is repackaged and repackaged (also called a "rollover") allowing the banks to continue to earn interest (the life blood of it's business) in order to avoid using the banks own capital to cover the losses, which by the way are losses on money that didn't exist before! If the bank had to actually to use it's own capital, it couldn't possibly take on as much risk as it does. Eventually, though, the scheme ends and borrowers finally realize they'll never pay off the loan. If this happens among too many borrowers, eventually the bank cannot be saved (the fraud is exposed!) and it leads to a bailout and the help of "the lender of last resort" which is the Fed and again the reason why it was created...To ensure that commercial interests can take these risks and if they don't work out, pass it onto the American public.

The history of the creation of the Federal Reserve is an incredible read.

Allow banks to stand on their own two feet. No market manipulation and government backing. Eventually, money will be created from capital instead of debt. Banks would obviously prefer money created from debt since greater elasticity of money lowers competition for the banking industry and creates more opportunity to earn interest.

And know this, when business comes together in order control profits and drive out competition, it is called a cartel. The Federal Reserve is a formal organization, a union of banks, that agree to coordinate prices, marketing, and production of our currency and set rates. It is a cartel but cleverly disguised and the American public is none the wiser.

The more I learn about the Federal Reserve and the banking industry the more I come to think that there is reason why money isn't taught in school. Ignorance is a very powerful weapon.