My biggest thing was always "where do the returns on these life insurance policies come from?" If it's from other people's life insurance premiums, then everyone is overpaying on the premiums. If it's in the stock market, then I should just invest in the stock market.

@CarlosLopez-ij4xn

6 ай бұрын

They come from the returns the company makes from their investments.

@joshi1q2w3e

6 ай бұрын

Also many of the returns they show you are highly inflated, one showed me a table of yearly returns that basically would mean 12.5% returns per year…. The average return for the S&P 500 over the last 30 years was 10.7% per year. When you take into account inflation its less than 10.7%

@shettynischith77

6 ай бұрын

What if something major happens in month 2 of your investment journey 🤔

@emoney1231

6 ай бұрын

@@shettynischith77 uh... Emergency fund?

@aFutureSelf

6 ай бұрын

A coworker of mine had a father who paid into these premiums for 20 some odd years. Long story short, he passed away and missed a payment while he was sick. The insurance didn’t pay out because he missed out on a payment. It’s a scam. Always ask where the money comes from. Someone profited off of his 20 years of payments. Free money for 20 years these scumbags.

Best advice is always “if you can’t explain why you are doing something with your money you shouldn’t do it. Circumstances change and you need to know when you need to evaluate and possibly shift strategy.

@shea2415

6 ай бұрын

It's too bad, though, that in this video the guys didn't give any examples of why someone might do this. This would be more of a FOO step 8 type option, and they compared it to Manny's step 6 or so. IB is more of a stay wealthy tool than a get wealthy, so that comparison kind of misses the mark. They promote, or at least acknowledge, the 3 bucket strategy. This is sort of a 4th bucket, not a replacement for equity investing. ex 1: opportunistic investors. TMGS themselves show stats of how strongly the market recovers after bear territory. After a 20%+ drop, take a loan from your policy, invest a year or two, collect your double-digit return and pay back the loan. ex 2: entrepreneurs. Need cash to start or expand your business but banks won't give a loan? Use your IB policy. Have you ever enjoyed a Disney movie? You have Walt's whole life loan to thank. ex 3: multi-generational legacy planning. Check out the Rockefellers' success vs. the Vanderbilts'. Granted, IB might not be beneficial unless your clan is well above the estate tax thresholds.

@InsuranceandEstates

6 ай бұрын

Most Americans have money sitting in a traditional bank earning very little interest and then paying taxes on that interest. There is an alternative, it is Whole Life. Consider the following benefits. Whole Life vs Savings Account 🏦 1. Tax Advantages: Whole life insurance offers tax-favored growth. The cash value accumulates tax-deferred, and policy loans are tax-free. 2. Guaranteed Growth: Whole life policies often come with a guaranteed interest rate, providing predictable growth of cash value. 3. Liquidity through Loans: Policyholders can borrow against the cash value of their whole life insurance without traditional loan approval processes. 4. Non-Correlation with the Market: The cash value in whole life policies is not directly affected by stock market fluctuations, providing a stable growth environment. 5. Death Benefit: In addition to the savings component, whole life insurance provides a death benefit to beneficiaries, which is typically tax-free. 6. Dividend Earnings: Participating whole life insurance policies may earn dividends, which can be used to purchase additional coverage or cash out. 7. Living Benefits: Some policies include riders for chronic illness or long-term care, providing financial support in case of health issues. 8. Creditor Protection: In many states, whole life insurance is protected from creditors, offering a secure way to store wealth. All the best!

@firecraig

6 ай бұрын

I can easily explain why I use my dividend paying whole life as my savings/emergency/ and bond fund.

@valleyscharping

4 ай бұрын

​@@firecraigLegally, it is not actually paying you a dividend. The IRS defines these whole life policies as paying out a charge after a deliberate overcharge. It's not the same.

@firecraig

4 ай бұрын

@@valleyscharping well aware what a life insurance dividend is. Now, do you know how they are used.

One thing people should remember about term life insurance is that it is possible to get a term policy that continues after the initial 10 or 20 year period. The premium just goes up (it goes up a lot compared to the original premium but still tons less than a whole life premium).

@jmc8076

6 ай бұрын

Agreed. I’d also say if young/er and healthy buy longest term you can afford. It will save you thousands in longterm. When/if renewed will prob be double in cost. No joke. I know people who learned the hard way. This was thru diff very respected cos. Most reps/agents won’t tell you up front.

@elizabeth_wall

5 ай бұрын

Term is only cheaper if you die at a young age. There are very few term policies that go past age 85 and the life expectancy of a male is age 85 and a female age 90. Your premiums after age 65 in a term policy are so cost-restrictive in the long run whole life is much cheaper and is one of the only products that actually cover you until death. Death is not an if it's a when and the fact is that most people outlive their term policies and they never pay out. Talk about a scam!

@multimeter2859

Ай бұрын

If you're going to get term, which I'll agree is better than no insurance at all, consider getting convertible term. God forbid a negative health condition happen to you that makes you ineligible for any future life insurance, you'll at least be able to convert that term into something permanent, since no further medical exam is required.

My life has been so much richer and easier since 2018 when I discovered these two mentors who don't even know me, but I am grateful to listen to their wisdom every fricking day. Thank you guys.

Your subtle sarcasm kept me interested in a 30 minute insurance video. Cheers to you 😂

@jmc8076

6 ай бұрын

I like obv sarcasm too. LOL

You guys are the real MVPs! This was one financial topic I heard a ton about and didn't understand it at all. Definitely sharing with friends and family. "If you can't simply explain it, you simply don't understand it"

@firecraig

6 ай бұрын

These guys are not being honest about dividend paying whole life policies and the infinite banking concept.

@maxpruger837

6 ай бұрын

If you didn't understand it before then you really don't understand it now because these guys didn't even get the basic facts right.

@thedude5040

6 ай бұрын

@maxpruger837 If I as a single investor have always made greater returns than these insurance products from billion dollar corporations then why should anyone invest in them? My non-taxable equities fund has annualized 26% over the last 5 years, 10.1% when you throw in all my bond holdings. I then just have a 30 year term life policy for short term death benefits. There is nothing these products offer that I can't do better myself.

@earlharden175

4 ай бұрын

They can't explain it simply, they are also not experts on the topic.

@multimeter2859

Ай бұрын

Do not share this video, as there is so much they get wrong here. Watch one of the three response videos made against these guys on this topic.

Congrats on 400k Subscribers!

Thanks for covering this. I do have one of these products for my husband (I didn't qualify) and I will say the reasons why we signed on. Once you build up enough on the cash side you could presumably stop paying in and just let the cash cover the premiums so to me it makes sure we have life insurance for good. I am the majority earner and the one who handles the finances so it gives me peace of mind that if I were to pass away suddenly our child would still have their remaining parent covered by life insurance even if he missed a payment while figuring things out. In addition ours covers long term care which lets us opt out of the long term care tax in our state (that benefit alone covers about 10% of the cost). That being said I don't think of it as a bank account or investment, I think of it as insurance. This also only accounts for a small amount of our savings in a year which I think is fine when I consider the overall risk profile of our other investments. So hope that gives you some insight into why folks buy these.

@jeffreychatman4000

6 ай бұрын

Ultimately, if you know that you're paying a premium/extra over term life insurance and that buys you peace of mind, then that's the right move for you and your family. Unfortunately, whole life and especially infinite banking are often touted as incredible products without the salesman sharing the actual downsides/hidden costs. The biggest one that frustrates me is that you get the cash balance OR the life insurance when you die. Not both. FWIW, my term life insurance policy withdrawals directly from my bank account, so I'm never worried about missing a payment. You can ladder out the cheaper term life policies to end at major mile stones (end of mortgage, kids college graduation, etc). Life insurance is to pay for those that need your income when you die. Once kids graduate college, they should be independent. Once a house is paid off, you don't need to make mortgage payments, once you enter retirement, you should have enough saved to live off of. So by buying the cheaper policy and the difference of what the whole life policy would be instead, you'll have built up a nest egg to leave your spouse instead.

@ManagingFI

6 ай бұрын

I don’t follow your logic. If you pass away suddenly, a term policy would pay out to your husband just the same. With autopay there’s no excuse for forgetting to pay a premium. Almost nobody seeks out these policies, they’re sold them through deceptive practices. Then when the single year life insurance premiums really start to get expensive people get crushed having to pay more. If they want out they pay a steep surrender fee.

@HoustonTom

6 ай бұрын

Maybe the premiums are eventually paid by the dividends but you are paying so much extra in premiums today. It’s like you’re making the payments on a $100k Mercedes today but driving a $25k Ford. But you’re still driving a cheap car. Buy a cheaper term life insurance plan and put the extra in the stock market or even a savings account.

@squeakers215

6 ай бұрын

@@jeffreychatman4000 Well with my husband it is less of a "whoops I missed a payment" and more of a "Thinking about death is morbid and makes me upset so I will pretend I will never die". Estate planning has been a fun time... Term and laddering was discussed but I like that we can pay into this now while we are high income and not later if we retire early, plus this can help with long term care after retirement which a normal term would not. I didn't qualify so we are doing that for me with a patchwork of different policies which isn't ideal. I agree that this whole infinite banking thing doesn't make any sense. It was made very clear that I would get either the cash or the policy, whichever is greater. Better to think of it as an insurance policy with a dedicated bank account that returns about what you would get from a savings/checking account. Why you would take loans from that I have no idea. These tiktok finance folks are wild.

@calebmelton5989

6 ай бұрын

Um....

What I got is this is an incentive for investors who want to borrow capital on their existing capital to be able to invest more now, in the future market I’d love to see another more in depth video to learn about it, I’m probably going to rewatch this too and research more anyway 😂

We fell into something like this in our early twenties and we were not able to pull any of our money out! Just glad we weren’t in it long!

@firecraig

6 ай бұрын

Who was it with?

@maxpruger837

6 ай бұрын

Then it wasn't a policy designed for IBC, which has anywhere from 60 to 90% of your first year's premium going to cash value. In fact, the technical term for cash value is Cash "SURRENDER" Value. It signifies to the penny how much money the insurance company will pay you if you want to surrender the policy. So if you made even one initial payment of $10K and $8K went to cash value, you could turn around and surrender the policy to the insurance company and get $8K back. Of course, if you continue to make premium payments the dividend compounds on itself and the cash "surrender" value will grow to exceed your premium payments.

@dcschwanner

4 ай бұрын

@@maxpruger837 These guys should be embarrassed at how little they know about IBC. They're comparing two different tools. Hey, this hammer sucks because you can't use it to cut wood.

Infinite Banking has flaws…but you guys missed them. The comparison should be done vs cash or money market fund, not stocks. In that case IBC crushes cash due to higher rates and no taxation. You clearly have listened to or read all these IBC people…because their whole idea is to open a policy and then borrow to re-invest in the same stocks or real estate that you were comparing it to. So you’ve essentially missed the entire concept. The real analysis/comparison should be done on whether borrowing to invest is better/worse than simply investing in risk assets. And whether borrower can consistently pay down that debt. And whether things like loan interest can be tied to the assets for tax deduction. These are the key questions to ask.

@DefinitelyNotRin

3 ай бұрын

There's no taxes because it's your own money. You really think the IRS wouldn't tax it? The IRS has it listed very clearly why it's not taxed. Take a moment and think why the IRS won't tax it when they will tax EVERYTHING. It's because it would be actual theft of your own taxed money if they did.

@multimeter2859

Ай бұрын

I like this response. Infinite banking is also a popular way to get into rental property investing, the idea being that rental income is repaying the policy loan.

@jamesiscool3245

17 күн бұрын

While the money advantage guys understand some of the infinite banking concepts, they clearly have not gone straight to the source of the inventor of this concept. Please talk to someone who is an agent certified from the Nelson Nash institute. Otherwise they are operating with imperfect information and assumptions.

I retired from the military when I was 49 (now 60), but bought whole life insurance ($250k) policy @ 39 versus paying for the survivor benefit (10% of gross benefit) because the monthly amount for each premium was equal, plus my wife would only receive 50% of my gross retirement benefit (taxable benefit) which would disappear the moment she passed. From a inheritance perspective, the whole policy will role over to our son tax free since my pension is non transferable upon my death. I know there is a lot of numbers behind this that I am not sharing, but the overall whole policy cost me $300 per month (since I purchased at such a young age) versus the annual increase in premiums for survivor benefits, and yes my wife and I have also be investing in Roth IRA's for over 20 years.

@multimeter2859

Ай бұрын

Props to you bro. Just ensure your son knows what he's doing with the money if you don't plan to lock it up in a trust. Even if he knows what he's doing, your grandchildren may still squander it anyway. I understand it won't be your problem by that point, but we need to consider bad apples in the family.

Investing versus insurance are 2 different things. A lot of advisors mix this up. All these financial products have a purpose to help solve client problems. It won’t apply to everyone’s situation.

@tyrecarmon20

6 ай бұрын

I got both. Yes I did my research heavily in life insurance (grateful I have a knowledgeable Agent to answer every question I have). I also invest in the stock market as well. My advice, just do what is best for you. There is no one size fits all in personal finance

@Chris-xt8io

3 ай бұрын

@@tyrecarmon20 if it was just that then it’s fine, nobody would be talking about whole life. The problem is these products are pushed on people who do not need them or want them

@Sparkz63

Ай бұрын

A lot of advisors... well, they probably make commissions on selling these whole life insurance products to consumers.

Another point is that as Manny is approaching 65 he will move his money to a less risky investment with a lower rate of return so you should use maybe 5% for the last 5 years. Of course that doesn't have to be the full amount exposed to the lower risk he could have a lower risk bucket and a higher risk bucket.

I used to have the whole life, IUL sold by “friends“ and said I can use it for retirement and kids college. Since I found the money guy I got the term life, cashed out the IULs and paid the surrender fees. My investments are now better.

@firecraig

6 ай бұрын

Whole life and IUL are two different things.

@wmmarquez

6 ай бұрын

@@firecraig yup. I had one of each in my lifetime. Not at the same time. Good fooled twice

@firecraig

6 ай бұрын

@@wmmarquez they are both permanent insurance. If you cancel them you really can’t be mad. You didn’t keep it. Now, if they weren’t with one of the top mutual companies, that’s unfortunately on you.

@wmmarquez

6 ай бұрын

@@firecraigi did cancel them. And now just have the term life like what I said on my first comment.

@firecraig

6 ай бұрын

@@wmmarquez yep. And that was probably a mistake.

Very helpfull thanks! We at 32 , bought a Whole Life 15 years ago. Can you do a followup video on how to maximize the value of this "boat anchor" in retirement assuming our kids don't need the life insurance?

@astroman30

4 ай бұрын

Cash it out. Otherwise the insurance company keeps your cash value.

The 3 simplest arguments for IUL fire infinite banking 1. It's a great bond alternative you'll yield 2%-3% more with the same amount of risk. 2. IUL comes with long term care built into it. So if you buy term and invest the difference you must account for separate cost of long term care. 3. Arbitraging your dollar is an accelerater to wealth.

@astroman30

4 ай бұрын

Why IULs are garbage (from an actual fiduciary :) 1. Money never enters the market - With an IUL, the money funding the cash value portion of the policy is never actually invested into the market. Instead, the insurer holds your “cash” and pays a return on the annual growth of a specific index. Anyone selling IUL are not required to have a securities lIC. 2. Growth potential is capped - While most policies have a “floor” of 0% which prevents your cash value from dipping below what you put into it, your growth potential is capped, too. For example, if your policy limits growth to 10% on the index and that index out-performs that percentage, you’ll still only receive the value of 10% in your account. The insurer keeps the difference. 3. No dividends - Dividends are completely eliminated in an IUL policy. Not having the chance to reinvest any earned dividends, as you could choose to do with an individual investment, means you could miss out on a great deal of money from dollar-cost averaging over time. 4. Fees, fees and more fees - IUL policies are packed with fees and charges that will eat into any cash value accrued. 5. Rising costs - The internal cost of insurance continues to rise as you age, which can limit the amount of money going toward any potential cash value. All universal life is A.R.T ( annual renewable term) PLUS: Almost all cash value policies have these “features” built in. • You’ll accumulate NOTHING in cash value for the first few years the policy is in force. • The cash value earns a lower rate of return (often just 2%-4%) than the potential return you could achieve if you put your money into a vehicle such as a Roth IRA in the U.S. • If you borrow from the cash value, you’ll pay it back plus interest. • If you die with the policy in force, beneficiaries receive the death benefit (less any outstanding cash value loan balance) while the insurer keeps any accrued cash value. Unless you have the increasing death benefit option (option b) the consumer will pay more for that option. The consumer always gets screwed when investing in these policies. The only winners are the agent and the company. The BS I hear all the time is it has to be "structured properly." I have collected 64 policies in the last year and I haven't I seen one structured properly.

@earlharden175

4 ай бұрын

@@astroman30 I am a financial advisor. I got my life& health license years into the game because Annuities, Long term care and Cash Value life insurance serve an important purpose in a balanced retirement portfolio along with real estate, securities . Having income that is non provisional is so important in a rising tax environment like our current one. An IUL will rarely ever beat the stock market, it isn't designed to do that. However it does out perform the bond portion of a portfolio and net a lower standard deviation of risk. This allows clients to invest more aggressively in the stock market or real estate while maintaining the same amount of risk across the portfolio. If you are max funding a policy you always start with option B and then switch to A when cost per unit will increase (50 or 65). The pay out of death benefit will need the sum of Cash value, Death benefit from B years.

@earlharden175

4 ай бұрын

@@astroman30 I think the cost of IUL is it's greatest asset. When funded to Guideline Level Premium the cost basis declines at an exponential rate. The average cost of insurance is .5-1% over 25-30 years. It's most expensive in the beginning and highest yielding later. That compliments AUM accounts that cost more as time goes on because cost is proportional to account value, which should be increasing up to retirement age. Policies can be made even cheaper with a term rider to coverage face value, but appease Tamra,Tefra and Defra so you don't mec. Also the long term care benefits and accelerated death benefit are far less expensive than the client paying directly for it on top of term. Lastly, IUL did not receive dividends but most WL policies are negative cash on cash for the first 10 years. A cost basis study has to be done to even figure out the cash on cash. In IUL it's clearly stated, and can be positive in 2 years. More so, if a client is extremely bullish on a particular year they can pay and additional 1% of CV to get 140% upside on an index with >100% participation rate. There is even a product where the client can pay 7.5%CV to earn 270% multiplier of the Indicies they chose, all in a tax deferred environment with a true zero percent floor to stock market volitility and superior liquidity.

@astroman30

4 ай бұрын

@@earlharden175Simple question, would you rather have 100k in a ROTH IRA or cash value?

@earlharden175

4 ай бұрын

@@astroman30 They're different tools on the same team. We fund life insurance after a 6 month savings, no to low debt and an Roth IRA being max funded. So in our philosophy I couldn't have 100k in IUL without already having heavily funded at least two brokerage accounts. We use CV life insurance as a Bond alternative in a comprehensive conservative way to build wealth. David McKnight does great seminars for CFPBs through the power of zero network. One of the aims is to have RMDs set to equal standard deduction in the future so that even deferred income is tax free.

Coming from an economist and and getting registered as a financial advisor, this has been a topic I never learned. Btw im not from the US and i dont have this kind of insurance policy in my Country.

“Infinite Banking Isaac” 😂 I’m unhinged. I would never! Term only!

There are also taxes you will have to pay out when you retire and the family will pay taxes once they recieved the investment money..

you should do a comparison if someone used it with loans. Supposedly the idea is you are getting a 4% loan instead of an 8% car loan

Great deep dive!

Time to update the follower counter! Almost 400,000! 🎉 I remember a couple years ago when TMGS was pushing for 100,000 by the year’s end.

One thing I never see brought up is that overfunding a policy in this manner can lead to it being flagged by the IRS as an “MEC” (modified endowment contract), which means any tax benefits the policy had are removed. This is a permanent change if it’s allowed to happen, and the limit of what you put in that causes this is something that’s extremely ambiguous and almost never brought up.

@firecraig

Ай бұрын

It’s not hard to keep a policy from MECing.

@astroman30

Ай бұрын

@@firecraig Even at 40/60 it takes about 8 years to break even according to your boyfriend Chris.

@firecraig

Ай бұрын

@@astroman30 clueless aren’t you? Who cares how long it takes if lifetime it’s a better return than a savings account or bonds. 🤦‍♂️

@DriveByReviews

10 күн бұрын

​@firecraig most of those selling these products do not include the "break even" Calc as part of the comparison. They simply compare return rates as if there was no commission. This is simply lying and unethical sales tactics. 8 years is a long time to be locked into a loss. With inflation now being a forward permanant concern, lifetime products that are locked in with conservative returns will be terrible options for everyone. There are better tax reduction strategies.

@firecraig

10 күн бұрын

@@DriveByReviews you realize the cumulative internal rate of return on a dividend paying whole life is exactly what it is? It’s not that minus a commission. I’ll gladly take a tax free vehicle that gets lifetime 4-5% and has a higher death benefit than the cash value. To match it you need a term that never ends and a savings account getting 6-7%. Let me know when you find either. Dividend paying whole has beat savings accounts, money market accounts, and even bonds the last forty years. For a safe place to grow savings ,not investing, I don’t know of a better place. Feel free to share if you do.

Just caught the sub count...grats on 400k!!!

@gm2407

14 күн бұрын

Six months later 455k, they are flying.

Another factor often left out with these policies is your success is tied with the financial health of these companies. What happens if the insurance company goes out of business?

@firecraig

6 ай бұрын

That’s why you only buy dividend paying whole life with the top financially strong mutual (client owned) companies.

@jaykadlec

6 ай бұрын

Similar to the FDIC coverage on bank accounts (but NOT the FDIC). If an insurance company fails, the State Guaranty Association and Guaranty Fund will usually step in. The association will: - Transfer the insurer's policies to another insurance company - Continue providing coverage for policyholders - Help pay outstanding claims from other companies in the guaranty association Every state has a nonprofit guaranty organization that each insurance company operating in that state must join. Regardless, working with at least an investor-grade level company is still a good idea. I typically prefer A-rated.

@lindawer

6 ай бұрын

Yes, the same is true for annuities.

@multimeter2859

Ай бұрын

They're a lot healthier than banks, that's for sure. 😂

What are your thoughts on converting Term to permanent at the end of the term to avoid estate taxes down the road? I understand this only applies to high net worth individuals. Most life insurance companies allow you to convert your term policy to permanent with no additional underwriting. Does it make sense to take risk in the market while you are young and buy term…then convert to permanent and get a lower guaranteed return once you are in your 50’s/60’s and have a lower risk tolerance?

@travis1240

6 ай бұрын

Does that even work? AFAIK the insurance has to be inside an irrevocable trust to avoid the estate limit. It would be wise to talk to an estate attorney.

@Alan-jk1yi

6 ай бұрын

I second what Travis said as I don't know the nitty gritty of estate planning regarding the taxation of life insurance, but I'd ask why you still need life insurance at all when you are 60+. If your savings habits and portfolio are healthy (I'm aware this is a big if, but this is a finance channel after all), theoretically, you should reach a point where you can "self-insure" and no longer need life insurance. Whole life is an extremely expensive way to remove risk from your portfolio. Bonds can do the same thing without the massive monthly premiums, without the need to take on debt (i.e. cash value loans) to access the money, and without locking your money behind surrender fees. I'm personally pretty harsh on insurance products as investments, but for someone 60+, I'd probably even go with an annuity with some kind of refund stipulation before I'd go with a whole life policy.

Just another product developed to add complexity and sell to people who do not understand the details until they realize it was a suboptimal play for their capital.

@InsuranceandEstates

6 ай бұрын

You put your capital into the whole life policy and then deploy the capital into other assets. The suboptimal play for capital is keeping your money in the hands of others and hoping for the best.

@dw9560

6 ай бұрын

@@InsuranceandEstatesnope, the suboptimal play is reducing your capital inefficiently with fees and charges associated with said policies. Whole life is useful only in a very small subset of life situations that most will not encounter.

@multimeter2859

Ай бұрын

Infinite banking is a process, not a product. Whole life is the product used to implement the process.

@dw9560

Ай бұрын

@@multimeter2859yes of course…. Yet another niche product that people were getting wise to so they had to start selling “infinite banking” as well as Index Universal Life that is so great…

Like how they use monthly amount for term versus annual amount for whole life.

@carolinecollins2441

6 ай бұрын

Bo misspoke - according to the chart shown, the amounts he gave are both annual costs (annual cost for term life and annual cost for whole life).

I am glad you covered this and showed the numbers. The tic tokers never tell you how long it takes to have access to your money. They say right away but they always show making 25k or more deposits. They never show how much is in the CV each year and how much they are keeping as fees and buying other options within the policy. Thanks for all of the numbers.

@firecraig

6 ай бұрын

My clients have access to cash value after their very first payment. Might need to do a little more homework before commenting. 😀

@multimeter2859

Ай бұрын

You would need a personalized illustration to see how much you would have year after year. The reason they can't show you in a tiktok is because there's too much variety in how the policy can be set up, specifically with how your premium is split between base vs. PUA. They also can't show you how much they keep in commission because that also varies depending on how much is in the base. Regardless, a policy set up to execute infinite banking lowers the commission to an agent anyway, since setting it up the Nelson Nash way requires 60% of the premium going to the PUA.

Would it be possible to flash up a picture of Justin Wilson (the Cajun cook) every time Brian says “gar-on-tee”?

Please address velocity banking next.

@rajbeekie7124

3 ай бұрын

Run from anyone who is selling you the idea.

What about using life insurance to cover the inheritance tax for your heirs?

@astroman30

3 ай бұрын

The federal inheritance tax starts at $11.7 million. Very few states have this tax. The ones that have them (Kentucky, Maryland, Mass.....etc.) start around $2 million to $5 million. Even then, I would seek advice from an estate lawyer about setting up a trust before I'd go out and buy a trash value policy.

I've been interested in the infinite banking, but those that are pushing it tend to either A) be life insurance salespeople and/or B) have ideological underpinnings trying to stick it to the banks. One of the supposed reasons life insurance is superior to a bank account is that for insurance assets and liabilities must match, whereas banks are allowed to conduct "fractional reserve banking," explaining why banks go under but no mutually owned insurers have (and that "mutually owned" part is important, both as a way to supposedly align company and customer instead of company and stockholder, and to pre-empt jokes about AIG). Another aspect is that a significant amount of bank reserves are in corporate grade life insurance contracts, so why not cut out the middleman? I have no confirmation that's true, but assume it is - where does the insurer invest? I hear it's in low risk bonds, but again, if that's the case, why not cut out the middleman and just buy ETFs that cost

@grumpus1403

3 ай бұрын

Didn’t know there was such an animal. Would the interest continue to compound if you borrowed from an ETF, or would it start back from zero? Not sure if that made sense?

Ramsey says you can’t get both the death benefit and cash value. He doesn’t mention that the death benefit rises over time with some policies. And over time it can be very close to the cash value that was put in

@Alan-jk1yi

6 ай бұрын

Ramsey is correct. You don't get both. The cash value is essentially just early access to the death benefit, so anything you pull from the cash value, including any interest paid, is deducted from the death benefit if you don't pay it back. The death benefit may increase with some policies, but you conveniently left out that you have to pay extra for that. And by "over time", you mean as you approach age 100. That's when the cash value converges on the death benefit value for most policies. And I'll remind you that the average US lifespan is currently 77.

This is educational. Well done! Another advantage, whole life insurance can argue for is behaviorally disciplined contribution, although this can be negated by automatic contribution to 401k from paycheck.

@ludwigvonsowell5347

6 ай бұрын

Yup their big rebuttal (I worked at one of them) is “well yes buy the term and invest the difference but most people don’t invest the difference, this gives you discipline”.

@robertblake60

6 ай бұрын

So basically this plan is for people who are shitty with their money. Check.@@ludwigvonsowell5347

@maxpruger837

6 ай бұрын

There is very little educational value in this video, it's almost 100% factually inaccurate.

@ludwigvonsowell5347

6 ай бұрын

@@maxpruger837 tell me more about “it just has to be structured properly”.

@JayseabeeSTL

6 ай бұрын

@@maxpruger837 lmao, tell me you own whole-life without telling me…

I started the whole life policy just recently. I did my research and I liked everything about it. I like earning money twice on the same dollar Then I took loan up to 90% of what I put in. Doing some private money lending and doing a loan 15% return 5% each month I’m generating $9000 a month cash flow minus the 5% loan rate. Which will be less than 5% because I will be putting that money back in as it comes back in. So yes little more expensive than term. But ,so far, my net worth has already started increasing since starting my policy. And this particular loan can continue to renew every three months. So up to 60% return over the course of the year. So thanks for the information. This was very educational. But so far it’s working very well for me. And I will actually add more policies as my net worth increases.

@InsuranceandEstates

6 ай бұрын

Sounds like you are actually practicing infinite banking, which the video said nothing about. Instead, they attacked their strawman Whole Life policy and claimed victory.

@leeposton1664

6 ай бұрын

100% agree. It actually just makes perfect sense. Everyone should be using Infinite banking whether they’re using a whole life policy or a HELOC or a line of credit. As I mentioned when I got the policy and did all my research I found private money club where you’re able to do the private lending and have your money working for you. Safer than the stock market. And loans are guaranteed by the first position and whatever you’re lending on. Also, just a tidbit of information to say the stock market yields 11% every year. Is misleading sometimes it’s much higher sometimes it’s lower. But when it’s way lower and you have a bad year, you have to make up significantly the next year to get back on track. Can sometimes take years to make up the losses from the down years. Sometimes those numbers can be pretty devastating. And I would much rather control my money than put it in a 401(k) and let someone else manage it. And just take a chance that my tax bracket is too high when it’s time to start taking distributions. To each his own I guess

@chemquests

6 ай бұрын

Leverage cuts both ways. If you get a big return on what you borrowed, you can also get a big loss. Of course you don’t need insurance to get that kind of action

@leeposton1664

6 ай бұрын

💯 correct you don’t need whole life policy. But the whole life policy allows your money to grow compounding interest while it’s out earning a second return. Like I said to me, that just makes sense making my money work hard for me twice.

@wan3416

6 ай бұрын

If it sounds complicated, there’s a whole lot of risk somewhere that isn’t being shown to you. Get greedy, get broke. Simple as

This is a great video! Thank you for hitting the social media buzz head-on with realistic data.

@maxpruger837

6 ай бұрын

It's not realistic. Nearly everything they say is factually wrong.

@Kalvain14

6 ай бұрын

​@@maxpruger837 You should explain why, then. They made their argument. Now make yours.

@maxpruger837

6 ай бұрын

@@Kalvain14 I did in a separate post. But it's not even an argument. Their basic facts are wrong. For example, there are no surrender charges on a whole life policy. Direct recognition doesn't mean you don't get a dividend on borrowed funds. The video is called "Infinite Banking Exposed" and they spent 95% of the time talking about a whole life policy. Infinite Banking is about taking over the banking function in your life, the whole life policy is simply the best vehicle to do it with. It's like calling the Superbowl and all you do is spend 95% of the time talking about the stadium and parking lot while ignoring the actual game being played. PS. I'm not an agent and I don't sell insurance, but I understand how this work and these guys have zero clue.

@Kalvain14

6 ай бұрын

Thank you. I see how they are missing a bunch of details now. The comments here are painting a better picture. 👍

How about when you have a term life converted to whole life at a lower cost ?

The only problem with watching this video is now we will be spammed with whole life insurance ads.

1. The biggest proponents of IBC are life insurance salespeople. 2. It's a highly convoluted concept that ultimately just allows you to take out small loans serially. This is antithetical to my beliefs about money.

@multimeter2859

Ай бұрын

1) I'm not an insurance salesperson. 2) Please explain your beliefs about money.

Whats the proper step to take if youre already about halfway through a policy? The cash value doesn't usually match what you put in until the pay period is over. So at that point, would it be better to wait for that, and cash out what youve put in (and just accept the opportunity loss). Or would it still be best to cash out early, even if the cash value is less than the amount of premiums paid?

@Alan-jk1yi

6 ай бұрын

It depends largely on the the plan and your financial situation. If you have a particularly good whole life plan (which is still probably a fairly mediocre investment at best) which is past the breakeven point and you already have a solid, well funded investment portfolio, it might be worth keeping as a conservative asset. However, if all three of the above are not true, I'd cash it out without hesitation. Stop paying those extremely high premiums to an insurance company, and instead invest them and the cash out value in something that will actually perform long-term. You'll have to swallow it as a net loss, but continuing with a bad investment just digs the hole deeper.

@Juliozev96

6 ай бұрын

@Alan-jk1yi That makes sense, and I do already have a well funded portfolio. The only thing really that's making me lean towards keeping it is that it is a conservative side of my porfolio (and I'm aware it's a bad one). I think I'll probably run the numbers and see if it's worth canceling, thanks for the input!

@firecraig

6 ай бұрын

@@Juliozev96who is your whole life with? If it’s a top dividend paying mutual company like Guardian or NYLIFE, it can be a bond alternative. Also google Ernst & Young’s study on having life insurance in retirement. You will see that having whole life provides for more retirement income and legacy.

@multimeter2859

Ай бұрын

How much of the premium payment is going to the base vs. The PUA? Does your policy even have a PUA? How much cash value do you currently have?

@Juliozev96

Ай бұрын

@multimeter2859 the monthly payment is $308, where $50 of it is going to PUA. My cash value rn is 10.5k, and I'm finishing up year 4 right now. The pay period is 10 years. Not sure if I should just get out now, or wait for at least the money to break even to what I put it (still bad because I could've invested it but oh well)

Great video guys! One thing to remember is Isaac would not be investing his 10k into the market. If he is working with a good advisor, likely he would be saving 10k each year in cash or investing in bonds, and this was presented as an alternative. Obviously an 8% return will beat a 3.6% return. But they're not the same. They have different purposes and should not replace each other. It drives me wild the people who suggest insurance over 401ks or other investments. But, that doesn't mean permanent insurance can't/ shouldn't have a place in a portfolio.

Comparing dividends of Whole Life to investing in the overall equity market isn’t very fair. I feel it is a more equitable comparison to T-bills

@jeanjasinczuk7543

6 ай бұрын

I do agree, the risks are not the same. I kind of understand the reason for comparing to an equity as the Tiktok videos are about replacing the 401k. In my opinion, those Tiktok videos are for entertainment only, it is a waste of time answering to those. A more reasonable approach would be comparing a whole life policy vs replacing the fix income part of portfolio and term life insurance. Those would compare low risk assets.

@chemquests

6 ай бұрын

Either way, with a direct investment you can unwind your position easily. Getting your money tied up in an insurance reduces liquidity.

@samsciascia4004

6 ай бұрын

@@chemquests It's very liquid; you can take loans for the first month with most carriers; that being said, this isn't a short-term play. There are no surrender charges like they claim they didn't realize it they were referring to a IUL

@chemquests

6 ай бұрын

@@samsciascia4004 a loan is not liquidity. Paying interest to borrow your own money proves you don’t own it. You handed it off to someone else who gets to dictate your access. Sorry but this is stupid (not calling you that but the arrangement)

@samsciascia4004

6 ай бұрын

@@chemquests You do not borrow your own money. The insurance company is loaning you THEIR money from the general account fund and your cash value is the collateral securing the loan. Your cash value earns whatever it earns, PLUS the spread between your, let's say, Real Estate investment return and your cost of money. This results in a higher return than you would have made by investing your own cash directly. This is used mainly in the Real Estate market. Does it always make sense to borrow from it? Sometimes it does and sometimes it doesn't. Keep in mind in life, you are always either paying interest or giving up interest.

Not a insurance agent, don't use it. The catch they would say, Your 1.2 million is only worth 960k if taxed at 20%, The more you withdraw, the more you are taxed. However, if you plan the policy you an take loans which don't count as income and you never have to pay back because the interest is subtracted from your death benefit. While you take out a loan, there will be no stopping of the compound interest of the original amount.

@astroman30

3 ай бұрын

Yet, the opportunity cost you gave up by not investing the money instead of buying a trash value policy is enormous. I'll give you an example: In a $500G DB example, the premium is $430 a month from age 40. Nick lives to age of 90. So with whole life insurance, Nick pays $430 a month for 600 months (50 years) total $258G. Dividend is $130 a year best case for 50 years on the premium paid, or $6500, for a cash value of $264,500. The alternative is to buy term life insurance with extended duration and invest the rest .. a $500G death benefit policy for a 30 year term would be about $60 a month leaving $370 available to save .. $370 monthly in the market at 7% (stock market lifetime average) in a tax deferred account gives me $432G after 30 years. I won’t need a $500G policy if I’ve got $432G cash in my account, so I cancel it, And for the next 20 years my account keeps growing at the full $430 a month. when I’m 90 the account is worth $1.9 million. Conclusion is clear .:. Do I want $264.5G (whole) or do I want $1.9 M (term and invest) for the same premium output .. I choose term and invest!

I would have liked to see a loan comparison at the end. Like, 10 years after both start, taking a $50k (car) loan from the whole life policy and a $50k loan from manny. Both then pay it back (manny paying interest). Don’t think it would have changed the outcome but it would have tested the “infinite banking” concept

@elizabeth_wall

5 ай бұрын

You can see examples like this in Nelson Nash's book, Becoming Your Own Banker.

When comparing whole life vs term costs, did i hear correctly they compared annual vs monthly cost?

@General8675

6 ай бұрын

No, I think they talked about $10,000 annual for the life insurance vs $727 for the term policy. though they assumed the investment in the stock market would be 10,000 annually when maybe they should have calculated it with $9273, but that still gets you $1,050,475 by my calculations.

@gregorylee1395

6 ай бұрын

Nope. Thats how astronomical the difference is in cost. I pay about 20 bucks a month for the 500000 dollar policy they mentioned.

@pwalsh691

6 ай бұрын

I think I heard Bo misspeak somewhere in there. Said “per month” for something and should have been “per year”. Can’t recall where though.

@pwalsh691

6 ай бұрын

At 5:22. Chart is labeled “Annual”.

Did y'all try looking into the tax implications of the whole life policies vs money in the stock market? Did you also take a look at inheritance of insurance payout vs stock?

@General8675

6 ай бұрын

There really aren't a ton though. you get a step up in basis in inheritance and inheritence taxes only step in after 11 million.

@travis1240

6 ай бұрын

Taxation is a really bad reason to buy whole life instead of investing in a diversified portfolio. If it's estate tax you're worried about, either life insurance or a brokerage account would need to be placed in an irrevocable trust in order to avoid estate tax. If it's tax drag on investments that you're worried about, buy index funds and hold them long term - your cost basis is tax free just like your policy contributions would be.

@me-myself-i787

4 ай бұрын

Stock market money in a Roth IRA is tax-free. And if you put it in an irrevocable trust, there are no estate taxes.

@General8675

4 ай бұрын

@@me-myself-i787 yes, but then you also have to put it.... In an irrevocable trust, which makes it very hard to use in your current lifetime. Depending on the trusts of course. Also, that's a nice problem to have more than 11 million.

What if you're a highly compensated employee and don't qualify for the employer's 401K plan so they offer you a whole life insurance policy with a 100% match?

@firecraig

6 ай бұрын

You take it!!!

@CapitalWorksPro

6 ай бұрын

What's the fee structure on the policy look like? That's the first question I'd always ask. If they can't answer it, suggest they find a way to provide 401Ks because they're obligated by law to provide the best available retirement options when they offer retirement options. Chances are, they're getting something in the way of incentives by offering the "whole life as retirement" option. To sum up; ask about fees, and talk to a fiduciary advisor if you need further advice.

@firecraig

6 ай бұрын

@@CapitalWorksPro not familiar with whole life are ya? There is no fee structure on whole life. Based on age/sex/ health rating, that’s how the company determines the particular cost of life insurance.

@Alan-jk1yi

6 ай бұрын

Take it while it's available, as a 100% match is silly to turn down, but advocate for updating the 401k so that highly compensated employees can contribute. Modern, properly set up 401ks usually bypass nondiscrimination testing, which is what can potentially kick out highly compensated employees.

@travis1240

6 ай бұрын

What does a 100% match into a whole life policy even mean? I would read the terms very carefully. If they are adding cash value and you can withdraw that cash value as soon as you leave, that could be a good deal. Why on earth doesn't your employer just use a "safe harbor" 401k plan though?

@themoneyguyshow ….Curious to know what the numbers would look like if you took it a step further & used non direct recognition loans from an infinite banking policy to buy index funds? IB proponents/influencers would highlight that you would then be getting growth in the stock market & on policy dividends….too good to be true???

@damemethief

6 ай бұрын

If you're going to put money in the stock margin while leveraged, why take out a whole life policy and bear the brunt of the premiums when you can just use a brokerage account with margin?

@charleslemaire8137

6 ай бұрын

I think you would be ahead if you invested directly. This would avoid ins costs & fees. You would not avoid cap gains on the investments. Where is the benefit?

@samsciascia4004

6 ай бұрын

@@damemethief Margin Loans can be called whole life can't. No one does this for an investment. They do it to help their investments, mainly Real estate or a business they own. It's about control, leverage, liquidity and tax-exempt income. Design is everything on this. They are correct on some of what they say but confused on other aspects. The bottom line is that your capital has to be stored somewhere, either in a bank or this, which is a better alternative to a bank.

I enjoy all your content and have agreed with everything up until this video. I was really sceptical at first with the strategy, as you are, but after running the numbers and seeing the flexibility it provides I decided to try it out a couple of years ago. What convinced me is that it's constant growth, can be leveraged at 90%, paid back in your terms and tax sheltered. I'm early into it but seeing the benefits as an additional strategy. Would love for you to discuss with one of the proponents of it and see you debate it because it's not about just swapping the strategy with just investing. Hope you have a more open mind than other investment gurus that are anti debt :) Thanks for all the great content.

@chemquests

6 ай бұрын

Why isn’t just investing the proper comparison? It’s the simplest thing you can do with your money to earn a return. I don’t understand why you would bother borrowing your own money to invest instead of just investing directly.

@firecraig

6 ай бұрын

@@chemquestsoh my. Google the word “collateral”. Policy loans are NOT borrowing your own money. 🤦‍♂️It’s a loan from the company using your cash value as collateral so that all your cash value can continue to grow. Next thing you will say is the evil life insurance company keeps all your cash when you die. 🤦‍♂️

@user-he2eq5hj1e

6 ай бұрын

@@chemquests Comparing that way misses the main reasons to use the strategy which is to use the loan off the policy to invest to increase returns. Rightfully you'd say well isn't that just leveraged investing? It is but the most secure way to do it. You're able to leverage 90% of the value which you can't do with other assets since it's secured by the policy. Second you don't have to go through a long application process, you just write to the insurance company and they send you the money. The loan would have at least a 1% higher interest but you get the flexibility of paying as much as you want, just interest, skipping payments or paying it out anytime. You can go to a bank if you want and get a better rate but that involves a longer application and a less flexible terms. Then the power of the strategy is your cash value is compounding uninterrupted while you use the loans to invest in compounding assets while you pay simple interest. Sorry there's a lot there and I'm not a pro by any stretch. I would just encourage people to also watch the videos on it and not discount the strategy outright because of this video. I also decided to try it because it can easily be cancelled, found a policy without any withdrawal fees after a year.

@chemquests

6 ай бұрын

@@user-he2eq5hj1e leveraged investing is inherently a bad idea. It magnifies upside and downside. It sounds like using a low risk vehicle to enable taking higher risks.

@multimeter2859

Ай бұрын

​@@user-he2eq5hj1e How did you set your policy up? How much is going to the PUA?

I still invest, but ONLY if I can be the financier of our own investments - amplifies return. The value is in the process, more than the product. Thus the problem that these guys have, no one makes money on a process that is in the individual’s control - only on product sales that involve risk. Control is key, speaking as a highly insured person with assets not at the mercy of the market cycle. Net worth growth is easy and certain.

What i love about this video is that Brian seems legitimately curious. He has done the research and heard the pros snd cons, but during the explanation and case study he is still thinking critically and viewing it from our perspective. Essentially, he is willing to keep an open mind to see if he is missing anything before passing judgement.

@firecraig

6 ай бұрын

😂😂😂😂

I asked you guys to do this episode maybe 2-3 years ago. Was ecstatic to see this pop up.

@multimeter2859

Ай бұрын

Now watch one of the response videos, because these guys are wrong.

@CapitalWorksPro

Ай бұрын

@@multimeter2859 no thanks. They're not wrong and judging by your comment, you have an interest in selling this crap.

Can you share how you calculated that rate of return? Thanks

@caragsdale10

Ай бұрын

They used a time value of money calculator, and solved for the internet rate. They assumed that Isaac started with nothing. Number of payments (N) = 30 Payment amount (PMT) = -10,000 Present value (PV) = 0 Future value (FV) = 532,000 Interest (I/Y) = 3.6 There are other variables, such as whether the payment was made at the beginning or end of the period, and paying monthly as opposed to annually will SLIGHTLY change the outcome; but it’s still going to be around that 3.6 percent range. Also note that, present value (PV) and payment (PMT) are expressed as negative numbers. Hope this helps.

Does it ever make sense to just have some small amounts in this as a way to help for diversity of your capital. I Still have blended term insurance. I would only use the loan portion if stock market is down during early retirement years. Also, I believe there are tax benefits for generational estate planning. I am still maxing retirement 25% savings. My agent pushed this as a risk off part of my overall portfolio. I still want term since my WL policy is low 250k. I am hesitant to have a high benefit policy but like the flexibility and discipline of a set long term savings vehicle since finance is mainly behavioral. Obviously it would be better to invest in the s and p in a taxable account that is easily accessible. I feel that most would fail at not spending taxable investment account dollars especially in the messy middle. I want to protect myself from this.

This is one of your best shows yet. Thank you, fellas and team! Merry Christmas!

What about the total cost of the term life insurance policy?

Does anyone else say to themseves Brian S. Preston!!! .....no? just me?........ok ill go.

Not sure if this was just slip, but at 5:20 you seemed to be comparing a term life insurance cost per month with whole life insurance cost per year. If that's the case how is that a fair comparison?

@natelevy1040

5 ай бұрын

He misspoke, but the chart was in annual rates.

I love that your subscriber count is 401K right now! Nobody else should subscribe.

I’m betting neither of you know how to ACTUALLY design a policy for IBC.

@maxpruger837

6 ай бұрын

Based on this video these guys couldn't even spell IBC.

So are you saying the cash value doesn’t get the compound interest it’s just the dividend?

I’m no fan of Infinite Banking but this video leaves out a lot of the positives of doing it. Also, this policy works best and is actually financially viable for people who already have a ton of money (Football players, lotto winners). I assume these 2 guys know this and choose the 500k policy deliberately. The real asterisk should be on this video for deceptively omitting when it can actually work l

@paulstutsman

6 ай бұрын

I make 50ish grand a year and it works awesome for me.

@firecraig

6 ай бұрын

What part of the concept of IBC do you not like?

@chemquests

6 ай бұрын

I don’t think it’s deceptive. They’re responding to videos that misrepresent this as a strategy appropriate to most people, so they take the example of what most people could do.

@firecraig

6 ай бұрын

@@chemquests not true. It’s a simple math concept. Doesn’t require lots of money.

Though the average return on a WL policy is 1.5%, a properly designed policy is generally closer to 3-4%. Not amazing, but its also not an investment. The best way to design a policy for high cash value also provides the lowest commission. Unethical agents will take advantage of those that dont understand what they are doing. Im not trying to make a case for or against WL, but it can be a useful piece to a bigger financial picture. Anyone trying to frame it as an investment is probably uninformed or collecting a commission.

@firecraig

6 ай бұрын

Try 4-5%

@03c5z

6 ай бұрын

@@firecraig lots of variables there. Potentially yes. It depends on the product. Either way, if its only 1.5% its a poor product for cash value and likely geared more towards death benefit or just a junk policy.

I have a fully funded 401k, Roth and brokerage account and I wouldn’t get rid of any. I can only borrow 50% of my 401k for other investments and if I stop working at this place I have to pay back immediately. Even with smaller returns, doesn’t it make sense to borrow from myself using IBS plus paying interest to myself than to hassle with approvals and loss of interest from using a bank loan? I don’t have any debt besides mortgage. I also own investment property and looking to continue diversifying with land at some point. Does it not make sense for someone who can afford it and has satisfied the FOO to use such a product, even considering the fees and low returns when considering the interest a bank would forever keep on loans I could take on my own money? Genuine question. Clearly not for everyone, but can certainly work for some, right??

@astroman30

4 ай бұрын

The interest you pay in Infinite Bullshit to borrow against your money goes to the LI company. So, let's break this down in details: You pay an insurance company 6 to 8% interest to BORROW against your own money only for them to keep your balance (cash value) when you die. You really think that is a good idea?

Totally CONFUSED!!

@firecraig

6 ай бұрын

No surprise. These guys confuse universal life with whole life. Don’t have any idea about IBC. IBC is a math concept that’s easily provable. Happy to answer any questions you have.

@astroman30

6 ай бұрын

@@firecraigSure, I have a question: What happens to the cash value when the person dies?

@firecraig

6 ай бұрын

@@astroman30 I have a question. What happens to your equity when you sell your house? Does the evil mortgage company keep it? No? Same concept. Whole life is an asset. Cash value in whole life is just the portion of that death benefit you have access to while alive. So clearly your question about what happens to the cash value when you die, makes no sense.

@astroman30

6 ай бұрын

@@firecraig yet, you didn’t answer my question.

@firecraig

6 ай бұрын

@@astroman30 it’s paid to the beneficiary. It’s a pretty simple concept. Problem is you think the death benefit is separate of the cash value. Nope. Not in whole life.

Odell's Law: The more complex a financial product the better it is for the seller and the worse it is for the buyer.

@multimeter2859

Ай бұрын

Good thing infinite banking is a process and not a product.

Just hearing about IULs. Are there benefits here to protect against taxes come retirement vs say capital gains in IRAs?

@astroman30

5 ай бұрын

Giving away your money with only an option to borrow is beyond stupid

@me-myself-i787

4 ай бұрын

You don't get taxes in retirement with a Roth IRA.

when you compare Whole Life to the stock market, the stock market is going to have a higher average return with a higher end result. It's a better fit to compare Whole Life to fixed income assets, particularly muni bonds given the tax deferral and often tax free advantages. Can you make a video comparing Whole Life to muni bonds? Particularly looking for the tax drag from a 60/40 non-qualified portfolio of someone in retirement compared to someone that used Whole Life as their fixed income allocation?

@astroman30

2 ай бұрын

60/40 will allow you not to hit a MEC. The problem is that it takes about 8 to 10 years just to break even. Not to mention, you have to dump A LOT of money in your PUA (at least $1600/monthly according to Chris Naugle) just build-up your CV. You miss a base premium, you will be up shit creek, because your "dividends" haven't kicked in to cover your premiums. You'll have hard luck try finding an agent/carrier who will set this up. There are some good turds in the toilet, NWM and Lafayette come to mind who set 10/90s and 40/60s. Their dividend rates are a little higher than others. The problem is that IBC is designed for suckers.

@firecraig

Ай бұрын

@@astroman30hahaha!!!! You think NWM’s dividends are higher???? Hahaha.

Bo mentioned dividends. Life insurance dividends from mutual insurance companies aren’t true dividends, but rather more along the lines of an income tax refund. The life insurance company is just returning money that it did not use. This is why life insurance dividends are not taxed; they’re not resulting from a gain.

@firecraig

3 ай бұрын

So please explain how I can receive more in dividends than I paid in premiums 😀

poor people make poor money decisions, middle class people make middle class money decisions, wealthy people make wealthy money decisions. Whole life is a middle class money trap. Don't do it.

@putaindemardesale

6 ай бұрын

Yeah i know tell that the rockefeller

@InsuranceandEstates

6 ай бұрын

Whole life is called the Rich Man's Roth. Middle class should learn the secrets of the wealthy rather than make assumptions.

Try borrowing against your 401k, buying assets with the money, and then paying back your 401k, while simultaneously making guaranteed returns in true compound interest fashion on your entire 401k balance.

@chemquests

6 ай бұрын

What‘s the point of borrowing your own money to buy assets instead of buying the assets directly? Regardless of instrument (401k or insurance) I don’t see the advantage

@InsuranceandEstates

6 ай бұрын

@@chemquests Thanks for the question. In a simple answer, you are borrowing against your money, not borrowing your own money. Since it is not your actual money, your money in your policy is still going to work for you. Your death benefit is the ultimate collateral because if you never pay back the loan that is where it comes out of. The key is you run your money through a whole life policy that offers several benefits such as tax favored vehicle, tax free death benefit, guaranteed cash value growth, creditor protection, terminal illness and chronic illness riders, etc. Your financial foundation is built on a contractually guaranteed asset with tax incentives and creditor protection. You can then use your money in the policy as collateral to purchase other assets, or opportunities, as they arise. But as you purchase the asset you are also still earning a compound interest return on your entire cash value balance. So you make money in your policy and you buy a new asset simultaneously. Or you can simply wait to buy assets until you see an opportunity but know you are earning around a 5% return on your money so you do not feel the need to take unnecessary risks.

@Alan-jk1yi

6 ай бұрын

@@InsuranceandEstates From a book keeping perspective, it may not be technically correct to refer to is as "borrowing your own money" since they technically come out of different pots, but from a practical perspective, "borrowing your own money" is exactly what's happening. What you're leaving out is that you have to pay interest on the loan, which is often times higher than the dividend rate the collateralized amount is making the in the policy. While from a book keeping perspective, it is technically correct to say that the cash continues to grow while you borrow against it, when you factor in the interest you have to pay on the loan and actually take everything into account, the net result is either break even or a loss, depending on the interest rate. That's kind of like having $50 in each pocket, spending $20 from your right pocket, then putting the change in your left pocket and pointing to how well your left pocket is doing. It's deliberately obscuring the overall picture, which is what truly matters.

@linnyh8242

6 ай бұрын

@@Alan-jk1yi The loan interest is not "often times higher than the dividend rate". They are practically a wash over the life of the policy, even a net positive spread in favor of dividend growth because while loan interest is based strictly on interest rate environment, the dividend rate gets supplemented by institutional business profits that have nothing to do with interest rates.

@Alan-jk1yi

6 ай бұрын

@@linnyh8242 A reasonably easy Google search says otherwise. The average dividend rates for different companies is easy to find, and it varies between 5-6%. According to MarketWatch, the average loan interest rate for whole life policies varies between 5-8%. There is no way to reach those averages without the loan interest rate often being higher than the dividend rate. And please note, this is me being MAXIMALLY generous to the whole life plan. This does not factor in commissions, management fees, surrender fees, or any other fees that are built into whole life plans, as well as various other factors which work against the net performance of the plan. Insurance companies deliberately hide those to make it hard to get a good idea of what the true net performance of the plan is, which on it's own is a huge red flag.

The key here is it’s not a replacement for a 401k or IRA or other investments. It’s a way for higher earners to put away extra savings (not investments, but cash savings) into something that is tax advantaged, and also provides long term benefits like a death benefit. The 3.5% return (tax free, mind you) maybe doesn’t sound sexy now, but it sure did the last 10 years when risk free returns for cash was close to 0%. Overtime these policies provide tax free bond like returns with essentially zero risk - which is what you want when storing cash somewhere.

@General8675

6 ай бұрын

So then it shouldn't be advertised to %99.999 of people, most are not looking to keep that much cash lying around.

@cscorona1

6 ай бұрын

@@General8675 I think the amount of cash to have is entirely personal and situation specific, but my belief is most people do not hold enough safe cash. With that said, if holding cash (whatever the amount) is not in line with your financial values, then whole life wouldn’t be for you.

Thank you for covering that topic! I've always wanted to hear an impartial breakdown of the topic

Show me the T accounts LOL. Insurance is not an investing tool, glad we looked at the numbers.

This show came out just as I was trying to learn the difference between these two insurances. Thank you! Great Video!

Where should one put 200-300k they plan on saving for the next 5-7 years for renovation or house down payment

@Waltuh22232

6 ай бұрын

you could probably split it between bonds and mutual funds - putting it all into equities is reckless and all into bonds will not yield enough to matter… CDs could also be an option

@andiclemenza6476

6 ай бұрын

Brokerage accounts-Index fund that tracks the sp 500, that’s what they have said before

@davidknoch2256

6 ай бұрын

Not sure how long this will last but high yield savings is giving 4.6% which is pretty safe.

@EightUp000

6 ай бұрын

CD’s. Safe, prevents you from taking it out on a whim, and will (probably) beat inflation.

@craigholland2274

6 ай бұрын

Money market at 5.35% vusxx

Does whole life make sense if you have health issues that wouldn't allow for you to get a term policy?

@Fred2-123

6 ай бұрын

I don't think you could get either.

One of your best educational videos yet!! Fantastic job of breaking down a complex strategy into all of its pros and cons.

@firecraig

6 ай бұрын

You are kidding right???

how does taxes work on whole life insurance ?

@firecraig

6 ай бұрын

It’s paid for with after tax money and if done properly (not hard to do), any money gained or taken out or left when the person dies, is tax free.

@wan3416

6 ай бұрын

Not much taxes taken out when your basis is nearly 100% of your account. Insurance masquerading as investment vehicles is the way they scam the middle class into being middle class their entire lives

Something you didn''t cover, which my friend who utilizes one of these policies talks about as a key strength of this policy, is that you can take the money loaned from the policy and turn around and invest that in the market (aka leverage). So your money can, with the non direct recognition, get the rate of return of the policy on top of the rate of return of the market. This doesn't change the equation a lot for me, because my risk tolerance does not extend to using leverage for a chance at increased profits, but it could change it for others.

@General8675

6 ай бұрын

It seems like that's just leverage with extra steps...

@RaghavaSetlur

6 ай бұрын

If you are borrowing to invest in the market, why don't you just borrow against margin or Heloc instead of this convukted crap. You can put lipstick on a pig...

@Alan-jk1yi

6 ай бұрын

The strategy you just laid out is essentially, give your money to an insurance company, then borrow it back (with significant interest) to invest it. How about instead of that you just... invest the money? The insurance structure can confuse people and obscure what's really going on (that's by design), but that strategy is equivalent to just giving a huge chunk of your investing profits to the insurance company for absolutely no reason. If you want to invest your money, invest it. Don't give it to an insurance company and then borrow it back.

@charleslemaire8137

6 ай бұрын

The MGs presented IBC from the policy perspective, not from the IBC use perspective. I think we can all agree that IBC is not obvious. They are Wall St oriented and thus they calculated the Rate of Return - I expect they did that correctly. Two classes of folks seem to like IBC, those that sell it and those that have jumped in. I keep looking for an example that makes sense, but have not found one. If I borrow at 5% and earn 5% then invest at 10% - I make 10%. They pitch that your compounding curve is not interrupted, but it really is. I don't think that's actually leverage: If an investment makes 10% and half is bank money, then my part will be 20%. If the bank is me, then it's not really leveraged.

@msvillian

6 ай бұрын

@@charleslemaire8137 The way this friend has explained it to me differs a bit from what the MGs say here. They way she describes it, her money is fully invested in S&P inside the account and, additionally, she can borrow the full amount against the policy (either interest free or interest paid to herself) and invest that in S&P as well. So touting 2x market gains over time. It's always sounded too good to be true to me. And I'm a big fan of keeping things simple.

Amazing information. Thank you money guys for helping so many people

@firecraig

6 ай бұрын

They are telling half truths and lies.

How did you get the 3.2% return? What equation were you using. I was trying to do the numbers on my own.

@firecraig

6 ай бұрын

It’s the cash value based on how much has been paid in. Lifetime with dividend paying companies is closer to 5%. Even the bad example they used will get higher than 3.2%

@whyclick_tv

6 ай бұрын

So in the example $300k was put in and about $532k was accumulated. Still not getting your 3.2%

@firecraig

6 ай бұрын

@@whyclick_tvjust use a savings calculator with 10k/yr for 30 years at 3.62%. Their math is right but what they don’t tell you is that cumulative IRR will go higher the longer you are in the policy. That wasn’t on accident, they did that on purpose.

Good analysis, but you missed really important detail. I hope that was just a mistake and not on purpose. The return in the insurance policy you calculated was TAX FREE and guaranteed. You compared it with 8% non- guaranteed and taxable (unless it is within Roth IRA) market return. In order to properly compare the returns you need to compare apples to apples, not apples to oranges. You should compare the returns of this policy with a fixed after-tax return. If you can get fixed 5% return in the bank and you have to pay let’s say 30% tax then your after tax return is 3.5%. This is the return that you have to compare with this insurance policy return. Otherwise you are not comparing apples to apples

@sk00lb0y

6 ай бұрын

One of many errors / mistakes they made in the video.

@General8675

6 ай бұрын

even with a 30% haircut, the Equities beats the "guaranteed" income. IRA/401k assets would beat the insurance policy out of the water. Also, tax situations are very different person to person, hence why WL makes sense if you are running up against the federal estate tax

@finuspih

6 ай бұрын

@@General8675 - agree overall, but why can’t they be completely transparent and say something like “8% return in equities should be adjusted for tax because the insurance returns are after tax”. This would be more honest. Also, equities are more risky product than insurance product and so that is also need to be taken into consideration when comparing

@cody5596

6 ай бұрын

I could be wrong, but I took it as they were comparing it to money in Roth IRAs and Roth 401ks. Again, I could be wrong but that’s just how I took it.

@samsciascia4004

6 ай бұрын

@@General8675 Why would you compare this to equities? Can you lose money? Whole life is the vehicle, not the investment. Understand that when you are leveraging cash value to invest in real estate, you are putting your money to work in two places at one time. And because your money is working in two places at one time, you are earning a higher combined rate of return.

If you guys showed the investment net of taxes and fees at age 66 the story would be completely different. And the life insurance would be gone.

Agree with most of your opinions on this show and been watching since 2018 but bad miss on this topic. Why can’t manny the mutant just buy a specially designed whole life policy, make 3.6% and then borrow the money as soon as it’s available. Take this money and invest that into the stock market as manny the mutant was going to do in your example. 3.6% + stock market return is 3.6% greater than just the market return. Might be an extra step but it’s worth that extra step. Additionally, the issue with your 10k example is you aren’t stuffing the policy to its max. You need to max it out right up to the MEC line. If you do so the policy will pay for itself in 7-8 years. The dividends become significant. You don’t need to buy term invest the difference. Buy an infinite banking policy, borrow from the policy and invest what you borrowed. Money working in two places at once. Also, if manny and Isaac live until age 80 manny’s family walks away with $0. Isaac’s family would walk away with 3.2 million the policy that I personally have in place. So I would have paid 552k over the life of the policy but family gets 3.2 million minus what I borrowed out of the policy (552k) = 2.6 million. More than happy to do that. You guys didn’t focus enough about borrowing money from policy. It continues to grow after you borrow it (non direct recognition). Just take that money you borrowed and invest it in whatever you were going to invest in without the policy. Your money is working for you in two places. For anyone reading this look up betterwealth (Caleb guillams), Nelson nash (author of becoming your own banker), Brent Kesler/chris Naugle (money multiplier). Don’t let this video be the end all be all when considering this type of product.

@astroman30

6 ай бұрын

Pay an insurance company 8% interest to BORROW against your own money, and you think this is a good idea?

@Jon.steiger

6 ай бұрын

@@astroman30 who’s paying 8% interest?

@astroman30

6 ай бұрын

@@Jon.steiger If you didn’t know, when you borrow against your own money, Cash Value, you have to pay the insurance company interest.

@Jon.steiger

6 ай бұрын

@@astroman30 I take it you don’t have a policy yourself. Mine is 5% and I’ve never heard anything much more than that. The little example they shared here isn’t the full story. I have my policy in front of me right now. Some agents know how to design them to maximize their benefit. The policy in the example did not go anywhere near the MEC limit. Look up modified endowment contract. Also, I got 1.2 million death from year 1 not 200k like they mentioned in this video. It is a lot to understand but that doesn’t mean it’s a poor financial strategy. when you are borrowing from your policy you are simply borrowing against the death benefit. In layman’s terms: when you die your beneficiary will get less money. When you are living you will enjoy that money that would have gone to them in a regular life Insurnace policy setup he says the average per year is 1.5% return. I’m not investing into the policy for returns. I’m creating a policy so that money can be used in two places. If I’m already going to spend it, why not run it through the policy first? Does your checking account make 1.5%? I’m literally just running it though and then paying CC bills with it. Investing it is just icing on the cake. Adds 1.5% to the investment.

@astroman30

6 ай бұрын

@@Jon.steiger Ok, you paid 5% (although you're lying) to BORROW against your own money, and you think this is a good idea? How stupid can you be? You didn't hit a MEC? Good for you. Who is your carrier? I doubt you're doing a 10/90 with a low basis without hitting a MEC. Right now, Lafayette and Northwest Mutual are the only two decent mutual companies giving the best base. But, that's like picking out a turd without corn in it. Mass Mutual pulled out of promoting IBC mostly because the agents aren't hardly making any commissions. Even if you did a 10/90, tier 1, low base, it will still take you (at least) 6 years to break even. Again, letting an insurance company invest your money is beyond stupid. IBC is just a gimmick to get nudniks like you thinking there is a "sophisticated way" to invest. I worked for a MAJOR LI company and we would laugh at people like you as we bank on the commissions.

But I read about infinite banking in a blog. And it was written by a guy who claimed to have millions and told me I could be just like him. You're telling me that it's not all it's cracked up to be??

@firecraig

6 ай бұрын

These guys are definitely not where you want to learn about whole life much less IBC.

The tax benefits are something to explore with Infinite Banking. Especially if you are taking money out of your policy to make real-estate investments (additional tax benefits). I think you guys should have an expert on and have a little back and forth! You guys are great. Keep up the great work!

@adambrooks7423

6 ай бұрын

This. I'm not sure the infinite banking is a good idea either way but you're talking about a huge swing in these numbers when accounting for taxes. Take a million out of your 401k vs taking a "loan" for a million is an almost 40% tax difference. These guys aren't giving the whole picture because taxes are different for everyone and complicated.

@bishamuesmus301

6 ай бұрын

@@adambrooks7423except that you would then have to gross up your payments into the program as these are post tax. The policy also isn’t tax deferred, once liquidated you will be taxed. What you are talking about is loaning against your policy which is not the same as withdrawing your policy. The high cost on post cash up front completely nullifies any future tax benefits. These things have break points at like year 60 of the policy term, good luck with them but people are being extremely mislead on the tax benefit on these items.

@path4061

6 ай бұрын

​@@adambrooks7423 you are putting forth a scenario that no one in their right mind would do (pull a million from a 401k as a single year distribution). So do you sell the insurance products, are were you suckered into buying one and are trying to justify the sting?

@dw9560

6 ай бұрын

@@adambrooks7423you have to figure out how much you need to actually contribute to the 401k vs the whole life policy to get to 1 million in each. Whole life would be significantly more or take a longer timeline to get to such a figure.

@edhcb9359

6 ай бұрын

@@adambrooks7423Percentage of people taking $1M out of their 401k to make real estate purchases = .001% so that is probably the percent of people who should use infinite Banking. 😂

You can beat me up all you want, I don’t care, but whole life insurance paid for my daughter’s college education. And the dividends will completely pay off the policy loans in a few years, and she has 293,000 in life insurance, and all I paid was 10,000 into a life insurance funding trust when she was 3. Was it the best investment I could have made. No, but that wasn’t the goal. It was to pay for her education. Mission accomplished. Not to mention, she graduated college with 0 student loan debt.

@tyrecarmon20

6 ай бұрын

Man that is amazing

@michaelswami

6 ай бұрын

@@tyrecarmon20 I couldn’t believe how well it worked either.

@tyrecarmon20

6 ай бұрын

@michaelswami I'm going to use my policy to help my oldest niece buy a car BUT she has to agree to pay me back with interest. I'm teaching her responsibility

@michaelswami

6 ай бұрын

@@tyrecarmon20 awesome.

Please list all the fees for whole life insurance. 😆

@joshurrutia6080

6 ай бұрын

Cost of insurance.........There that's the whole list.

@firecraig

6 ай бұрын

@@joshurrutia6080 yep. That’s figured at underwriting and never changes.

There was not one mention of the figures after laying yourself interest on the self loans.... which is the biggest benefit, cutting out the bank and using yourself as the banker

@astroman30

5 ай бұрын

Pay an insurance company 8% interest to BORROW against your own money, and you think this is a good idea?

@MsSunshinelivia

5 ай бұрын

@@astroman30most IUL products these days loan rate is 2%…

@astroman30

5 ай бұрын

@@MsSunshinelivia Why IULs are garbage (from an actual fiduciary :) 1. Money never enters the market - With an IUL, the money funding the cash value portion of the policy is never actually invested into the market. Instead, the insurer holds your “cash” and pays a return on the annual growth of a specific index. Anyone selling IUL are not required to have a securities lIC. 2. Growth potential is capped - While most policies have a “floor” of 0% which prevents your cash value from dipping below what you put into it, your growth potential is capped, too. For example, if your policy limits growth to 10% on the index and that index out-performs that percentage, you’ll still only receive the value of 10% in your account. The insurer keeps the difference. 3. No dividends - Dividends are completely eliminated in an IUL policy. Not having the chance to reinvest any earned dividends, as you could choose to do with an individual investment, means you could miss out on a great deal of money from dollar-cost averaging over time. 4. Fees, fees and more fees - IUL policies are packed with fees and charges that will eat into any cash value accrued. 5. Rising costs - The internal cost of insurance continues to rise as you age, which can limit the amount of money going toward any potential cash value. All universal life is A.R.T ( annual renewable term) PLUS: Almost all cash value policies have these “features” built in. • You’ll accumulate NOTHING in cash value for the first few years the policy is in force. • The cash value earns a lower rate of return (often just 2%-4%) than the potential return you could achieve if you put your money into a vehicle such as a Roth IRA in the U.S. • If you borrow from the cash value, you’ll pay it back plus interest. • If you die with the policy in force, beneficiaries receive the death benefit (less any outstanding cash value loan balance) while the insurer keeps any accrued cash value. Unless you have the increasing death benefit option (option b) the consumer will pay more for that option. The consumer always gets screwed when investing in these policies. The only winners are the agent and the company. The BS I hear all the time is it has to be "structured properly." I have collected 64 policies in the last year and I haven't I seen one structured properly.

how about term insurance with return of premium?

@firecraig

6 ай бұрын

That’s term.

@natelevy1040

5 ай бұрын

It's usually so much more expensive, though you get the premiums back the missed opportunity of investing those additional funds is worth more than the insurance (how they make money).

This is an insurance policy. Is any of this taxed?

@firecraig

6 ай бұрын

Not if you follow the rules which are easy to do.

Where does Northwest Mutual T80 policy fall on this spectrum?

@firecraig

6 ай бұрын

Isn’t the T80 a term policy???

If you end up borrowing, you are taking money out of the death benefit, so your family is likely underprotected too

They haven’t produced a true life insurance policy in years and worth it. And that as far as I know stopped in the the 90’s. Even if you have paid off policy it’s actually worthless because they drop the amount available or just don’t fallow up with the next available that you have to be dying to actually access

Then right on cue, you two compare whole life, a fixed products with guarantees, to investing in the stock market 🤦‍♂️🤦‍♂️🤦‍♂️ Please tell me neither of you actually advise clients.

I hope they talk about the estate planning use of whole life insurance. If you are curious you can look at the case study of the Rockefeller vs Vanderbilt

@cody5596

6 ай бұрын

They’ve mentioned it before but never explained it in detail. I would like this as well even though I probably will never be wealthy enough for it to make sense for me!

@mattcanterbury

6 ай бұрын

​@@cody5596yeah. With policy changes you would have to have over like 11 million in assets for any estate tax issues. There is an extremely small portion of the US population that has that type of wealth on death. Also, you get step-up in bases on brokerage accounts and homes which saves your heirs a ton of taxes if they decide to liquidate.

@NateBee

6 ай бұрын

A lot of farmers have a boatload of whole life insurance to cover their estate taxes. They often systematically give land to their children over time, but it’s never enough and those estate tax bills can easily be 7 figures.

@Oaky

6 ай бұрын

I need to point of "death tax" really hasn't been a thing for a LONG time unless you're extremely wealthy. @@NateBee "An April 2021 report by the USDA Economic Research Service said that less than 1% of farm estates owed estate taxes in 2020."

@General8675

6 ай бұрын

@@NateBee The estate tax exemption is 12.92 million for an individual, honestly, if a farmer is making that transfer, they need to be taxed, they are just landed gentry at that point.

One important thing I don't think you guys hit on is that it should be illegal for these insurance guys to talk about a 6% dividend like they're comparing it to a bond!! If Insurance Company X pays a 6% dividend, what that means is if their General Account is a $1Billion dollars, they are paying out a $60 Million dividend out to all policyholders! That means that if you have $2000 of CV in a policy you don't necessarily get $120 dividend, that dividend goes thru the sausage factory and you get a dividend that especially in the early years that like is nowhere near 6%.

@firecraig

6 ай бұрын

You realize dividend paying whole life policies have done better than bonds the last 40 years? 😀

@tomfulfaro1943

Ай бұрын

@@firecraig Says the insurance salesman (or person who got ripped off by the insurance salesman). I have a 10 Pay whole life that I opened for my daughter in 2012. It will not have more CV than premiums paid until about year 13, at which time it will likely earn about 3-4% a year in dividends. I DID NOT buy it for that, I bought for guaranteed insuranbility and an extra source cash flow for my kid when I am gone. As for your "LOL" listen my firend I have a FINRA Series 4, 7, 24, 53, 66, ChFC and CFP...So I am pretty sure I've forgotten more about finance than most people know!!

@firecraig

Ай бұрын

@@tomfulfaro1943 hahaha!!! Sounds like you chose the wrong company and/or have no idea how to design a policy!!!!