How To Know Whether You’re Getting the BEST Infinite Banking Policy | 693

MORI 693 | Infinite Banking Policy

 

How do you know you have the most efficient infinite banking policy? How do you know whether that insurance agent isn’t adding more fees where THEY make more money than you do?

 

Many have asked us how they can tell whether they’re getting the best designed infinite banking policy. Unfortunately, many pay THOUSANDS more in insurance fees than they should be. In this episode, you’re going to see what a well-designed policy looks like. Tune in now!

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How To Know Whether You’re Getting the BEST Infinite Banking Policy

This show is for you that work so hard for your money and you want your money to start working harder for you right now. You want that freedom of cash flow today, not 30 or 40 years from now, but right now, so you can live that life that you love with those that you love. Most importantly, it’s not getting rich. It’s about living a rich life because as you are blessed financially, you have a greater capacity to bless the lives of those around you.

Thank you for allowing me to create that ripple effect through you. I appreciate you tuning in. You’ve been sharing and binging on this show. I can’t thank you so much because you are the best audience out there right now. I know that you are willing to not just learn about these things or read about them, but you’re willing to do something about it as well. Thank you so much for tuning in.

As always, be sure to check out our website MoneyRipples.com. If you haven’t done so by now, go check out that Passive Income Calculator where you can figure out how much passive income you could create in the next twelve months. Check that out and see how we can serve or help you in any way, shape, or form.

Today, I want to talk about this topic that has been asked of me so many times. It’s long overdue for me to be able to share this with you today. Many times, people will ask about infinite banking. I know this is one of the most popular topics you read on our channel already. The question is, how do you know whether you’re getting the best deal? How do you know if your agent isn’t lying to you? How do you even compare all these numbers? What do they all mean, and everything like that? Is it about having more cash value in the first year or not? Is it that 60/40 blend? Is it 80/20 or 90/10? How do you know?

I’m going to break it down for you pretty simply. One, if it beats our numbers, that’s a shocker. Our numbers, hands down, are going to win it. Not to try to be completely self-serving, but it’s true. We do an amazing job. We promise to give you the best ROI on your cash value every time. There can be some exceptions. If anybody does beat our numbers, we want to know how they do it because we’ll try to find out how they did it and then beat it again.

Consistently, we have come out with the best numbers every time in the infinite banking space. I did find an exception recently. I want to share it with you because it threw my client off a little bit. He said, “We’ve done several policies.” He did one for himself, his wife, and his kids. All of a sudden, this agent comes out and says, “You could have more money in this.” It wasn’t apples to apples. That’s one thing. If you ever want to try to figure out who’s lying or who’s not, make sure that the numbers are apples to apples. They’re real numbers. That’s number one. That’s the key thing.

I always ask for apples-to-apples scenarios. I’ll even run apples-to-apples scenarios. I know our team does, too, when somebody says, “This is what somebody is running for me. What do you think?” We’ll give you an honest opinion. If they have a good one or if they can beat it, that is great. In fact, the other day, we had somebody come to us and said, “Here’s the policy that we’re doing.” We find out that the policy was already approved. It was done with a good company, too. There are several good companies, but this one was solid.

The numbers, although we could have beaten them a little bit better, weren’t that far off. I’m not sure why they designed it the way they did, but based on the numbers, those people matched our numbers if you were to do that scenario. There are probably scenarios where we would get a better rate of return on it, but because it was already approved, we said, “Go and do that policy. If that’s what you want and that’s the way you’re funding it for eleven years max, do that,” which I’m not sure why it was eleven years. I’m like, “Here are some other options that get you a better ROI on that money. They can save you a few thousand dollars over the next few years.”

In any case, there are times that we might say, “That looks good. Go for it.” Other times, if you have an older policy, we might say, “It’s not the way we’ve done before, but at the point, it’s at right now, it’s good enough.” There are many times when it’s not the case. I want to say this one specifically from a client because he was saying, “This looks good.” I said, “Let’s take a look.”

At first glance, I almost felt like yelling out like in The Princess Bride. If you remember Vizzini or whatever his name was, he was like, “Inconceivable.” I thought the same thing when I saw it, too. I was like, “There’s no way.” I was right. There was no way to do it legitimately. This guy cheated. Let me share that with you right now. This is my client. They say he is 54 years old. I don’t know where they got that. He’s 53. They ran the numbers. They had him dump in a bunch of money.

Here’s a key bonus for you. If someone says to dump in a lot of money upfront, almost every time, I would recommend against it. What that does is it pays the agent more money. It looks nice to have that extra cash in there for you, but it costs you more money. There are better ways to spread out those premiums over a few years versus trying to dump it all in one year.

MORI 693 | Infinite Banking Policy
Infinite Banking Policy: If someone says to dump in a lot of money up front, almost every time it’s not recommended. What that does is pay the agent more money.

 

In that first year, he got $141,000 after he puts in $148,000. That means that well over 95% went into cash value in that first year. This is a whole-life policy. This is with one of the companies I write with. It’s also, interestingly enough, very high. If someone is doing a dump, I will often look at this company as one of those options. For dumping in money, this is a better company. Usually, insurance agents that use this company try to do that.

There is another company, OneAmerica. This is Lafayette. OneAmerica is another company that many agents would try to use because it pays them a lot more. They’ll dump cash in that. I thought, “There’s no way.” What happened? This is what happened. I told him, “Look at page three here.” It’s this thing that says, “Important tax information.” The keyword to look for, especially when it might look too good to be true, is MEC as in Modified Endowment Contract. This is where I went.

I said, “Those numbers are crazy. I write with this company and I can’t get those numbers legitimately. This must be a MEC.” I went to that. I went to the bottom of page three on this. It’s different for every company, but usually, right around somewhere at the beginning when they’re showing you all the different terms and definitions, they’ll talk about MEC. Often, they’ll even bold it about this initial seven-pay premium that says the max is $20,000 per year. He’s doing more than $20,000. That’s the max you could pay in the first seven years. That’s all a seven pay is. It’s saying, “How much can you put in?”

Here’s what the MEC is. The MEC, from the IRS, is defined by how much you can dump based on a particular death benefit. Based on age, health ratings, and all this stuff is factored in. Whatever your death benefit is that you’re getting, there’s a limit to how much you can put in and keep it growing tax-free. If you cross this MEC limit, this Modified Endowment Contract limit, or if it becomes a Modified Endowment Contract because you put too much in, what happens is that now, you’re getting tax on this. This becomes like an IRA in that all the gains get taxed.

If you try to access any of this money before the age of 59 and a half, you get a 10% penalty. It is the very thing that we preach against with qualified plans. This becomes an IRA. We don’t want that. We love the fact that this becomes more like a Roth IRA where it grows tax-free and comes out tax-free. It’s even protected better from lawsuits and accreditors. With MEC status, it becomes almost like an IRA, but it’s an insurance-based thing.

I said, “If you look at the bottom of page 3 and then at the top of page 4, it says, “The policy as illustrated is a MEC.” That means the guy broke it. The agent cheated to try to beat the numbers that he already had. Why? That is because he couldn’t beat it. This is the only way he could do it. He had to cheat to do it. Did he disclose this to the client? Not at all. Did he tell him that he is going to get taxed on any gains in this policy? Not at all. The problem is that you’re going to have gains early on, and then he’s going to have to report it to taxes every year. That’s not cool. This is not cool at all.

He’s not 59 and a half yet, so if he tries to take out any of this money to try to use it to invest or do anything, he will have a 10% penalty and then taxes on top. He would lose way more than it saved him in this scenario. I generally do not recommend doing that. That’s what makes us win. We try to get the lowest death benefit for the amount of money you’re trying to put into the policy.

We don’t even tell people when people say, “How much can I get for a $1 million death benefit?” We’re like, “I don’t know. We’ll have to run numbers to find out.” Usually, what I’ll say is, “Let’s not worry about the death benefit as much unless you really want a certain death benefit. Instead, let’s figure out how much you’re going to contribute to this thing. We’ll then reverse-engineer it to figure out what’s the minimum death benefit. That is the lowest cost to come out of this policy needed while still getting tax-free growth and protection from lawsuits, accreditors, taxes, and everything.” That’s what we try to aim for.

I had another person. It was the same thing. She had somebody send her numbers. This woman was supposed to put in $10,000 a year, then $4,500 for pretty much the rest of her life. She sent this to our team here and she said, “What do you think? Is this good? Is this bad? What are your thoughts? Can you do better?” I said, “We can do better.”

First off, if you’re a woman, 49 years old, getting a preferred plus perfect rating, and in great health, I said, “You’re going to get almost the same ROI I get as a 45-year-old male because women live longer.” The fact that she puts in $10,000 and in that first year only has 56% is not good. It’s not great. Getting in 50% or 60% in your first year is not very good. Even if it tries to grow a little bit, the next year’s not bad. The year after that is so-so. Finally, it takes until the fifth year, there’s a net gain. It was until about the 5th going into about the 6th year. She paid $44,500 and got $39,000. She doesn’t even have her money back even after five years.

I did apples to apples. I noticed there was one penny on this $10,000, so I did the penny on it. It was the same thing. Instead of $5,600 in the first year, what does she have? She’s got $7,500. She’s got $1,900 more in the first year alone. By the time we get to year five, she has put in $44,500 and got $43,700. She’s almost got exactly everything dollar for dollar in there. Had she max-funded it, she would’ve at least broken even in this case.

By the sixth year, she’s got more than what she paid. She paid $49,000. She’s got $50,000 and so on and so forth. That’s assuming that dividends don’t grow. If interest rates stay higher, we’ll see the dividends go up. These returns will probably be better. These will probably end up becoming conservative returns if we keep seeing interest rates and bond rates holding steady and therefore, driving up the dividend rates for insurance companies overall. By the sixth year, she’s got more than what she paid into it.

For that other plan, she had to pay for about ten years. She put in $67,300 and got $67,200. She’s still $100 short after ten years. It’s costing her more money. She is paying the agent more money, but she makes less. That’s not great. We knew right off the bat we can beat it. I even told her, “This is an okay plan, but here’s a plan that’ll give you a better ROI.” The first plan was $5,600. My plan had $7,500 in the first year. For this one, she can get up to $7,700. You get a few hundred dollars more out of it by paying into this.

We can even pay $10,000 optional the whole time and the minimum is lower. The minimum in the other one was $4,500. This one is only $2,200. The cool thing is she could put in $10,000, but her minimum’s $2,200 a year. She’s got a range. She can pay anything from $2,200 all the way up to $10,000 during that period of time. By that fifth year, she’s almost about breaking even. She has put $50,000 in and got almost $49,500 there. In the next year, she’s got well over $1,000 more, and she keeps going. There’s another way we could tweak it. If she wants the max fund in fewer years, we can get it to where that fifth year is about $50,000. There are lots of ways to skin this cat.

Needless to say, it didn’t take much to beat it. How do you know? You can have us run numbers and we’ll give you our honest opinion. We can show you. Sometimes, it doesn’t make sense. You’ll see these agents putting in these random weird numbers for premiums. Notice I like to do even numbers. It might be rounded to the nearest thousand dollars per year. Whether it’s a kid policy, adult policy, or whatever, we’d like to try to make nice, easy numbers to remember and not bury the range that you have no clue what you’re paying year to year.

You’re like, “I don’t know. Wherever that schedule was, they got buried in my emails somewhere. Where’s that policy that they sent me? It has 150 pages. Let me dig through that again.” It’s much easier to have it simple and easy. It also gives you the best thing. There are infinite bankers out there that will teach you, “There’s that 60/40 blend.” That means that if you put in that same $10,000, you have $6,000 that first year. They’ll tell you like, “This is the perfect blend.” No.

These are against guys or even friends of mine. Every time we run these scenarios, we kick the crap out of them. Here’s the real reason. I’m going to come out clean and be blunt with you if you’re okay with this. The real reason they’re doing that is that they’ll get paid more. They rationalize by saying, “They still get a win. We get a little bit of a win because we get paid more commissions. It is about double the commissions that we would get paid in that same scenario. It works out. It’s fine. In the end, long-term, they’ll still have a decent amount of money even though Money Ripples will beat the crap out of it.” That is how they rationalize it. They’ll say, “We’ll give a little to you, but we’ll take a little back for us, too.”

The thing is we still make money on these policies. It’s impossible to make zero on these policies. We make about 1/5 of what an average whole life insurance agent would sell you. Why? We cut it down by about 80% on those costs. That’s why we end up coming out with making 1/5. Here’s a big difference, and this happened with one of my friends. He is a popular real estate investor. He’s on YouTube and stuff, too. He had a policy done for him that the agent did. Since all of it was going to expenses and insurance costs, he said, “I’m going to do a small policy.”

After six years, he realized that he only got half of his money back in cash value. It was six years and only half his money. He said, “You were right. You told me six years ago this guy’s a schmuck. Now I’m seeing the truth of it. He told me it was an infinite banking policy, but it’s not doing the thing that you teach about.” I said, “I’m glad it took you six years to figure that out.”

What we ended up doing is that we ended up showing him the number. We said, “If you put in $50,000 a year, you’ll have about $39,000 or $40,000 that first year available on day one.” He said, “This is way better. The guy showed me putting the money in and I wouldn’t have any money until the third year.” I said, “By the third year, you’ve got a couple of hundred thousand bucks.” It was not a couple of hundred thousand. He would have about $130,000 by that third year after he paid $150,000. He’s like, “That is way better. I had nothing. I barely had something by that third year.” I said, “That’s the difference.” As a result, he did a $50,000-year policy.

Here’s the crazy thing. Even though we reduced those costs so that he makes more money, the thing is, I did the math. I worked at the other insurance company. I may probably double the commissions that that insurance agent made. Why? It’s because we did what was right for the client. We still make good money on those policies overall because you know you’re making more money. If you know you’re making more money, you’ll put more money in as a result because you know it’s not a crappy ROI. You get your money back.

If you're making more money, you'll put more money in as a result. Click To Tweet

Our policies typically by the third year start paying for themselves where they make more than what you put in. In that guy’s case, he’s put in $50,000 that third year. By the time the dividends payout at the end of that third year, he’s made over $50,000. It’s a net zero cost or less than zero cost insurance policy. He only paid the net cost for the first two years, then by the third year, it is paying for itself. Kid policies take a little longer. In the 4th year or maybe 5th year, depending on how it’s set up, you start having a net gain above what you pay into it where it’s making more than what you’ve paid in.

There are lots of things that you can make these work. I don’t want to make this seem like I’m trying to tell you, “Use us and only use us.” I’m not saying that. I know there are reasons you use that. I told somebody last week. They said, “We’ve got a good friend that’s an also an insurance agent that we bought a policy through. He gives us a lot of referrals for a business.” I said, “New policy is okay. It’s not great but it’s okay. How about you minimum fund the policy and start a new policy because that’s much better? You’re not taking the policy away from him, but if you do a new policy, make that one flourish and work, and use that one for your investing where you can double dip on your investment returns. It’s much better.”

Let me get a little bit serious about this, too. I talked about doing the minimum death benefit. Don’t let me talk you that the death benefit is not valuable. I already mentioned how we had a single woman that was 65 years old get a policy even though she had no children. She did have extended family members with whom she could leave the money and leave her estate. Since the last time I’ve been recording, I’m starting to catch up. I’m back in Utah again.

I had two clients pass away in the month of January. Not to mention I had another client pass away in the fall. Don’t worry. This doesn’t mean that all my clients passed away. I had remarked to my wife. I said, “It’s weird that we have hundreds of clients, and the last client I remember passing away was fifteen years ago,” which was the best man at my wedding. All of a sudden, I had three clients pass away all within the last few months.

I can tell you from personal experience that for their loved ones left behind, there is all the emotional overwhelm, especially because some of them had assets. One was a dentist, for example. Another was a chiropractor. They had money they built up. It’s a confusing time for the other spouse in the family that’s left behind there. They’re trying to figure out how to make everything work. Those death benefits are heaven-sent. They help out.

With one of those clients, she was a one-on-one client working with us on the consulting side. We were helping her create passive income. I am so glad that we got her to create passive income now versus waiting for someday. She was already in her 60s and she wasn’t like, “I’ll keep building up retirement accounts and then enjoy life.” She was already starting to enjoy it now. She had an aggressive form of cancer and only had a few months left to live. I was so grateful that she was willing to take action and do what was right for her family.

I recommend the same thing. This is a great tool to use. We use it for investing, so you can make money in two places at the same time. At the end of the day, it’s also amazing too that the cherry on top is the death benefit that can help protect your family. It can give options when there’s so much emotional overwhelm happening. When those spouses reach out to me and say, “I don’t even know what to do. What’s next?” We can say, “It’s okay. We got your family taken care of.”

My point to you is this. This is not something to mess around with. This is not something to do wrong. You want to make sure this is done right. There is no reason that you should be paying more than you deserve. There is no reason you should be paying more on the costs of these policies than you ought to be. Do not get caught in that trap because that insurance agent might seem like a good guy or a good woman. Don’t do that. You want to make sure you get the best every time. That is our commitment to you.

It’s your choice. You don’t have to use us. You can use somebody else. There are great people out there and goodhearted people. I’m going to tell you that they won’t beat us. They won’t do better than what we do. If they do, we are going to find every way possible to match it and/or beat it. If you have questions, always reach out to us at MoneyRipples.com. I challenge you. Make it a wonderful and prosperous week by taking care of your future right now. I’ll see you.

 

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