Frequently Asked Questions
- A. In the answer rests the uniqueness of this concept. The underlying contract of a whole life dividend paying life insurance policy has not fundamentally changed in over 100 years. This contract is central to the entire system. So, the concept of how to convert that contract into a tax-advantaged vehicle with similar to that of the banking process is what has been developed. R Nelson Nash saw the strategy in his own life and began teaching his clients how to use it in their lives. In 1999 he published the book “Becoming Your Own Banker” which is now in its fifth edition.
A. Since a perfect system does not exist, there are some obstacles in the details of any system. The particulars in this program would be namely; the commitment of a long term discipline to save (vs. a get rich quick program)…the working knowledge of how to apply this system to the owner’s greatest advantage by following the designated guidelines…the application of the correct insurance contract along with the prescribed options, riders and ratios…and, the belief and understanding that this program works because of fundamental laws and insurance contractual guarantees.
A. “I’ve been to countless seminars and advanced training sessions in my 25 years in this business, but this one changed my life” said one agent. But, more importantly a significant leader in the insurance community (a past president of a major insurance company) stated…
“Nelson’s book has impressed me most favorably. I found it highly informative and stimulating. I have always held the author in high esteem, but this volume far surpasses my most optimistic expectations. I recommend it be read by every owner of life insurance.”
A. Infinite Banking Concepts did not happen overnight. What we are seeing today is the product of the last several years (thirty) of fundamental and educational presentations delivered on this subject all over this country.
A. Educate the consumer in practical, usable financial philosophy, with the help of an educated financial services industry, in order to promote free enterprise through the practice of privatized banking by the use of dividend-paying whole life insurance, to create a true savings and banking vehicle that will help enable the consumer to control their financial environment, while minimizing the role and significance of the out-side influences in our financial lives.
A. In any of the different mediums used to demonstrate how to set up the banking process (Book/CD/DVD/Other), they consistently point to how one can use an insurance contract to finance business equipment, accumulate cash and even purchase vehicles on a tax-advantaged basis. The key is to create a financing pool. To back that up, consider a few of the book chapter titles such as: “Five Methods Of Financing Automobiles,” “Equipment Financing,” “Potential Sources Of Capital” among others. Also, consider that businesspeople know that banks can become very “particular and demanding” in certain economic climates. It is a great satisfaction for a businessperson to know that they have already established “Tool-kits”. And, as time passes, the system gets even better.
A With Infinite Banking, or becoming your own bank, we simply use the power of compound interest in a whole life insurance policy. This mean safety, security, and steady, predictable, long term growth. The risk game works, if the risks you are taking are strategic and planned. However, cash value life insurance offers us a place to put our money when we want safety. Keep in mind you do not have to take risks ever. We have met more than our fair share of people who would be much wealthier today if they had put their money under their mattress. The market has crushed many of the unsuspecting. However, this strategy will allow you to use your money whenever you decide. For some people saving money in a safe place and letting it compound is more than enough. For others the tax advantages and safety nets are a benefit to their long term investment plan. Regardless, this concept provides a safe environment for your money.
A. Participating Whole Life Insurance (PWLI) is a contract that remains in force for the insured’s whole life and typically requires premiums to be paid every year. The contract is between the policy owner and the insurance company where the insurance company contractually guarantees to pay to the beneficiaries of the contract a certain death benefit upon the death of the insured; and to share with policy owners (participants, policy holders) the excess profits the company generates. This sharing of excess profits is referred to as dividends but is considered a refund of premium according to current tax law in the United States. Therefore, these dividends are not currently treated as taxable income in most cases.
PWLI contracts provide for the build up of something called cash value. This cash value is contractually guaranteed to be made available to the policy owner through the policy loan and/or surrender provisions. These provisions allow the policy owner to collateralize their policy and borrow money from the insurance company, or to surrender paid up insurance and withdraw the premium paid for it. A loan which is taken from the insurance company against a policy in this manner will be subject to interest charges and if this interest and future premiums are not paid the contract may lapse and the loan will then be considered a withdrawal and could be subject to taxation.[iii]
If the loan interest and premiums are paid according to the contract, the policy will not lapse and the owner of the policy can use the capital borrowed for whatever need or purpose intended. The only requirement to initiate a policy loan is to assign the policy to the insurance company for security, by either making a phone call or completing a simple loan request form. Policy loans may alter the dividends paid and the death benefit under the contract of some PWLI contracts.
The policy loan provision of PWLI polices guarantees a relative liquid source of equity which can be borrowed and self- managed. When done appropriately, with the assistance of a good consultant, this positive cash flow can be used to create more value, wealth and abundance. It can also create the ability to increase policy premiums and therefore allow you to repeat this cycle.
The guaranteed loan provision found in contracts of PWLI are rewarding to those who understand and manage them accurately but if not managed well could end up causing a policy to lapse or create a tax liability for the owner.
A. As mentioned participating Whole Life Insurance is not as common as it has been in years past. Yet as independent agents we us multiple companies to choose from when it comes to designing the very best policy to fit your personal or business needs. Each company we represent has a solid financial rating as well as a strong history of providing dividends to policy owners, so we are not limited to selling products from just one company.
A. With consulting provided by us it’s possible for you to have cash value in your policy within 30 days of the time you purchase your policy.
A. We don’t know but we will help you find out how your existing policy will work best for you. Whatever you do, don’t cancel your existing policy before we can review it.
A. Not everybody is astute enough to realize that a plan followed by the masses does not guarantee that the plan is best. If your goal is to be like everybody else, then you don’t need a consultant, and you can expect the results that everybody else is getting. If your goal is to have greater success, then we look forward to assisting you as you progress with your worthy ideal.
A. Henderson and Floyd look at your financial flow and most often find that people are unknowingly and unnecessarily “hemorrhaging” money from their income. By understanding how this is happening and redirecting these funds we find money to use without cutting into your lifestyle.
A. Yes there is no requirement to purchase any product or service. You can do this with a shoe box under the mattress but life insurance gives you benefits not found anywhere else. Some of the outstanding benefits are, tax-advantaged growth, continued compounding of interest, litigation protection, a legacy kick.
A. Age really has nothing to do with being able to succeed. The requirements include your own Desire, Determination, and Discipline.
A. We can help anyone who is spending money.
A. Our strategies aren’t about Life Insurance, rates of return, or contributions to retirement plans and life Insurance is NOT an investment. Instead we help you learn how money really works and understand the cost of interest you continually pay to others when you pay cash or finance purchases you make in your life. Participating Whole Life Insurance is an asset not an investment and by owing it you can learn to stop throwing away your money through the process of learning to “Think Both.”
A. Good for you! You have the discipline to save! We look at Life Insurance as an “and” product not an “or” product. A financial review and goal setting activity will help you see how to best move forward from here.
A. Originally, and for several years this concept could only be gained by attending a live seminar conducted by R. Nelson Nash himself in cities all over the country. The book of “Becoming Your Own Banker” is a must read. A full Five-Part Eight-Hour Seminar has been commercially and professionally produced and is available for anyone to own. Jason Henderson and Craig Floyd are students of Nelsons book and have attended multiple seminars as well as coached many clients to successfully implement this system in their lives. Sitting with them and asking informed questions will move anyone quickly down the road to financial independence.