The Infinite Banking Concept for Real Estate Investing


Learning to invest with
your life insurance policy, that’s today’s show. Let’s dive into it. Hey everyone. Welcome to the Investing
in Real Estate Show. I’m Clayton Morris. I’m Natalie Morris. And once a week Natalie
and I get together as a family to talk about
real estate investing, and talk about buying
hold real estate for the purposes of creating
legacy wealth for you and your family. And something that Natalie and
I have been exploring recently is life insurance as a vehicle
for us purchasing real estate. Do you want a kind
of a back story about why we even went
down this rabbit hole? All right, so if you’ve
listened to this podcast, you’ve heard a few
people already talked about the value of having
whole life insurance and using it to invest
in their things, or finance your
life in other ways. They call it infinite banking. And so we listen to these
people tell us about this. We’ve heard people talk
about it on other podcasts. But we just sort
of felt like that’s one other thing to learn. We’ve got all these other
tools we’ve talked about, the 401K loan, the IRA purchase,
and creating notes, right. So we felt properly diversified. But then Clayton left
his job in September, and we had a 401K that
we wanted to roll over, and we wanted to explore all of
the options for how to do that. So then I thought, well, maybe
this life insurance thing is the right thing to do. So I found a little
e-book on Amazon. It talked about
how this one couple had gotten taken to the
cleaners in their 401K because that was their
only savings vehicle. And it was cyclical
with the market. And so they had lost
like 80% the value and had no other
means of savings. And how the wife is
really pissed off that the husband
had [AUDIO OUT].. And so I thought,
oh well can you. The point of this book was
that the 401K is crappy. We already know that. And that the life insurance
is a better product, which may or may not be true. It made me think that maybe you
can use a 401K to buy a life insurance policy. Well turns out
you can’t do that. You can only roll a
401K over into an IRA to make a nontaxable event. However, this did lead me down
the rabbit hole of figuring out is this life insurance thing
really worth it for us, because like I said, we’ve
heard people tell us about this all the time. But I don’t know. What’s been your
hesitation about doing it? You know it’s one of
those things where it’s like you can kind of
bury your head in the sand, but you feel enough
tugs on your sleeve. You know when your kids,
like in the kitchen, they’re like mommy, mommy,
mommy, daddy, daddy. And then they kind of pull
on your sleeve a little bit. And you’re kind of like, OK, OK. What? What? What? Right. You know, and
that’s kind of how I felt about life insurance, or
this idea of infinite banking, because you and I have
purchased most of our properties free and clear. We’ve done portfolio loans. We’ve borrowed from our 401K in
order to purchase real estate. We’ve done, we’ve used our
IRA to purchase real estate. I think we’ve used
private money. We don’t just about
everything in real estate, but we hadn’t done
infinite banking. And it almost seemed like
one more distraction, right? Like why are we going to
go down this rabbit hole. But– Right. Once we started
exploring this idea, we’ve had a number of guests
on the show, M.C. Loubsher and others, if you go back
and listen to those episodes. Nate and, why can’t
I think of her name. Nate and, yeah anyway. She was really great. Why am I blanking on this? Don’t– But anyway– It’s in our show
notes somewhere. Actually that podcast,
we had a viewer, or a listener write to
me just about a week ago, and they’re like, is that for
real, can you really do that. And I was like, you know
what that my thoughts too. So I’m trying to figure it out. I’ve read now three
books on the subject. And you’re trying to
figure it out too. So the point of us doing this
podcast together, anyway, is so that we help you
learn along with us. We’re not saying this
the best thing ever because we’re trying
to figure it out too. We’re telling you
all the strategies that we try to learn to employ. So this is part one in a
series of us learning what the heck is infinite banking. Right. So this is part one. We will have a part two where
we’ll dive into some more nitty-gritty. We may have a part
3 because I don’t think it’s as simple as
like I decide to do that and then like poof, I have
a life insurance policy. No, and it’s not that simple. And we know from our
phone consultations that it’s not a one size
fits all plan for everyone. It’s not as if you just sign up
for a self-directed IRA account and it’s a one size fits all. There are individual
plans crafted to your individual
family’s needs. So it’s not going to
be one size fits all. So, first of all, what is
the idea of infinite banking? We should crack
open that nut first. This idea that you’re taking out
a whole life insurance policy. You’re putting in a
certain amount of money into this whole life
insurance policy, but it almost acts as
if its your own bank account that you can
then borrow from, creating loans to yourself. Now the beauty of this,
the difference between this and a self-directed
IRA, maybe a lot of you are wondering what
is the difference. Well, the difference is
with the self-directed IRA, you’re then purchasing the
properties inside of the IRA. For instance, it might say
Avanta IRA for the benefit of Natalie Morris, right. That’s the actual name on the
title of the property you’re purchasing. And it’s in– Right. –Side of a self-directed
IRA, which is great. You do not, however,
get all the tax benefits that you get from owning the
property outside of the IRA. And that’s where this idea
of whole life insurance and infinite banking
comes into play. It allows you to borrow money
from your whole life insurance policy. Absolutely. in order to– So– –purchase properties
outside of– Infinite banking. So, infinite banking, is
what Clayton just said, is using life insurance,
whole life insurance, as like a bank account. Now how the heck can
you do that, right? Clayton and I right now both
have $2 million policies, and yet we haven’t
killed each other, and they are term life, right. So they were only good, we got
them when our son was born. And they expire in 10 years. So if in this 10 years
I kick the bucket then Clayton gets $2 million. He gets $2 million, tax free. That costs us about $800 a year. Clayton’s policy is the same. If he kicks the bucket, I
get $2 million cash payment. There’s no tax
taken out of your– and that’s what’s
called a death benefit. So what I’ve done is
purchased a lump sum of money that will go into my
family’s bank account, tax free, if I die, which
is a good product, right. If there there’s some
like assurance in there. That’s why the word insurance
makes you feel good. So these products, though,
are not all created equal. A term policy you’d think of
as almost like leasing a car. Like you pay for it
while you’ve got it, but then when it expires
you give that thing back. So if I die a month after
my term policy ends, nothing happens, right. You get no money. Now whole life
insurance, these policies can be crafted in so
many different ways. But what you need to know is
that there exists on the market policies that let you pay into
them every month in perpetuity, and you can access
the money that you put in there as a bank account. So, let’s say you put, we’ll
use some round numbers, let’s say you put $1,000
into a whole life policy. Now some plans, if you
get a really good plan, can let you invest
with up to 90% of that. Now you can’t get all of it as
soon as you open the account. Within the way it goes is– I’m sorry I’m stumbling. Within 10 days of
opening the policy, you can access around
I’d say up to 70% or 80%. But once five years
later, your plan vests, you can access up to
90% of that cash value. So now we’re saying,
let’s say 10,000. Let’s say you put
$10,000 into an account. You can access up to 90%
of it to buy whatever the flip you want, right. And you set the terms of paying
yourself back into that policy. That extra 10%
has to stay there. That’s your premium, right. The 10% is what you’re
paying to own that property. The 90% that you’re then
using is then your own loan. The book that I really
like that I read about that this is called Live
Your Life Insurance, and he makes the point, it’s
not death insurance, right. It’s called life insurance. You want to use it while
you have a life to live. Does that make sense? Right. So that 10%, OK that’s remaining
in the account as your premium. You can then borrow 90% and
set the terms for the payback of that loan to yourself. So, you could lend that
money out to somebody else. Right. You could lend this life
insurance policy money out to a flipper in your
backyard who is going to flip a house in six months. And you could lend him at
12% interest with two points. Right. Six months. Now, he’s going to borrow
that money from you. You would, I hope, put your
name on the first position on the mortgage. Great. He’s going to pay
that back to you. And now your whole
life insurance policy, that money’s now just
made 12% interest, and two points on that money. Or, so this is what
I want to get to, is that you can
lend it to yourself and you set your own terms. So– Right. For instance, why
wouldn’t we, OK, now we could set what 4% as our
interest rate to ourself? I think so. Now here’s what
I’m not clear on is like what are the terms
in which you can set it. Because when we did a
401K loan, we usually paid it back within a year. And we paid ourselves a specific
amount of interest rate. I think it was around 7%. I don’t know exactly how you
structure your own note back. But here’s the thing, if
we lend ourselves $9,000, and then we, I don’t
know, buy something that has a big payoff, right. And so then we bought
something for $5,000. And we sold it for $6,000. And we put $6,000
back in the account. Now there’s a $3,000 difference. But I had $1,000,
I put that $6,000. Now I can borrow what’s
left in there again. Like with a 401(k)
loan, you can only have one loan out at a time. You can only take
a specific amount. With your life insurance
loan, you take up to 90% and you put it back,
you take it back now. You say to yourself, why
would I do that, right? Well, when you think
about everything you buy, like literally
everything, OK, like the hat that Clayton’s wearing
right now that cost me $19. OK, I paid cash for it. Or I could have used that
cash to loan to somebody and made some interest on it. Or I could have put
it on a credit card and then paid interest
to the credit card to buy that thing, right? If I had financed that
hat, well, then I’m paying someone else
to use that money. If I finance my car, I’m paying
someone else to use my money. But what if I have $100,000
in a life insurance policy and I want a new car
that’s worth $50,000, and I’ve committed
to getting this car? Like for instance, we
found a car that was safe when I had our third baby. And we’re like, this is the
one for a family of three. We feel like it’s super safe. It wasn’t the most
economical choice, but we had our hearts set on it. So we bought this car. And then we paid Volvo
in order to use the money to buy that car up front. Well, what if we had bought
it out of our life insurance policy and paid
ourselves the interest, because we were the bank? So we took it out
of our own account that we own that
also has a death benefit for our beneficiaries. But then, as well, we’re
making back the interest instead of the bank
making back the interest. And we’re raising up the
limit of that account so now we have even
more that we can borrow. Now it never is–
this is something that I had to wrap my
head around– because OK, let’s say I borrowed
$50,000 for that car. I had $100,000. At the end of this
loan, whatever, I now have $120,000 in
that account, right? That raises the amount
of money I can use, but I never get $120,000 back. Does that make sense? It’s not like I ever have
it in my bank account, but I always have access to it. So I am a bank. This money is going in and out. But as it grows, it increases
the amount of money I can use. And it increases the
amount of money I have, because I’m paying
myself as a banker. This is the big
concept that was hard for me, because I didn’t know
that plans like this existed. Because most of the time,
when you’re watching, say, football on a Sunday, you
see ads for life insurance, and these products are not the
same products that can do this. Right. And so we can get into the
nitty-gritty on another episode about the ins and outs
of paying yourself back and what that loan
structuring looks like. Because I’m
fascinated about that. If I state 5% interest
for this particular loan and it’s paying me back, then
I’m able to write that off. And in fact, according
to the research, you are able to write off that
mortgage interest on your taxes at the end of the year. That’s a mortgage
interest deduction that you’re then able to claim
on your federal income tax. Well, that’s amazing, if you
understand how to put that together– and we can dive,
again, deeper into that– because it’s coming from you. Not Wells Fargo. It’s your own bank that
is structuring that loan to pay back, which
is phenomenal. Right. Yeah. Well, some of the other things
that I found interesting about this, or one
of the other things that I found
interesting about this, is the idea that I can set this
up with however much I want, but then I can continue to
purchase real estate outside of a retirement account. And that really was the
most attractive piece for me on this whole
thing was, but what are we going to
do with this money in the self-directed account? That’s great. We’re going to lend
that money out. We’re going to be
lending money out for purchases of real
estate, instead of acquiring real estate with
inside of it so we can take the tax benefits of it. Because I asked– we had
a call with MC Laubscher, who also was on this podcast– and I said, well, if
I take $90,000 out and I want to buy a couple
of properties or one property or even make a loan, put it
as a down payment for a debt service, can it be in my name? Can it be in an LLC? He’s like, it could
be in whatever. You use that money
however you want. And then it’s up
to me to make sure that, A, I can pay it back. But what I’m interested in,
yeah, is that it performs. Because let’s say I buy
a small turnkey property in Indianapolis for $50,000 and
it’s making 11% year-over-year. But I’m paying myself back 8%. So then I take the remainder of
my own debt service to myself and just put that
in my bank account. Use it for groceries. And then it’s mine. Right? Right. Right? Right. I mean, that’s an
amazing strategy. Hello? So I’m just– I’m just letting
it all soak in a little bit. So what’s the downside,
I guess, you know? Because you had a friend who
the other day said, oh, yeah, life insurance, that’s a scam. And I think that it
does get a bad rap. Because most people– I think the point that was made
by MC Laubscher on this podcast was that only 2% of
life insurance policies are actually leveraged against. So most people just
pay into their policy and leave it there, not knowing
that they can access it. And again, it’s just
sort of the difference between an IRA with
Fidelity or Scottrade or any of the big banks on
Wall Street that only give you a finite amount of
funds to invest in, and the difference between
a self-directed IRA, where you do whatever the
heck you want with it. Now I had some very
specific questions when I scheduled
this call this week. Let me open up my notes. I thought I had them open. And while you’re doing that,
I wanted to make an apology. It was Nate Scott
and Holly Reed. They were on episode
212 of our show, called Deep Diving, The
Infinite Banking Concept. So sorry, Holly. It was hidden under
my spreadsheet. So all I could see was Nate’s
name on my spreadsheet. Sexist. We have a lot of
guests on this show. Yeah, I’m just so sexist. So Holly and Nate, thank you. And then, of course, MC
Laubscher, who was on our show, as well. You can go back and check out
his episodes with us, as well. Now I was concerned about
the liability issue here. For instance, would we set
up a life insurance policy in our name or in a trust? And does that make any sense? And I’m not completely sure
on the nuances of each, but he did say this,
if a creditor were to come after you, they couldn’t
[AUDIO OUT] life insurance policy because it doesn’t
go on your credit card, or your credit report. It’s a private policy. So this is a true
private contract between you and the insurance
policy, so none of it shows up on your credit report. Isn’t that crazy? That’s interesting. Interesting. Yeah. So it doesn’t go for or
against your credit at all, because what you’ve done
is made a private contract within the insurance
company saying, I’m going to let you
keep this money here, I’m paying for a
specific death benefit. And it’s an index based. It’s not based on
the stock market. So it’s lightly based on the
index of the stock market. But if the stock
market dips, you are still assured a
certain amount of growth. So if the stock
market’s doing great, you usually get
around 12% return. If the stock market
dips, they still pay out, because they’re not
based on stock-based indexes. And so you could get
less, like 7% to 8%. But hopefully, you’re
leveraging your own money. This is a strategy
for investors who want to leverage their
own money, right? Right. And so one downside,
though, would be that you don’t get
the tax-free wealth growth that you would get
from a self-directed IRA. So if you’re
thinking to yourself, OK, I’ve got $50,000
to work with here. I’m either going to set up one
of these whole life insurance policies or I’m going to put
it into a self-directed IRA and I’m going to lend it out
to people, at 8% interest or 5% interest or whatever, and then
it’s going to grow tax free. And then when I’m 59 and
1/2, my self-directed IRA, guess what, all that
money that I made off of lending out that money
is now tax free, right? It is tax free. So the whole life insurance
policy is tax free? Your deductions and
your loans to yourself are in fact not taxed. Now when you want to
actually take money out, like say you’ve
hit a certain age and you want to start
taking that policy back down and taking money out to live
off every year, you can do that. And there are strategies that,
again, I don’t completely understand yet. This is Life Insurance 101. That will be in
Life Insurance 201. But you’re putting
in post-tax dollars. I had to think about
that for a second. Right, right, right. Post tax, right? So this is money the government
has already had its hooks on. You’ve paid tax on the
seed, not the crop. Gotcha. OK. Great. OK. So I think– is
there anything else we need to cover in Part
One of this episode? We kind of laid out the
basics of infinite banking, the benefits of setting up
and the borrowing and loaning to yourself. Is there any other basics
that we need to cover? Well, I think you need to know
that your life insurance is based on who you are. It’s based on what
you earn right now. Usually they give you about
one times your net worth. So we’ve talked many times about
how to create your net worth, how to figure that out. And usually you’ll
get about that much as a policy, which means– I think it means that’s how
much you can then contribute. But how much you can contribute
per year or per month, I’m not clear on
that yet either. And that’s all sort of,
it’s like a contract that the insurance company
comes up with and says, we think that you’re
worth this, right? But they have to
take blood samples. They have to make sure
that you’re healthy. You’re going to pay more, for
instance, if you’re a smoker. You’re going to pay
more if you’re a hooker, I would assume. That’s gonna be my problem. And I don’t know how you get
your net worth out of that. You’re going to pay
more if you’re, I don’t know, like, you get– they’re going to be
able to read your, like if you have
high blood pressure. If you’re older, like
if you’re 81 years old, they’re not going to love
the idea of paying out a life insurance policy. You won’t get very much from
that, unless you’re like, how old is Rupert Murdoch? He’s in his 80s, right? I think so, yeah. So he would probably
qualify for maybe at least some type of life
insurance policy if he started right now,
because he has a high net worth. And maybe he’s healthy. I don’t know. Didn’t he just marry
the lady from Batman? Right? Yeah, what? Mick Jagger’s former wife? Who is that? I don’t know. So presumably he may be– I don’t know– this is– Yeah, total conjecture. But what you’re saying is, based
on what based on blood tests, they would find like a
whole lot of bean dip and hot sauce in your
blood, and cheese and potato chips in mine. And they might say,
ah, that guy, you know, he’s not long for this world. So you have to be
relatively healthy if you want the best policy. Also, you can get
policies on anybody with whom you have a vested
interest in their life. So you can get a policy on
your personal assistant. You can get a policy
on your children. They’re eligible for a policy
within 15 days of being born. So you can slap a policy
on them right away. They don’t take their
blood, by the way, because that was a
nonstarter for my kids. They just get doctors’
records, because they assume most kids are
relatively healthy. So we could start
a policy like this. I was thinking about this. Like what if we took
Ava, who’s five, got a health insurance– or a
life insurance policy on her and we’re paying
$300 a year into. Then say she’s 16, 17 years
old and she wants to buy a car. And I’ll be like, take it out
of your life insurance policy. Then she finances
it with herself. Hello. I love it. That’s so crazy town. So I mean, think of what
this teaches our kids. It’s like put a middle
finger up to the bank, right? Because they’ll see, like why
would I apply for this bank loan if I can pay myself? Bottom line, this whole
podcast is a big middle finger to the banks. I want you to– if there’s
nothing else you take away from everything we’ve
done over 217 episodes, it’s that what we’re showing
you is a big middle finger to the banks. It started– It’s like you’re going broke. Because we’ve talked many
times about using a local bank. But it’s about breaking the
paradigms of the banking system. Right. Exactly. There are other ways. Don’t get crazy. You’re getting crazy. There are other
ways to build wealth that don’t rely on going
down to the local bank. OK. So that’s good stuff. That’s part one. So I think we should follow
this journey a little bit, because you and I are going to
set up our own infinite banking life insurance policy. We’re going to decide how
much money we put into it. We’re going to start to use
it for purchasing and lending on real estate investing. I’m super excited about it. So we’ll sort of
document this journey, what we’re learning
as we’re setting up these policies, how we set
them up for our children. So again, this is just
part one of Investing with Life Insurance. So check back. We’ll probably have a part
two, and we’ll maybe even have a part three as we kind
of go through the follow up. I think we should
even, in part three, talk about the acquisition
of some new rental properties and that sort of thing, and
how we use the life insurance policy to do that. Does that sound like a plan? Yeah. And I want specifically,
on your Instagram, I want you to post photos of
you getting your blood drawn. Because Clayton’s a humongous
baby about that kind of thing. All right. And then– yeah. I mean, that’s the hardest
part, I’m going to say. I don’t know. We just got our applications
yesterday at the DocuSign, so I’ll be going through that. So we will let you
know how hard this is. Because like that viewer or
listener had written to us, it sounds too good to be true. And I think so, too. There must be things
that we’re going to have to learn along the way. So come with us, learn with us. And go follow me on
Instagram, by the way. I think I only have like
20,000 subscribers over there. That all? So follow me on Instagram. Poor you. And I’ll show you some pictures
of me getting my blood drawn. I’m Clayton Morris on
Instagram, by the way. It’s the happenin-est
place around. All right. Cool. So we’ll be back with another
episode of the Investing in Real Estate Show. This is part one of
Investing with Life Insurance and how to buy rental
properties using life insurance. So thank you so much. Be sure to join us
on our next episode, because we publish this
show three times a week. So if you are new to the show,
please check out everything we’ve got on our YouTube
channel, on our archives. We’ve got some
great episodes that will help you build
wealth and give the middle finger to the bank. That’s the takeaway
from today’s episode. We’ll see you next time,
everyone, on the Investing in Real Estate Show. Now go out there, take action,
and become a real estate investor. We’ll see you next
time, everyone. Bye now.

62 thoughts on “The Infinite Banking Concept for Real Estate Investing

  • Great video. I signed up for a 500 k Whole Life Insurance Policy from my Fraternal Organization last year. And in 19 years (when I am done paying the monthly payments and I will be in my 40s), the cash value of that insurance I can draw from is going to be 189 K, along with the death benefit. With the draw I am charged interest, but it isn’t debt on me. I really like that idea of loaning it to others (like flippers) for higher interest. But I was also thinking of using it for expanding my rental portfolio. Which would you prefer doing? Also it is good to get these terms when you are young, cause the healthier you are you are considered lower risk to the insurance company through the life of the insurance.

  • Please DO NOT buy into infinite banking, guys! I know that y’all are still learning about it all, but it is not what it seems. 8 years ago, I had a life insurance agent sell me on this concept. I read the book by Nash (and several other books). I was super excited about the concept and I put my entire retirement into two whole life policies with two major reputable companies. My premiums were almost $10k a year. It was all structured properly with “paid up additions” and everything. Fast-forward to 2017, I finally figured out that it was all a scheme to sell life insurance. The numbers simply did not work, and I figured out that the numbers would never work. I cancelled both policies and put that cash into my next rental property purchase.

    I love you guys 😍. But please be careful in telling your subscribers about this concept. Maybe i should come on the next podcast to tell my story?

  • I don't understand. If you have to put the money in, and can only use 90% of your own money, why not just keep the 100% and invest it?

  • I've been interested in this too but have been a little hesitant because I have not had time to read the fine print. Dave Ramsey, not that I'm a big follower, says that they are a scam because when you die the money that you've been putting in above that 10% for your actual death benefit does not go to your beneficiaries. That that extra money you've been putting in monthly to invest is kept by the insurance company. Is that true?

  • great advice but just be careful talk to you in Wester and thing because not always you policies can do what you say they can do so just be careful these policies different am i x you got pay a lot of heavy taxes on that so just be careful like I said always talk to you accounting on you situation

  • “…Creating legacy wealth for you and your family,…”

    …over-simplified, term-life-insurance is “renting” … very small percentage is paid out, as Natali points out.

    Whole-life-insurance is “owning.” Again, over-simplified, $100K as an example,… uber conservative — AND THIS PRESUMES THE POLICY IS PROPERLY WRITTEN, w/ APPROPRIATE RIDERS, etc. (Lafayette Life iC in Cincinnati, OH) — you can take a loan out, usu. max. Of 2-pg form, NO disclosure of what money is to be used for, and money accessed in most every case in < than 10-biz days!… interest rates vary b/t 6-10%, but you pay-out on your own terms!!! (I.e., no-such-thing as a “late”/“missed” payment, therefore not reported to some credit bureau),… PLUS: the nominal interest (2- to 3-%, usu.) is accruing on the policy at $100k!!! I.e., as if the $75k is still there,… additionally, you MAY get a (again, nominal) dividend at the end of the year!…

    Another perspective: If you own a condo, you pay condo fees. Why? Basically for maintenance of all kinds of the overall real estate. Makes total sense. Why wouldn’t we do the same thing for major assets, like cars, and homes. If one was really organized, for example, we may consider putting aside $100/mo. For each vehicle. $500/mo. For ea. Property. 3-yr.s later need to replace the roof. Well the $18k saved up in your Single-Family “condo fees” account may not pay for the roof-replacement, but sure makes a significant Dent, no? … BUT, wait a minute,… that $18k, once it pays the roofer from a savings/checking account — wherever it’s coming from — to replace/repair the roof, how much interest are you gaining on that $18k from the bank? – ZERO, b/c it’s no longer in the account! … but if you borrowed the $18k from your PROPERLY STRUCTURED/WRITTEN Whole Life Policy, the value of the policy continues to grow as if the $18k was still there.

    Same w/ purchasing a vehicle,… You save up. When you have enough, you w/draw from an account, but no more interest is gained on that money b/c it’s no-longer there. So if you’re fiscally conservative, why wouldn’t you look at putting aside “condo” fees w/ All significant assets. Certainly real estate would fall into this class.

    Let’s say a family member is attending college. Apply for financial aid. (THE PROPERLY STRUCTURED WHOLE-LIFE POLICY IN NO WAY NEEDS TO BE REPORTED — b/c After-Tax monies!). The family submits the proper forms to the school/government agencies. With the “affordability” plan submitted, the school says, “well, next yr. Harvard is — all in — $68k,… based on our assessment, the family can contribute $9k to the education of this student; remainder of the $59k will be financed by loans, work-study, and flat-out ‘scholarship,’ money not to be repaid by the family,”… .. well,… That $9k can come from the whole-life policy,…. and, you should get the idea by now,… properly understood & executed, it can Definitely be a significant CENTERPIECE to “Creating legacy wealth for you and your family.” The goal is all the interest you WOULD pay to a bank, finance company, whoever/whatever, you pay to YOUR FAMILY BANK!,… as Natali around 12-min.s, Points-out,…

    EXCELLENT resources:
    (In order of knowledge, understanding, AND objectivity,…)

    R. Nelson Nash – kind of the “godfather” of this big-picture concept (Infinite Banking), … FROM FORESTRY INDUSTRY, where time-horizon is Minimum of 75-year spans of time (e.g., 1900-1974, 1901-1975, 1902-1976,… etc.)

    Pamela Yellen (no relation to Fed. Chair.), MAJOR Advertiser/Marketer,… BUT modern-day thought-leader in this concept,… Her “book-funnel” is titled, “BANK ON YOURSELF,”… if you can get through the advertisement (like 3 of ea. 5 pages!), an excellent primer,….

    And there is JOHN CUMMUTA, who has partnered-up — w/in last 3-to-5-years — w/ Anthony Manganiello
    …CUMMUTA’s original expertise was perceived in Debt Elimination/Reduction, but is now centering around using PROPERLY STRUCTURED/WRITTEN Whole Life Policy’s (Both Yellen and Cummuta’s strategies commonly end up at Laffayette Life, Cincinnati, OH, ViA “authorized”/“qualified” [w/re: this concept] ADVISORS.)

    …btw,… CLAYTON & NATALI, … Love Your RE concept, AND your YT channel,…

    …hope this helps,

  • OH, YA! —. And what kind of Death Benefit is the bank account at WFB going to pay you after you’ve withdrawn Whatever amount of money-, for Whatever reason?…. w/ a Term-Life policy, (“renting” life insurance) it’s Exclusively about the Death Benefit; w/ a Whole-Life policy, the Death Benefit — if properly understood and executed for your family — …. the Death Benefit often gets forgotten,…. as i just did!… it almost becomes an Oh-By-the-Way,… Usually quite a handsome one!!! — And, btw, policies can be Written on a young person, but owned by An adult, a sick-person,…. And they can be rolled-over upon the death of who the policy was written ON,……

  • If structured properly this is the most power financial foundation that you can give to yourself and your family. I have 2 policies and I use it for real estate and other investments

  • I'd never even considered this, but as always, good information. I have nothing but term life at this point, and have been reducing that since my kids are grown, their college is paid for, the house is paid for, we have significant savings, and I need to reduce the incentives for my wife to cause a "mysterious death". (Joking, of course, except on the reduction each year in term life.)

    I had a couple of whole life policies when I was a young man, but the agent that sold them to me never mentioned this as one of the advantages, and on the surface, term insurance seemed like the better deal. I eventually just cashed them out and went to term policies.

    I'm likely too old to pursue this strategy at this point, but it is an interesting concept.

  • I would never mess with a whole life policy but either way I always enjoy your views and opinions, Thanks for sharing

  • The problem I have with using a whole life insurance policy is the cost of a whole life insurance policy. They are infinitely more expensive and provide less coverage than a Term policy. The money you spend on whole life you could get a term and invest the difference, likely putting you ahead in the long term.

  • the"concept/principle infinite banking" is not generic you have already started your own bank to increase your wealth via …
    real estate (HELOC) for investment .
    real estate (REFI) for invesrment
    real estate (REIT) for investment
    Self directed IRA via trust companies for investment.
    stocks brokerage account (can be leverage without selling stocks in Apple etc) for investment
    personal saving (if you can collertise your saving at a credit union/bank) eg 25k in saving you barrow 20k. you barrow.from.your self.and pay back the loan+ put some interest put aside in your saving on the initial sum from cash flow from.your investment.. so by time you pay back loan you force yours self to save and apply interest back to your saving. at the end of pay back loam u should save forcefully (25k+interest i applied to your saving)

    PROS benefit with infinite banking
    1 tax benefit.
    2leverage/colatirise the cash value
    3.forces you to increase cash value by paying back interest on the cash value over time on your initial sum.
    4.forces you.not to use your.initial asset for purchases, investments etc but instead collerterise your asset.
    5.forces you to save or reinvest into your savings.
    6.death benefit …doing all this in a shelter of a insurance policy

    CONS
    1Insurance is a cost and it cost money to build up the policy to a level before you can actually leverage the account.
    2 .whole life insurance cost way more vs term policy
    3. just a marketing tactic by the insurance company to sell more policies to make a profit of the consumer. just like the banks do.

    I am still currently researching just like you guys buy watching YouTube videos lol on topic.

    SUMMARY/conclusion
    just another way to.build wealth
    Term life insurance is cheaper
    you have already started being your own bank already it's basicaly building wealth over time by leveraging from your initial assets in this case your insurance policies cash value.
    still good to have options..

    if you want to be a bank best thing is to do start buying shares in a bank by investing in a bank stocks like Warren Buffet. and use other people's money to invest to achieve your goals. Start a REIT company start a hedge fund.mutual fund.etc
    .

  • If you want more information watch the video www.JMinfinitewealthsolutions.com its about an hour long but he breaks it down pretty well.

  • I started this strategy earlier this year and there are a few things that I can help clear up.
    1. You are purchasing whole life insurance which has a cost or premium.
    2. You have the option to structure the policy for "high early cash value" which allows you to accumulate a cash value that you can borrow against.
    3. The cash value in the policy can grow at 7-8% per year depending on the dividends being paid out.
    4. The loan that can be taken from the policy is actually a loan from the insurance company, where basically your cash value is the collateral. So, the insurance company will loan you up to 90% of your cash value in the policy. Your cash value continues to grow because the insurance company made you the loan. You can pay the loan back however you want or never pay it back.

    On the surface this may not make sense, but I recommend speaking with a specialist in High Early cash value whole life policy.

    Most insurance agents don't understand the concept. It's all in how the policy is structured. I can recommend my agent if anyone wants the info.

  • Life Insurance Agent and Financial Rep from 2008-2017. Sat down with alot of folks.

    From my experience, anything other than Term Insurance is a money grab. Any variation of whole insurance is certainly NOT an investment vehicle. It is a high (the highest) commission item than is sold by poorly trained (untrained) and financially illiterate part-timers.

    Don't feel bad over 80% of Life Insurance sold in the US is whole life.

    I've seen millions wasted in whole life premiums go to the insurance companies' imaginary investment account, rather than in a client's self-directed portfolio directly.

    IMO just buy Term, Invest the difference in Index funds yourself, this is not financial advice only my opinion but my best and honest evaluation.

    Whole life is not an actual Investment lol

  • I'm looking at a 4 plex one problem i have is I'd like a couple of the current tenants out before close.. have you covered something like this before?

  • Can't wait to follow your journey. I've had a whole life insurance policy setup for this infinite banking concept and have had a good experience so far. Have taken out multiple loans for down payments on houses, etc. Typical money sitting in your whole life insurance account will make about 5% tax free annually. When you borrow funds from the account you have to typically pay back 5% interest on the loan. The part that you can dictate is the payments. I can wait 6 months to start, or pay $100/month and then increase it to $500/month, and then stop paying, etc. Whatever you want, as long as you pay the annual small amount they tell you to keep it going. I funded another policy recently and was able to borrow about 90% within a week. Didn't have to wait any longer. And the amount you can contribute annually is related to your MEC limit, something setup by the IRS I believe. The goal is to never take out any money from your accounts, but to loan it out. Even if you never pay it back. Then you won't have to pay tax. Any loan you take out will simply lower your death benefit.

  • One last thing. This should never be looked at as a 7-10 year strategy. This is a FOREVER strategy that you can pass on to the next generation.

  • I had a whole life insurance policy for a while. The entire first year is all interest unless you front load the policy. The concept will work but I would suggest to set up the policy small enough just to cover your borrowing needs. FYI there are still fees to pay to borrow your money from your policy.

  • I have purchased an IUL and am in the 7 year process of front end funding it out of my IRA. It is taking 7 years so that my IRA distribution will not put me into the next higher tax bracket due to the withdrawal. I am over 59.5 but I was concerned about the continued IRA growth and the eventual RMD and the tax implications of any future withdrawals. I was impressed enough with the policy I became an agent while also investing in real estate. And, in just a couple of years I will have sufficient cash value to borrow against. Remember – I will have real estate depreciation along with an interest expense that I will paying myself back into the policy. BIG PLUS – the policy also has the new living benefits! At a minimum, check to make sure your policy has the new living benefits. This is an investment and is a WIN – WIN – WIN – WIN payable to yourself!

  • Interest on the loan is paid to the insurance company and not back to yourself. Dividends are paid to you and determined by the overall performance of the policy..

  • I believe you may have a misconception as to the fact you are paying interest to yourself. The interest on borrowing your money will go to the insurance company. The loan may also decrease your death benefit.

  • oh dear lord so much bad info on whole life. it's the devil in disguise. im sure many have already laid it out but you guys are doing your listeners a disservice handing out such a one sided argument. 12% return on whole life?!?1 thats laughable. not even close to reality. and the premiums, oh the premiums. a healthy 30 yr old woman can get $1M term life for $600, do you have any idea how much that would cost for whole life? when we got an inheritance the financial adviser tried to sell us a paid up whole life policy…for $100,000 bahahahaha he laid it out on paper and even though i had very little experience investing at the time i could see the returns were horrid. and his commission i came to find out would have been $20K, :O please do more research into the downside of these financial products before you cost some trusting listener a crap load of money. and don't be offended, no one can know everything about everything, but i have no doubt that more unbiased research, and you can make a much different video.

  • since there seems to be such strong feelings for or against WL, it would be cool to see a side by side comparison. remember though, LIFE INSURANCE is meant to replace your income for your family if you pass FIRST AND FOREMOST. so if you truly want to secure your families future if you pass you need 10-12X your income to be invested in average mutual funds with an 8-10% annual return and your faimly will be taken care of. so for the side by side comparison, if a 35 year old man making $50K a year comes to you with $50K next egg, what could you do for him with your turn key rentals? but first he goes and guys $500K of life insurance for $800, so you have $49200 to work with…..the other 35 yr old guy goes and gets a $500K whole life policy…….he pays it up with his $50K and you think he can then come to you with 90% or that…….yeah after he waits 5 years for everything to catch up. why, cuz his broker took $10K off the top, boom gone, then there are the gawd awful fees, then there is the very slow, NOT 12%, rates of return. 10/10 if my friend asked what to do, he'd get term and i'd send him to you guys with the rest of the cash and i'd be confident he's be waaaay better off.

  • As stated in several comments below, why set a policy for say 100K to be my own banker, have access to 90% of my 100K along with requirements to pay my self back plus interest (even if the rate is set by me)? As oppose to building and account up to the same amount, have instant access to 100% of MY moneyt at any time and pay my self back with no interest if I borrow from it. The cost of having this type of structure is not worth it. Need life insurance? Get term. Need a savings vehicle? Choose from any number of products out there – no physicals, age requirements or any other rules attached to YOUR money. BTW, building up the account to the point you can use it as "your own bank" will take much dinero and time. Don't believe the hype folks!!!

    Natalie, Clayton … love you guys but clearly you haven't lived throught this.

  • Guys after you have done infinite banking can you give an update because I have heard both sides of it being the worst thing ever, to it being the best thing ever

  • You borrow your own money at 5% and have to pay it back at 5% on top of the monthly payment. If you don't pay it back by the time you die they will take it out of your death benifit. Whomever is the benificiary dont get the cash you put in.You're benifit might be eatin up by the compounding of the money you "OWE" ON "YOUR" MONEY!!

  • My mother works in title work in real estate…… she tells me that the wealth use insurance funds more than poor people…..

  • Great job guys, plus the Insurance Company will pay you a dividend at the end of the year. This process really works!!

  • Emphasize that this strategy generally takes 20+ years to accumulate enough cash value to utilize even if 90% is available in the first few years. The key with this concept is the deferred tax free growth and ultimately tax free income.

  • I've been very happy with my plan for the last decade. I liked it so much I got into the industry and have been helping people really understand this tool. It's great for car purchases and real estate. We've done a few real estate deals that did well.

  • Nice podcast. I don't have a life insurance, I don't really have a significant, personal meaning for it. I don't believe in it. However, now I learned from you what I can potentially do w it, I may get involved in one. it sounds like my 401k, I may take a loan and pay myself back, well, up to 50%

  • I always say this. Thanks you so much for your videos. Very instructional. What do you think about private lenders in comparison with the banks?

  • I don’t understand how you can’t just do this with a savings account. Am I missing something? I have to put my own money into an account just to only be able to borrow 90% of my own money, and pay myself interest. Why do I need life insurance to do that? I could do that with an empty pickle jar on the fridge. Does it earn interest? Higher than a 1% return like a savings account? And you can only borrow what you put in, so….. savings account. Also, if it does earn interest, then when I pull the money out, it’s not earning interest anymore until I put it back. It’s just really hard to see this as beneficial, especially when I’m sure the insurance company charges some of their fees for you to do this

  • These are good discussions as I have been in a deep dive on the topic. I can’t wait to hear the other series on the topic.

  • Is this something a non-US citizen can do? I have not heard of or found anything like this in Norway where I live for example.

  • This is a very POOR strategy. Whole life is not an investment vehicle. There is no understanding in this video of the negatives of whole life. Including; surrender charges, 2nd and consecutive years premium, the interest you pay on "loaning yourself money", whole life charges you interest, 6 to 8%, what happens if you cant pay your next premium?, it comes from your cash value, what happens if you die (this is life insurance) to your money and insurance? And on and on and on.

  • Bank of America has owns over 18billion of life insurance…. your family should bank together. When the kids borrow money from you it increases their death Benefit they will get from your passing. It’s almost a x3 multiplier when they increase your cash value.

  • I am a little confused with this IBC stuff. If one takes a loan against their policy without touching the principal in the investment portion, this implies the insurance company is providing the loan. Therefore, the principal portion to the loan must go back to the insurance company but the interest would as well, right? Otherwise were is the R.O.I for the insurance company to provide loans? Sounds more like someone is hoping the dividends in the investment portion of the policy outpaces the interest paid on the loan. This means, there is a cost, if you will to use this so-called bank. In fact there would be two costs. The cost of the life insurance portion and the interest on any loans taken out. Is this correct? I have always viewed these products as term life with forced savings.

  • Clayton and Natalie i love the idea , to buy a policy for my daughter , I heard Gaurdian or mass mutual are great Cash value whole life policies , but critical they are designed right Denzel rodriguez on youtube does this

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