I spend a lot of time motivating difficult financial topics by constructing “thought experiments.” In a thought experiment, you can only focus on one or maybe two moving parts, while holding everything else constant. This is the
way to isolate the impact of the factor you want to understand. However, it means the whole exercise is necessarily unrealistic
In his classic work Becoming Your Own Banker, Nelson Nash claims that the standard approach to life insurance has things backwards. Consumers have been taught to get their desired death benefit for as little outlay as possible.
Nowadays the average American has been taught to believe that a very responsible financial strategy is to plunk as much of his paycheck every month as possible into a “diversified” and “conservative” mix of stocks and, if he wants to really play it safe, to mix in some government bonds. Naturally the acme of savvy saving is supposed to be a tax-qualified vehicle such as a Roth IRA for the self-employed, a 401(k) for salaried employees, or a 403(b) for educators.
In the 20th century, households used actual savings accounts at the bank—which were distinct from checking accounts. Households also invested directly in bonds and life insurance.
A lot of our clients are concerned and ask many questions about the guaranteed cash values in IBC policies. We want to make absolutely sure that you understand all the assumptions behind the guaranteed values in these policies.
The number one concern of most of our clients with young children is how they can assist their children with their college education without affecting their retirement plans.
Why do the premiums paid exceed the cash value during these first years? Well, it is due to the initial costs of setting up the death benefit and the compensation paid to the financial professional who designs, sells, and will service the policy for years to come. This is what Nelson Nash calls “the capitalization phase of the policy”. Insurance companies call this initial cost, acquisition cost.
The question always arises as to what is considered a reasonable contribution. We use the following rule-of-thumb: if you are younger than 21 years old, reasonable contribution should be a minimum of $300 per month (or $3,600 per year); if you are between 21 and 30 years old, it should be the larger of $500 per month (or $6,000 per year) or 10% of your gross annual family income; if you are between 31 and 40 years old, it should be the larger of $1,000 per month (or $12,000 per year) or 10% to 15% of your gross annual family income; if you are between 41 and 50 years old, it should be the larger of $1,500 per month (or $18,000 per year) or 15% to 20% of your gross annual family income; if you are between 51 and 60 years old, it should be the larger of $2,000 per month (or $24,000 per year) or 20% of your gross annual family income; if you are older than 60 years old, it should be either $2,500 per month (or $30,000 per year) or a lump sum larger than $200,000.
The Global “Lock Step Scenario.” The Kennedys – Part One: By L. Carlos Lara
It was after reading the works of Augustine of Hippo that I was able to more accurately comprehend the depravity of man and how far his violence can actually extend. Prior to this I was always asking, what many of us lately are asking, “what’s wrong with people these days?”
1)What is the Infinite Banking Concept?
The Infinite Banking Concept (IBC) is an exceptional cash management tool for your personal economy or for your business that gives you financial independence by recapturing interest payments that otherwise would flow to outsiders.
Prospective clients need to realize that the cumulative break-even may take a few years due to the initial cost of setting up the death benefit of the policy and the compensation to the financial professional who designs, sells and will service the policy for years to come. That is what Nelson Nash calls the capitalization phase of the policy.
