(00:03): The 2015 movie, the big short opens with a quote. It ain't what you don't know that gets you into trouble. It's what you know for sure. That just ain't so. Mark Dwayne, Funny enough that quote might be misattributed, it might be what you think, you know, that just needs, so just putting that in there. Okay, continue with the opening. Yeah. So paraphrasing now in case the kids are listening. And in the 1970s, banking was a job you went into to make lots of money. It was a snooze. Who doesn't pay their mortgage? Money came raining down. America barely noticed as its number one industry became boring banking until 2008 when it all came crashing down. That's the intro to the Big Short. Hey, I'm Brandon and welcome to the Wealth Wisdom Financial Podcast, episode 1 21. What is Bank and Yourself and Infinite Banking?
(01:10): And hey, I'm Amanda. If you wanna watch the full first four minutes of the big short, we'll put a link in the show notes where you can watch it on YouTube. Just be sure you're using headphones if the kiddos are around. Today's episode though is not really about banking. It's also not about some scheme developed in the last 50 years to make a few rich people richer. If you want that, maybe go watch the Big short and then come back and watch. Listen to this episode or watch this on YouTube. Cuz the info here is not really about banks. This is about something that's in a totally different system and a lot of what we're putting together within this episode we've never seen in one place before. So I wanted to compile it from a bunch of different sources. That being said, if you do see something in today's episode that you think is an error, please let us know. We don't want to claim to know for sure what just ain't so.
(02:09): And really, are you sick and tired of hearing the same old conventional financial advice? We feel you we're fed up with the same old truisms that fall flat when you get into the unique opportunities and challenges of your specific situation. This show is all about bringing you historic wisdom around building wealth and practical insights on how to apply it to your journey. Not again, somebody else's journey. When conventional financial thinking doesn't get you to where you wanna go. You need wealth wisdom. So let's master wealth building together. I think to understand something best, you have to know where it came from. You have to know its origin story. And who doesn't love a good origin story? I mean, I do. I love origin stories. I mean, Amanda, you don't stick around for the long movies, but the origin story of Wolverine or all those fun things that, I love those things.
(03:05): I like a story where the characters change and that often happens in an origin story. They're going along humdrum and then there's a big change that happens and that's part of why they then become something totally different. And I love seeing that character development. I hate movies that have zero character development. But let's get back to life insurance. , start with a little history lesson. This is wealth, wisdom, financial after all. And we love bringing you historic wisdom. So I wanna take you back to the roots, the origins of life insurance and build from there. So of course we're gonna jump back into our DeLorean and if you don't know what that is, I mean haven't you're Not a child of the eighties, But jump into our DeLorean and we're gonna go to the Roman Empire Times ad time, right Early. Wait, wait, wait. Yeah. To understand the origins of life insurance, we had to go back that far. Almost 2000 years. Yeah. Whoa, We're going way Back. Okay, take me back, Brandon. Back then, they didn't have GoFundMe pages, those things where if somebody passes away and you know do this little, I dunno, I need money for it. Not that there's anything wrong with that, but people would often help each other cover the cost of expenses in funerals and burials. During that time they didn't have GoFundMe, but they did do that. Then they'd have to figure out who would support the widows and orphans left after the husband or somebody had died with young children.
(04:46): And so some genius back then came up with this idea of allowing families to join a group, a collective, a community, what they called a bural club, where some would pitch in a little on the regular or everyone that's part of this club would pitch in a little bit on the regular. So there would be come the store of money that could be used whenever someone unexpectedly passed away rather than everyone having to scramble to figure it out. Cuz it would often be unexpected. You never know when someone's gonna pass away. And archeologists have literally found records of the membership requirements and dues in order to join this kind of burial club. Going back to approximately the year 133, literally almost 2000 years ago, they found these archeological records. And it wasn't some company, it wasn't some government thing, it was just normal everyday individuals coming together and saying, we see this problem of everybody having to scramble when someone unexpectedly graduates and gets to go to the afterlife where we then have to figure it out. So why don't we set up a system, a way of figuring it out as we go so that it's never a burden and it's only a little bit saved. What is that? An ounce of cure is worth a pound of no, an ounce of prevention is worth a pound of cure. They were doing that way back then. That's some pretty cool, that's why I called it some genius that came up with this idea. Yeah.
(06:23): Well, and I wonder what some of those membership requirements were back in hundred and 1 33. Oh, I should have pulled out Archeology Magazine and looked it up. I'm sorry. I'll do that next time. Yeah, I found out cuz I'm just curious, what would I have had to do, give a goat or something? I don't know. In more modern times, the earliest known life insurance policy was issued in London in 1583. That is again, modern or life insurance policies, right? 1583. For some perspective, this would've been when William Shakespeare was in his twenties and just actually starting his career. Few things are still around and celebrated from the 1580s, but I guess two of them are Shakespeare and life insurance. So Shakespeare and life insurance are two things that we all know about that have been around since then. And from the late 15 hundreds, I must have said 18 hundreds, 15 hundreds, 500 years ago until the 20th century life insurance evolved. Different people added different things to it. Math got more sophisticated. They developed what are called actuarial tables and mortality rates. Those are the math used to determine premiums and death benefits. And those things got developed. Then they got codified, they got commonly adopted. So all life insurance companies were using the same kind of tables and rates and things. Early Americans even started life insurance enterprises when we were still colonies. Before we were in nation, we had life insurance enterprises
(08:12): By the 1900s in America, most Americans had, well, it's called Whole life insurance. They would buy a life insurance policy that not only protected their loved ones if they died prematurely, but would also provide a cash value they could borrow or borrow against to pay for weddings, buy homes, and eventually become a thing that they could use to buy cars because cars didn't come around until later. So again, we're thinking about a history long history of this stuff. So eventually they were able to buy cars with it. And then also some very cool people, some famous people, we've heard their stories of how they've used cash value life insurance to help their businesses survive a downturn in the economy, to grow their businesses, to start new realms within their business. Literally realms, remember that word. And even to start new businesses, For example, Mr. JC Penny borrowed from his life insurance policy to meet payroll. During the Great Depression, his employees were able to keep working rather than joining the long lines at the unemployment office, all because he had life insurance.
(09:28): Another place, another realm that so many Americans look forward to going to on every year and taking their kids to resulted because of life insurance and wouldn't exist today had there not been life insurance. In 1953, Walt Disney borrowed from his life insurance policy to start his first theme park. That was when the bankers thought he was absolutely nuts and would not give him money. He used his own life insurance policy to get started. Maybe the bankers back then were nuts because I bet you they're all wishing they had done that. Right. In 1939, max and Verta Foster borrowed from their life insurance policy to buy a farm in California and founded Fosters Farms. Foster Farms. So you might be able to look up Foster Farms and see that all over the place. And then my favorite story in 1995, just what is that now? Almost 30 years ago, Doris Kristopher borrowed from her life insurance policy to start pampered Chef out in the suburbs of Chicago, which she then sold to Warren Buffet a mere seven years later for a reported 900 million.
(10:48): Wow. Way to go, Doris. Yeah, these are just a few stories. I mean, I bet you there's tons. I know there's tons, tons more of business owners cuz again, using it for business is amazing. But also people who have used it for personal things, for maybe it's cars or maybe it's for real estate or other ideas. So you might be one of those stories. So life insurance has a long history dating back almost 2000 years. I mean, many improvements were made between the 15 hundreds and the 19 hundreds. But how we got to banking yourself and infinite banking is a major turning point in the history of cash value life insurance. And this is the topic of what we are talking about today. So we're finally getting
(11:43): To finally getting there, . Now, this turning point begins in 1964 when a young man who had formerly been a pilot in the US Air Force and then a forestry consultant, literally planning when was the proper time to cut down one part of a forest and plant new trees there. And then what next part of the forest thinking hundreds of years into the future to do this forestry work when this young man in his early thirties becomes of all things a life insurance agent. This man's name is Nelson Nash. Nelson brought his long-term perspective from forestry thinking hundreds of years into the future. And this clear 30,000 foot view from piloting, right, you're, he is literally above the earth looking down. Lots of pilots get this unique perspective on life and what our purpose and meaning is while they're flying and having that thinking time from that perspective. So he brought that long term and that high level perspective to life insurance and this unique perspective way of seeing things helped him innovate the possibilities of cash value life insurance in a way former innovators hadn't seen yet. And so he was able to stand on their shoulders and keep the industry moving forward and finding new improved ways to use these policies that millions of Americans had and still have today.
(13:14): Yeah, Nelson started sharing a specific way of using life insurance at seminars with families all over the United States. He called it infinite in banking. The basic idea was about getting the highest cash value possible as early as possible and helping the policy grow effectively over time. At the same time, we'll come back to how later, but let's continue the history for now and then we'll get back to how. So throughout the 1980s and 1990s, Nelson continued to share this concept throughout the United States. And many other life insurance agents started adopting that philosophy as well. Some added their own permutations to it. It became such that a life insurance agent in one part of the country might do infinite banking way differently than another life insurance agent, even if that person was right next door or just across town. You didn't know who was doing what. And there were a lot of these iterations and permutations of what infinite banking is.
(14:16): For example, some people think they can use other types of permanent life insurance like Index universal life to do infinite banking. When Nelson was clear in the fifth edition of his book, becoming Your Own Banker, that he never recommended IUL or Variable Universal Life through his entire career. He said that, and you can find that on page 39 of the book, to just not take my words, but go and see what he has to say about It. And so this was the state of the industry, lots of different people doing infinite banking in lots of different ways. In the 1990s when a woman comes into the movie now named Pamela Yell, and she was there searching for the best place to put her money, her and her husband together, they were looking, what's the best thing we can do with our money? And she actually was a coach of financial professionals. She would speak in front of rooms of financial professionals and help them learn and grow and become the best versions of themselves. So she really knew the players in the industry and she hired some of the best financial advisors in the United States and paid them a lot of money to work for her. Again, trying to find her the best place to keep her money and to grow her wealth. And they all ended up losing her money. And so she continued her search and she's continuing. And that's when she gets introduced to the independent banking concept and she starts working with a life insurance agent. They set her up a policy, seems like finally she's found the Holy Grail when it went south shortly later. And she realized that the agent didn't set it up correctly.
(15:59): So bringing her own perspective as a trainer and teacher, Pamela decided to take the infinite banking concept, the IBC concept, and codify it into a specific structure. And she found partners who could also keep life insurance agents accountable to not only learn the right and wrong ways to set up policies, but also to make sure they continued to do it the right way and not the wrong way. And because her codification and perfecting of infinite banking was so good, she worried about copycats and mutators and rightly so and so, she developed her own trademark, calling it Bank on Yourself. Still to this day, her books, her website, bank on yourself.com, are the very best ways to learn what bank on yourself is and how it's different from independent banking. We purposely did not show her this episode. She has not reviewed this. She's become a friend of ours. We wanted to be able to say that without you knowing we got her permission to say that or anything like that. She doesn't even know this podcast is being recorded right now. But we are gonna put one of our favorite links in the show notes along with a link to buy one of her books, the Bank On Yourself Revolution, where you can get all the nitty gritty details of why someone would want a bank on yourself policy, what it's supposed to look like and all those kind of things.
(17:23): And then you'll also want to connect with a bank on yourself professional to make sure that you get the right kind of policy specifically designed for you. And I will say one more thing about Pamela. There's been a lot of people who have rejected her work, they've rejected her contribution to the industry. And I really believe that those folks, when I try to honestly come to their critique, when I try to honestly read it and view it from an unbiased perspective, it always becomes clear to me that they haven't really looked into or openly sought to understand it. They haven't come at it from an open mind and an open heart to really get into it. So if you were to Google Bank and yourself or Pamela, and you'll see a lot of people who reject her work. They call her a fraud. They call bank and yourself a scam. I would invite you to look at her work in more depth with an open mind. And I think you'll find that those folks haven't done
(18:28): That well. And I do think some from our own experience, this whole thing has changed our life and made a big difference for us personally. And I've done it in an ethical way. At the same time, sometimes people are like, yes, but you're unethical or you've done this to get where you're at. I'm like no, we have not. We've done it in a ethical way that is helping people and being good to ourselves. So enough history, let's talk about right now. Here we sit at the end of 2022. Nelson Nash passed away in 2019. Pamela Yellen just turned 70. Happy birthday Pamela . Yeah. What does the future of life insurance look like for current and future generations? Cause again, we're a bit younger than them and my son is way younger, so I've been thinking a lot about him and this legacy. So what does it mean for the future generations?
(19:31): Yeah 2022. Is it 1982 or 1992 or even 2002? And so we wanna give you kind of the basics, the high level of what is banking yourself now that you hear that history. So you kind of know what to start looking for and where to exist in today's time. So currently there are four key criteria for what life insurance companies can actually be used to have true bank on yourself designed policies and to execute the system correctly. And they're very stringent criteria. They have to be a mutual life insurance company, meaning they're owned by the policyholders. Remember those burial clubs from Roman times where individuals that come together, these are individuals coming together and the policy holders are the owners of the company. It's exists for their benefit, first and foremost before any other benefit. So very important there for Mutual Life Insurance Company to be the number one criteria.
(20:36): Secondly, they have to be profitable for at least a hundred years straight. These aren't new companies just formed yesterday, or a ragtag group of individuals. They're generations that have come together and made sure that they're profitable. They've paid dividends to the policy holders every single year for at least a hundred years. Third, they have to get some outside determination that they're a strong company too. They have to be highly rated by third party independent rating agencies. And then finally, they have to have this strange term called a non-direct recognition. And this is all about when you want to use your policy to do the things of life or the things of business, how do you access your policy? What does that look like in a non-direct recognition company, you don't access your cash value, you access the general fund so that your cash value can still grow, get the same guaranteed growth, the same dividends as if you didn't touch it because you didn't touch it, you took the money from the general fund. So those are the four main criteria for the life insurance companies and how they have to exist in the world before we'll consider them for a bank and yourself designed policy.
(21:49): Part of why those requirements are so stringent is to keep the four key benefits of a bank on yourself. We want it to be tax advantaged. We wanna make sure that we are in a place that it is helpful for our future tax obligations and all of that stuff. We want guarantees. We don't wanna just hope that it's okay, but the guarantees behind those companies, it is insurance, by the way. So we wanna be able to make sure we are protecting our greatest asset, which happens to be us, right? And it is also great for financing. So using it in ways to buy those things like cars college, business more. So that's what I think about business and real estate. How do I create more assets? And we have a previous episode on this. What's more important than life insurance? I think it's been four episodes back that I totally recommend when it comes to financing,
(22:54): If you're keeping track there, that's an acronym. T G I S, tax Advantage guarantees backed by strong life insurance companies, insurance and financing, T G I F, the main four benefits of bank and yourself. Speaking of businesses, by the way, Brandon mentioned, loves to think about businesses here. Currently where we sit right now, corporations and banks are some of the biggest purchasers of life insurance. In fact, according to the independent banker, a publication of the Independent Community Bankers of America, I, cba I think is it's the acronym there. Here's what they wrote in a report bank, interest in bank owned life insurance. Boley has an acronym there. Boley has been surging in the past two decades amid what some describe as a perfect storm of market conditions. Two thirds of banks in the US hold bully assets. The cash surrender value of those policies totals, hang on your hat here for this total. Listen to this. Closely, 182 point to billion banks with less than 10 billion in assets have on average approximately 14% of their capital in bully. Those are some huge numbers to think about. Banks and corporations owning life insurance.
(24:24): Yeah, this is where I tell people a lot of times, don't just do what the banks tell you to do, what the banks do. Why do they do that? Maybe question that and kind of understand the need for financing the banking industry, and why would they have boldly policies, why they do that? So don't do what the banks tell you to do, what the banks do. And it's not just for the rich, but for everybody. And middle class Americans can do this, and I think in a lot of places should, because it'll help them build a better, stable foundation to do all kinds of other stuff in their lives. So middle class Americans, everybody should or could have the possibility to build this kind of foundation.
(25:18): That being said, it's not right for everyone. , there are some reasons that you might not want to bank on yourself. Policy based. Stay tuned for our next episode. We're gonna dig into that a little bit more. But for now, I've got something really important to say. As we look toward 20 23, 20 24, the 2030s, the 2040s, the 2050s, as we look toward our futures, I know sometimes the mortality tables are gonna be updated, life insurance is gonna get re-priced. In other words, yearly, the dividends can fluctuate up or down, sideways. Minor changes might make the numbers look better or worse than in the past when people are deciding whether they want life insurance or not, particularly this cash value type of life insurance. But I believe in my heart of heart. So there's one thing that I keep coming back to. Life insurance has been there for families from the Roman Empire to England in the time of Shakespeare to the early American colonies, through some of America's hardest times. World Wars, great recessions, huge inflation in the 1980s, real estate bubbles and bubble bursting all through the ups and downs of American history, cash values and death benefits from life insurance have been a bedrock. Foundational assets for generations,
(26:46): Right? So Come what may the powers that be in our world, whether we love 'em or hate 'em, the powers that be Congress, the Federal Reserve, large banks and corporations, they know that life insurance is gonna be what likely gets us through future hard times. They own life insurance policies that have cash value. They're leaning on this as their foundational wealth. Don't you think we should take a clue from them? And don't you think this will be what will actually be there for us, will be that bedrock that we can build our financial strategies on. That's for you to decide for yourself. But that's what I've come to believe through my own research, through learning about this for almost a decade now. We adopted our first bank and yourself policies back in 2013. We're really looking forward to celebrating a decade of owning bank and yourself policies next year. And the more I learn about this concept, the more I want to learn about it. But also the more certain I am that I made the right choice nine years ago, and the more certain I am that I'm doing the right work, the right type of effort to make the world a better place and to make sure come what may people have, foundations that aren't gonna leak, that aren't gonna let in the water, but that are gonna be there for them, that they can stand strong and take care of themselves and their families.
(28:13): Yeah, that's powerful, Amanda. So in conclusion, we invite you to consider what surprised you today. What did you think? You know that just ain't so, what was something you had never considered before? And if you currently have a bank and yourself design policy architected by a bank and yourself professional, what in today's episode brings you comfort for your future? Who might you share this episode with to bring them the same comfort insanity that you experienced and are experiencing and will continue to experience? So go ahead and share it with them right now. We'll wait while you're sharing this with your friend and with your children. Somebody there, right?
(29:01): Your parents, anybody? Yeah. And if you're now at this episode because somebody shared it with you, or you've been checking out this concept for a while and you're not sure if you want a policy or not, you currently don't have a policy. You maybe you do have some kind of life insurance policy, but you're not sure if it was the one created the specific way that p l yell, codified and called bank on yourself. We invite you to schedule a quick discovery call with us@wealthwisdomfp.com slash call, no obligation, no cost. We'll just answer any initial questions you have. Talk about what our process is like to decide if bank and yourself the right fit for you if we need to do something else or what all we might do together. Again, that's wealth wisdom, fp for financial podcast.com/call, C a L L. Even if you're not sure that you're ready for or a good fit for banker and yourself.
(29:58): That's not all we do for financial professionals. We help people look at a holistic perspective of their financial lives and decide some ways to move forward toward a brighter, smarter, more stable financial future. We carefully weigh each individual or couple's unique situation and goals before helping them develop a strategy. And we share expertise that relates to that strategy. So the first step to working with us in any capacity is to schedule that quick discovery call. You can do that in two minutes@wealthwisdomfp.com slash call. I'll put a link in the show notes so that you know can just click there, schedule a time, and be expecting our phone call Then. Awesome. Well, we look forward to chatting with you again soon, whether it's in a discovery call or on our next episode, where we are going to address some of the major pros and cons with banking yourself. It's not like Amanda said the right fit for everyone. So next week's episode is to help you decide if it's the right fit for you. And so next time, keep growing and protecting your foundational wealth so you're ready for the next adventure. Life brings your way and we hope you live long and profit. The topics presented in this podcast are for general information only and not for the purposes of providing accounting, legal, or investment advice on such matters. Please consult a professional who knows your specific situation.
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