Infinite Banking Simplified

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Blog 68 – The Term Rider Of An IBC Policy

One of the key pieces of information that a prospective client shares with us is the monthly or annual contribution that he/she would like to make to his/her Infinite Banking Concept (IBC) policy.

Once we know the original contribution to the policy, including the modal premium, (annually or monthly), and the age, gender, and the underwriting rating of the insured, we determine the minimum amount of death benefit necessary to make sure that the policy does not violate the Modified Endowment Contract (MEC) regulations.

2020 June BankNotes

Humanity has been asking what is happiness and how to achieve it since the dawn of time, but still without a definitive resolution. The divergence of views on this subject is enormous, although it may be a good thing, because each individual can pursue happiness in their own way, which—according to the Declaration of Independence—is an inalienable right.

Blog 67 – The Capitalization Phase Of An IBC Policy

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.

2020 May BankNotes

The latest report on new unemployment claims was abysmal, coming in at 4.4
million last week, some 100,000 more than surveyed economists had expected.
The continuous claims came in at just under 16 million, an all-time record.
Mainstream labor economists estimate that, all things considered, the actual
unemployment rate now (which is only officially reported with a lag) is above
20 percent—a rate not seen since the darkest days of the Great Depression.
Indeed, all of the job gains since the Great Recession have been wiped out in
just a matter of weeks.

Blog 66 – Everything You Ever Wanted To Know About Paid-Up Additions – Part 5

Up to the late 1980s, policy owners could place an unlimited amount of discretionary capital into a life insurance policy. All this changed in 1988 with a new law known as the Tax and Miscellaneous Revenue Act of 1988 or TAMRA. This law established a qualification test for life insurance contracts based on the amount of premium paid each year to the policy. If the premium is too large under the guideline, the policy fails the test and no longer enjoys life insurance status. It is then reclassified as a Modified Endowment Contract or MEC and it loses several tax favorable features enjoyed by life insurance contracts.

2020 April Lara-Murphy Report

Major Firms Less Liquid Than a Responsible Household
Standard financial planning recommends that a typical middle-class (or wealthier) household have at least 6 months’ worth of expenses available in very liquid funds (“cash in the bank”), to handle a sudden job loss, injury, or illness. And yet, when the coronavirus crisis struck, we saw not only small businesses but even many major firms brought to their knees because they couldn’t handle even a temporary interruption in their revenue streams.

Blog 65 – Everything You Ever Wanted To Know About Paid-Up Additions – Part 4

The most common dividend options for dividend-paying whole life policies are paid-up additions, paid in cash, reduce premium, and accumulate at interest.

Of the four options, paid-up additions will produce the most amount of cash value and will also increase the amount of death benefit. The reason is that you purchase paid-up additions which earn dividends which then purchase more paid-up additions resulting in a compounding effect or exponential growth in the amount of cash value as well as in the amount of death benefit.

2020 April BankNotes

“This is R. Nelson Nash” in His Own Words
The following was put together in January 2018 by R. Nelson Nash for the
2018 IBC Think Tank Conference. I thought it appropriate to share on the
anniversary of Nelson’s passing (27 March, 2019). — David Stearns
A person’s thoughts over a period of time ultimately results in a set of core
beliefs—a mindset—some call it a worldview—that controls human action
and gives life meaning and purpose.

Blog 64 – Everything You Ever Wanted To Know About Paid-Up Additions – Part 3

A flexible paid-up additions rider allows the policy owner to increase or decrease the contributions to the paid-up additions rider within a range specified at policy issue. The policy owner is free to make these adjustments at any time during any payment period of the policy.
The level paid-up additions rider does not provide the same flexibility to adjust the premium going towards it. The level paid-up additions rider assumes that the policy owner will pay the same amount year-over-year towards the rider. If the policy owner reduces the premium going to this rider, that reduction can become permanent.

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