In this episode, we dive deep into Nelson Nash's book Becoming Your Own Banker, and the power of whole life insurance dividends. Many people are unaware of how they contribute to the growth of cash value and overall efficiency. We also explore the importance of thinking long-term when it comes to Infinite Banking and building a legacy through whole life insurance policies. By understanding the mechanics of whole life insurance dividends and focusing on long-term growth, we can create a powerful financial tool to pass on to future generations.
https://www.youtube.com/watch?v=nKfnZU7mkSg
This process may take time, but it is essential to build a solid financial foundation and leaving a lasting legacy. Join us as we uncover the secrets of the infinite banking concept and how it can help you take control of your finances and create lasting effects on your life.
The Benefits of Infinite BankingThe Power of Whole Life Insurance DividendsOver-Engineering Life Insurance PoliciesAre You Getting Overcharged?Is Life Insurance Safe? Book A Strategy Call
The Benefits of Infinite Banking
People have a need for financing over their lifetime. Access to capital can help you partake in opportunities, grow your wealth, and also enjoy your wealth. Life insurance can also help you protect your family from unexpected death. Infinite Banking combines these two needs into an asset that is ultra-efficient and fulfills both.
When you pay premiums, you are contributing to an ever-increasing (and never-decreasing) supply of money. This is money that you can use whenever you want to, for whatever you want to. So you can be confident that the money you pay each month or year is doing something meaningful, in more ways than one. You’re not throwing money into the void.
The powerful thing about Infinite Banking is that you are in control of your capital. Many people believe that if they really need money, they can simply go to a bank. However, it can be incredibly difficult to secure financing from the bank, unless you can prove yourself or provide collateral. It’s not a reliable system, because the bank can easily deny you funds. By creating your own pool of capital, you can ensure that you always have money available to you when you need or want it.
The Power of Whole Life Insurance Dividends
When you have whole life insurance, your policy is always growing. This growth is a combination of three things: your premiums, guaranteed interest, and non-guaranteed dividends. These dividends may be non-guaranteed, however, they’re more likely than not. When you work with a mutual company, you get to partake in all company profits via dividends. Since they can’t guarantee profit, they can’t guarantee dividends, however, most major mutual companies have been profitable for over a hundred years.
Because you can count on these things, your policy becomes more efficient over time. The uninterrupted compounding growth, plus using your policy's dividends to purchase more PUAs, make your policy better at growing each subsequent year. This is by design, and you can think of it as a reward for holding up your end of the insurance contract, which is to pay premiums and loans on time.
[24:56] “Nelson is saying if you fulfill your end of the contract… then the company is going to be more profitable than they’re projecting on the illustration with the dividends.”
Over-Engineering Life Insurance Policies
In Becoming Your Own Banker, Nelson shares that life insurance policies are “over-engineered.” He compares this to the fuel light in your car. When that light comes on, telling you that you need to put gas in the tank, it creates an immediate need. However, cars are actually over-engineered to have some space in the tank even when the fuel light comes on. The light creates urgency, yet the reality is that you should have plenty of gas to get to a gas station, and then some.
Actuaries,
