Want maximum immediate liquidity with an IBC policy? Planning to fund a 10/90 infinite banking policy and then take max loans to fund real estate? Are these double-dipping returns too good to be true?
https://www.youtube.com/watch?v=YAwhBlF3XVs
STOP. Listen to this first.
The allure of making an IBC policy better than even the creator of the term IBC has many people shopping for “Skinny Base” whole life policies with maximum early cash value.
But there are problems on the horizon. And we’re scared of what 10/90 infinite banking policies mean for many who want guarantees.
Today, we’re talking with James Neathery, fellow IBC thought leader, Nelson Nash Institute certified IBC practitioner, and executive producer of the best-selling documentary on the Infinite Banking Concept, Banking with Life. In this rare panel discussion, we’re collaborating to give you the truth about policy design and what you need to understand that most financial advisors will never tell you.
So, if you want to ensure you build your IBC policy on solid rock and not shifting sand, tune in now!
Table of contentsIllustrations Aren’t Always HelpfulThinking Big-PictureDon’t Steal the Peas10/90 Infinite Banking Policies and the Long-TermGiving Up Guarantees with 10/90 Infinite Banking PoliciesAbout James NeatheryBook A Strategy CallFAQsWhat is a 10 90 insurance policy?Is 10/90 whole life insurance the best option for Infinite Banking?What are the risks of a 10 90 split in life insurance design?Can you fix a poorly structured IBC policy later?
Illustrations Aren’t Always Helpful
[5:45] “Specifically speaking about equipment financing in his first book, Becoming Your Own Banker... [Nelson Nash] said… if he were to rewrite the book, he would not put illustrations in the book. Because they serve, really, as a point of confusion. You know, you cannot look at a life insurance illustration—the tabular detail where all the numbers are—and make a coherent decision.”
We believe this is a significant point because examining the numbers seems like a logical step. Yet, the illustration is a projection of what we expect to happen, not a guarantee of the policy's outcome. Examining all the numbers can be overwhelming and muddy the concept as a whole. Not to mention, if you’re looking for early cash value and comparing illustrations, you may even overlook the big picture.
Illustrations often reflect best-case scenarios based on assumptions that may never come true. The reality of how your policy performs depends on factors such as dividend rates, costs, and how you utilize the policy. As James Neathery says, an illustration is a snapshot, not a strategy.
[8:15] “In the agent’s heart of hearts, they think that this is right, squeezing the base down…so you can have a high PUA or high cash value, or a high immediate loan value. But then they don’t realize what they’re sacrificing in the future with those policies. And there is absolutely a trade-off.”
Thinking Big-Picture
While the goal of infinite banking is to create a system of wealth for yourself that is liquid, reliable, and certain, it’s often mistaken for a magic pill, especially when people hear about strategies like the 10 90 split.
People want a quick solution, with a quick cash value build-up. They want a magical pool of money to dip into. Unfortunately, this short-term thinking can prevent you from seeing and fully appreciating the long-term benefits of whole life insurance.
Early cash value build-up isn’t inherently good or bad—it depends on the purpose of your money. However, it isn’t magic. It still takes time and diligence to maintain a policy. Life insurance is meant to be a generational tool—well beyond even your own life.
[11:05] “You are afraid to capitalize, you are afraid to pay a premium if you have to have access to 100% of it.”
James Neathery isn’t disparaging access to capital; however, he is pointing out a system of flawed thinking here....
The Money Advantage Podcast