Don't Borrow Against Your Whole Life Insurance Until Watching This Video
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- Опубліковано 31 лип 2024
- Watch this one video before borrowing against your whole life insurance policy. #wholelifeinsurance #lifeinsurancepolicy #infinitebanking
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A policy loan is best taken when the funds will be used to purchase a working asset that makes money to offset policy interest or turn profit. .... In a perfect world.
Well stated!
Perfect
Then what are your thoughts on variable life?
You can buy an asset and then borrow against that asset.
Control cost was hard for me to understand in this video I had to watch it multiple times.
Great video as always. Would love to see an example of a policy being put to use...borrow from policy, invest in a cash producing asset then showing how you would pay back your policy in the best way possible.
Your math is correct, I have seen a lot of misinformation out there making it sound like one can get magic money by using the leverage strategy
Im so glad I watched this! I had been thinking about what “paying yourself back with interest” actually meant and I am discovering what that all means
Amen on borrowing for liabilities!
Love this video! Thank you. If the control cost from your own account is 5%, and the interest on the account is 3% and the dividend is 1%, does that equate to an effective -1%. Math is my head as I’m driving…
One situation where it makes sense to borrow to buy a car is when the interest rates at the credit union or bank are much more (currently trending upward) compared to your policy. If the bank is offering something like 8% but my policy loan is only 4%, mathematically you are saving 4%. It completely depends on the situation in the economy and much cash value you have available. I still would want to have liquidity available, so I wouldn't want to use most of my cash value that available.
Correct!
1. If you were sold on the car you were going to buy
2. And it would be cheaper to borrow from the Insurnace company then a credit union or bank then math would say use life Insurnace.
3. Personally I would still use bank for something like a car because I would value the CV available vs losing liquidity to something like a car. I should make a video going over my mindset here 😊
I really appreciate your comment and thoughts!
You could split the difference also. Use CV from policy to make a large down payment/50% of the loan. And finance the rest through dealer/lender. Best of both worlds in a sense.
What if you borrow money from your policy at 5% to pay off debt at 7% compounding daily. You are disciplined to continue paying off your debt back to your policy thereby reducing the 5% because you are paying it back before the policy renewal. I have seen control costs drop down to as low as 1.05%. Thoughts?
I believe Mr. Nash and others are saying that if you were to spend the money on the car or the vacation regardless, you're more wealthy using life insurance as a place to store the capital first due to the lifetime compounding (as compared to borrowing from banks or using cash). Which is true. However, you make an excellent point that if you already have a policy, the compounding will happen regardless of the borrowing, so getting better rates etc just makes sense.
Really appreciate this comment!
Yes I agree that a policy is the best way to store and use capital!
I think it’s also important to know that there is opportunity cost in every decision we make and HOW we use our money 😊.
Thanks so much for watching Dallin!
Loved this! Thanks
New to you channel. Super smart dude, way too smart to be saying “minusing” instead of “subtracting.” Still great content, especially for a young dude like yourself. Thanks!
Thank you! Haha I’m working on my delivery every day!
So, which whole life company is the best to go with for life benefits ?
Hi Caleb - I have a question. Would it make sense to open a life insurance policy and borrow against it each year to put the borrowed amount in my Fidelity account for large chunks of investment each year? Or would I be better off just putting all my cash flows into Fidelity ?
This is what I’m hung up and confused on
Very helpful video and great explanation! Thank you!
I really appreciate you watching and sharing this comment!
Hi Sir. Thanks for this informative video. I just have a question. If your policy is already paid up. How does your money grow there? Thanks in advance for the answer.
So when you borrow funds from the cash value, how does that work? Do you have to say I want $10K, $20K, or some other bigger amount? Or can you use it like a line of credit or a checking where you can make smaller deductions several times per month? For example, how you would pay your credit card bill and your electric bill at different times each month and would use a debit or credit card.
Great video. In depth!❤
Thanks Scott 🙏😊
I agree with most but you totally forgot what a compounding effect your policy interest generates daily versus the daily cost of policy loan interest. If loan is taken out few years after policy start, you should always come on top with regular disciplined monthly repayments back to policy loan.
Is it good to use it to pay off your credit card debt it’s a program that’s called debt free for life and it consist of using a tool to pay off my credit card debt so I would like to know what’s your opinion on this and is it good or not to do this?
Whats your thought to use loan to pay the premium every year and then pay it off as we go throughout the year
I’m little confused so buying a car with life insurance to drive to work would be not worth are saying just get auto from bank
Ok thanks for sharing.
My pleasure 🙏. Thanks for taking time to watch and comment!
I'm making 34% ROI day trading (mostly options). I have $75K in my brokerage accounts, so I'm on margin. I have a very strategic and fairly safe way of trading. Anyway, based on your calculations, theoretically speaking, if I took out $35K from those accounts and placed it into a whole life insurance policy. I could borrow against it... say within the next year. I could then put that "loaned" money back into my brokerage accounts and keep earning my average 34% ROI BUT I'd also keep earning above and beyond say the 4% current interest on the life insurance?
I really like your descriptions of banking in this video - great illustrations of how taking a loan out at 5% to then put into an investment that earns 7% is actually an ROI of 40%. A tough concept to explain (in my opinion), and it was done in a very digestible way. Good info as always Caleb!
Thank you! I really appreciate that Patrick!
Explain why ROI is the correct term. I see an annual ROI of 2%. Your cost is not what you calculate the return from.
@@thebradmanofmuskoka sure thing! I’ll try to explain my thinking a little more clearly. If we’re taking out a loan, let’s say we take out a loan for $100 at 5% annual interest. We’ll have to pay back the original loan + the $5 in interest at the end of the year, meaning we owe $105. However if we take the $100 and invest it and make 7% we’ll end up with $107 total. So all in all, we’ve made $2.. but since the $100 was a loan, and not our own money, we really only paid $5 out of our own pocket in order to gain a net of $2. That’s where the 40% comes from, we spent $5 to profit $2.
Hope that helped to clarify how I got the ROI.
@@patrickhoulihan554
That’s not how you calculate roi.
Please share the name of the bank that gives 1%?
is this possible in the UK
Wow any I can see your an addict to your passion. Ima continue watching more and subscribing. I might want to connect with you if possible. Lmk 😅
I really appreciate that! Feel free to send me a DM on Instagram or shoot me an email!
Really good stuff Caleb.
Thanks so much Cory! Means so much
Thanks for watching and commenting it really helps 😊
Nice video. What do you think about leverage high cash value policy to pay for premiums. Kind of premium financing
Great question. In most cases the math doesn’t add up for cash value net increases. I would cation life Insurnace illustrations that say otherwise. For estate planning and death benefit though you could argue for something like that. Borrowing to start new policies are frown upon from Insurnace carriers and called laddering. I hope this answer was helpful 👍
I’m using my policy to pay off debt and storing money each month. One thing I’m doing this year is waiting to borrow on my policy to pay off my car on the anniversary date in 2 months so I’ll save on the yearly interest payment.
Hi Jay, I think it super cool that you have a life policy and your using it for things like debt and cars. I wish you the very best 😊. Thanks so much for watching and commenting!
@@BetterWealth Thanks! I love your content and just started reading your book. Keep up the great work!
What type of policy do you have?
By paying my liability when i don't have an opportunity still give me a cashflow that i can use back. Isn't it?
I am a new Whole Life agent and i am excited to start this new venture. I understand that this insurance is a multi-use asset. How do you propose I began learning the illustrations, so i can do the designs on my own and be able to show my potential clients how it will look like? Thank you for all your insight.
Email me at caleb@betterwealth.com and I will do my best to get you on a solid path 🙏
awesome breakdown in helping me understand the strategy. Question: you say the cash value continues to grow uninterrupted even when you borrow against it...does make two payments? 1 into the loan and 1 into the policy?
the and asset vault link isnt working...
Try this www.andasset.com/vault
If you are paying your premiums annually and then take out a loan and decide to pay that back you would have your annual premium contribution AND your instructed (optional) loan payment to the Insurnace company. Does that make sense?
@@BetterWealth perfect sense.
where do I find the right agents who will allow me to make-contract with their bank using the cashflow banking paradigm, with the high-cash benefits strategy? in other words, are you capable of setting up my policy? can we use quantum-grammar? why don’t you have the venue for the corporation of your own bank?
Hello! Yes, we specialize in designing overfunded whole life insurance policies which can be utilized by the infinite banking concept. As far as structuring goes if you head to The Vault we offer further explanations, resources, and a strategy call if you would like to further the process - bttr.ly/vault
This is true, but you still make profit in the end. Let’s say after 30 years you make an income of 1,000,000 from dividends (after we subtract all the fees). Not premium, but a million from the compounding effect of dividends. Now divide 1,000,000 by 30 years. That’s about 33,000 you made per year in dividends alone. So say you take a 10k loan out every year at a 5% interest rate. That’s about 500, so 10,500 a year. Which means assuming you pay your loans back so intrest doesn’t compound, you’re still earning 20k free per year just off the strength of compounding intrest. So taking a loan from yourself is smart IF you don’t take out more than the your 30 year profit (years depends of course) AND if you pay it back so interest doesn’t eat itself (although if you didn’t they’ll just subtract from the death benifit). Of course investing will be 100x smart, but again compared to sitting in a bank taking a loan for a dream car and letting the rest compound still sets you on top!
I am interested in doing your readings I’m licensed and I want to specialize in this area.
Are there any 3rd party lenders Caleb you would use right now? I am assuming all rates from
Lenders are going up…
Right now as I speak the reason to use 3rd party lenders are for connivence or for writing off Interest for Busienss use. The interest rate is no longer cheaper then Insurnace companies. Over time though I don’t think the loan interest rate will remain cheaper for Insurnace companies.
Email me and I can send you some of the 3rd party companies I would look into 😊
Can I use my 10 year money policy to spend or save money? I feel that my money is trapped there and what's the point of saving it if I'm still there!
After age 80 they probably charge more fee and life insurance
Love the irrefutable logic here Caleb. Thank you for what you do.
My pleasure bro! Thanks for the comment and for what you do!
so what is the least amount of cash that you can open a policy and what's the max amount ?
I would say 5K annually would be the minimum that I would start with. We like to say 10K to begin because then structuring the policy upfront and ongoing becomes a no brainer :)
None of the equation factored in the huge premium you also have to pay in addition to the control cost!?
That would be because those premiums are ultimately not cost… they’re capitalization of the asset. The asset that is being collateralized to lend against - no different than banks do with tier one assets, except the difference is that banks collateralize a liability (deposits owed to account holders) whereas IBC bankers aren’t contributing to fractional reserve counterfeiting (source of inflation and boom/bust cycles society suffers from)
The whole point of using the generational wealth method is to be your own bank not have to use your own credit not have to use their money Once you have credit on a house they got you locked in the whole point is to be debt-free and the only way to be debt-free is by doing this but you are right though and one stance you are right though
I appreciate your comment and your perspective. There is many different reason / convictions to do this strategy. I don’t share the same passion for not using banks BUT I can agree that this is one of the best things you can do if you don’t want to use banks 👍
Thanks again for watching and commenting!
Does this video hold true for both direct and non direct recognition?
Yes, this can apply to both types of companies.
Nanban Caleb, did you ever practice the GK strategy from your other video? Would that investment be worth getting a loan against your policy assuming that loan rate is 5%?
I know people well who borrow against their policy and do the Gk strategies. Last I spoke with them they we’re crushing it. Don’t give investment advice but the mast ads up if you feel confident in the backend strategy 😊
Thank you for commenting and watching Pat! Really means a ton!
I was just thinking... Is this closely applicable to lines of credit like a HELOC or different because we are essentially our own bank?
Does this work well for Human Design Projector types?
Thanks so much for the comment! Can you maybe clarify your question? I look forward to answering!
I think it's fairly obvious that you're better off using policy loans to buy cash flowing assets. What you fail to mention about buying liabilities is the bit where you're going to be an honest banker as described by the founder of the infinite banking concept.
Not only will you pay back the loan + interest, but you will also charge yourself the market rate for such a loan over the term you will pay it back. These separate payments will be used to purchase PUA. It is this factor that actually allows you to come out ahead and still have a car in your driveway you wouldn't have had or come out much worse off financially.
Now, you could not have bought the car and instead put all the loan payments, interest and honest banker interest into the policy as PUA (potentially) and been waaaay further ahead in your policy, but you'd also not have the car.
Simple matter is everything in life is financed and the average person has immediate needs. They don't have the breathing room to buy cash flowing assets right now. They can be an honest banker and finance the things they need in life and come out ahead rather than being poor indefinitely.
The question is who are you serving? Because by presenting it this way, you've basically convinced the people who NEED these policies the most that they shouldn't get one. The people who need these policies the most are the working class whose every dollar is squandered to go on living. If they could instead save every dollar they make and use PLs to finance their life and, yes, make money doing so they absolutely should. The goal should be to eventually loosen the noose to a point where cash flowing assets become a possibility. But for now, life happens and financing it with a whole life policy is vastly superior than going into debt or using income and savings in the form of cash.
Great! This need to be said
According to this vdo its better tonsave up gor a car instead of relying on a whole insurance since it brings the 60% ROI instead of saving up cash for the car
Can a LLC or a business, take out a life insurance policy on a member?
Yes they can! If you want to talk to someone on my team about this email me at Caleb@BetterWealth.com
There are pros and cons to having Busienss funding a policy
What about argument compound growth > simple interest payment
When you factor opportunity cost, every decision compounds.
Simple internet earned or paid has a long term compound effect.
Does that make sense? I can make a video on this to better explain this concept.
We normally save up money to pay all cash for vacation. What you're saying is you wouldn't put that cash into my policy and they borrow against it to pay for the vacation?
Technically you could but I personally wouldn't borrow against your policy to use for anything that doesn't give you a greater return on your investment. So if you borrow against your policy and the interest rate is 5% you would want to use that money on an investment that would give you a greater return than 5%.
Now, if you really only care about seeing your cash value grow in your policy and you're not concerned with paying the interest rate, you can use it for a vacation. The important thing to ask yourself is, "Will this vacation bring me closer to my intentional life, and what is the most efficient way to do that?"
@@BetterWealth Understood. That's the battle for me. I want to capture all of the interest I can, but vacations are something we didn't have as a kid. So, that became one of those things I wanted for our life.
@@_coachcraig_ Absolutely! Ultimately, the goal of using life insurance as an asset is to improve your life and bring you closer to your intentional life. Feel free to give us a call and we'd be happy to help you figure out the best move for your life and goals bttr.ly/aaclarity
I literally just looked up the average interest rate on a personal loan in the US and as of October 7, it’s 11%!!! 11! SMH
Crazy!
Depends on policy/company type. Ideally issued by a participating mutual company with non-direct recognition on the dividends.
Agreed on the cars thing. It didn’t make you more money buying a liability with life insurance. However in comparison to paying interest to a bank on a car loan or opportunity cost of using cash. Given say you repeat for 6 cars over 30 years time, you’ll have a lot MORE cash than you would otherwise.
When stock markets correct, I like borrowing against my whole life before using margin. And then just repay myself in 1-3 years. Rinse and repeat, and works great.
What happens if you don't pay the loan interest?
If you never pay it back the insurance company will take what’s owed out of your death benefit after you pass away.
Seems like the lower the control % then the better to have a better ROI
Also is the control% same thing as the Internal Rate of Return IRR
Could u barrow to buying equipment for a business
Short answer is if you have cash value available you can borrow for anything you want. So yes 🙏
You can definitely borrow against a car...
In a world manipulated thru debt (usury) man continues to defy biblical laws. Infinite banking is a system to counter the loss of usury, allowing the insured to recapture all of the interest, principal they would lose to the outside third parties 😮.
What makes more sense?
Watering a fruit tree?
Or watering a rock?
Once we buy that car and we start a Turo business that’s an asset now
🔥🔥🔥
🔥🔥🔥🔥🔥🔥🔥🔥
😎😎😎😎
Buy assets not liability..
Lest not forget tax!
Yes! When you borrow against your policy is not considered income making that access to cashflow “tax free”
It’s 3% that the bank made and not a whopper 300%.
Correct. What he should have said was, "They make 100% of 3%". I feel so bad for people that are falling for these terrible financial products.
it isn’t about spending yourself wealthy but hanging onto as many assets as possible while spending whatever you would spent.
If you have $50k earning 4% (2000 in interest) you can borrow up to 33333*0.06=2000 while earning at 50,000*0.04=2000. Or 0.04/0.06=0.67=67%. Borrowing more than that moves you backwards (unless it’s for assets that exceed the borrowing cost), borrowing less than that and the asset can pay off the loan itself without any additional capital outlay.
If you replace expenses you would ordinarily have and now can start putting more and more of your current expenses and payment into IB, and also continue to make investments just as you would it is a net benefit.
😂”that’s in-credible” ex-act-ly.