(00:04): Pretend for a second with us here that you have a 10 year old child that you drop off at school every day Monday through Friday. And let's say you find out that every day after you drop off your child as they're entering the school grounds, there's two bullies at the gate that steal their lunch money every single time. What do you do? You can't give your child extra lunch money because then the bullies are just gonna steal that too. You can't give them no lunch money cuz then they're gonna go hungry. You can't switch and send them with a lunchbox because the bullies are just gonna steal the lunchbox instead of the money. You might start to think that maybe you choose a different entrance to the school grounds, maybe even choose a totally different school. Now what does this have to do with the topic of today's podcast? Keep listening to find out. Hi, I'm Amanda and welcome to Wealth Wisdom Financial podcast, episode 122, infinite Banking and Bank on Yourself, pros and Cons.
(01:06): Hey, and I'm Brandon. Now, when Amanda first told me the bully scenario that she just went through, one of the first things I thought of was, well, I would park the car and go into the principal's office and tell them to do something about the bullies. I mean, I'm an eight on the engram. I would just go for it right? Then she reminded me that if these are wealth bullies and these bullies are part of the financial system, then the principal or the powers that be probably know what's going on and might even be supporting it. I tend to actually agree with her on that and can only think of choosing a different location or a different gate to get my child into school or like we said, aka engage with the financial system without these bullies being part of that situation. Our mission with today's episode is to help you see who are the bullies of the financial system and how you can tell them apart from other options where you get to keep your lunch money and not somebody stealing it from you.
(02:16): So are you sick and tired of hearing the same old conventional financial advice? We feel you we're fed up with those same old truisms that fall flat when you get into the unique opportunities and challenges of specific situations. This show is all about bringing you historic wisdom around building wealth with practical insights on how to apply it to your journey when conventional financial thinking doesn't get you where you wanna go, you need wealth, wisdom, let's master wealth building together. Now, a bully is a person who habitually seeks to harm or intimidate those whom they perceive as vulnerable. The bully is to seek to harm, intimidate or coerce someone who is perceived as vulnerable, like as bully and bullying. If you've been around the financial industry for very long, you already know it's ripe with bullies and with bullying, bullying. Now some in the industry are even famous for calling other people idiots or stupid. You know who they are. Others have a big red denied when someone brings them a financial problem to solve. And so I hear it in those shows.
(03:41): You know who these people are. What we wanna do today by way of sharing the pros and cons of infinite banking and bank and yourself is to compare and contrast them with an alternative philosophy that is promoted by a lot of the financial industry, including those two folks that we just talked about. It's called buy term and invest the difference where instead of buying whole life insurance, you buy term and then you invest the difference in the premiums. You can decide which one seems more like the real bully of the financial industry as we go through today's episode. But before we jump into this comparing and contrasting, we want to give you a very helpful reminder, even if sometimes you feel vulnerable, you should never, ever accept being harmed, intimidated, coerced, or any other form of bullying. When you're seeking financial wisdom, counsel advice or allyship. If you ever feel harmed, intimidated, coerced, or any other form of bullying when speaking with a financial professional, know that there are plenty of other fish in the sea and some of those fish are ready to empower you, to teach you, to bring you to a place of true wealth wisdom.
(04:55): Now also, a quick refresher in case you missed our last episode, which you should totally go back to and listen to, right? It's Infinite Banking and Bank on yourself, some history of it, and it's based on a modernized way to use whole life insurance to reclaim the banking function for everyday Americans. Now, to do bank on yourself, you must use a very particular, specially designed whole life policy with only a select handful of companies that meet the rigorous criteria and standard standards. And again, go back to the last episode for more on those criteria and the history of these concepts. It'll be linked in the show notes. Okay, now let's get to the comparing and contrasting. There are actually four major criticisms of whole life that the people that advocate for by term and invest the rest, they have these four main criticisms of whole life. So we're gonna use those as a way to compare and contrast the two strategies. Brendan, what's the first one?
(06:01): Yeah, the first one is that cash value grows too slowly. And it's something I've heard most recent from a friend as he was talking to me and saying, yeah, this happens. And I said, I don't think so. Yeah, I hear this at least weekly when we're looking at banking yourself designed policies with folks that the cash value just grows way too slowly. And the first thing I love to remind folks about is that it's not about the rate of return. If you're looking at the average rate of return, I think you're looking in the wrong spot because as we've talked about previously on this podcast, you could have an average 8% rate of return and still lose money. We've got the YouTube video where we prove it. If you don't believe us linked in the show notes, be sure to check it out how to get an 8% average rate of return and still lose money.
(06:56): And with that person that mentioned it to me is that you don't have any cash value for four years. And I was like you're wrong. It's actually definitely different and where you're listening is different. Yeah. Just to make just tolar, hold on. Just to clarify what you said, the no cash value for the first few years or several years, it's true of more traditional whole life insurance historically speaking but with a true bank and yourself design policy, you do have cash value typically day one. But let's just pretend for a second that the cash value increase is the equivalent of only 3% per year after 30 years and over those same 30 years, the stock market gets 7%, a true 7%. Again, we're just pretending not talking about volatility, we're just saying, Hey, let's try and make it equal. Which would you
(07:54): Pick? Now, most people if they thought, okay, if I know for sure I'm gonna get 3% over here and I know for sure I'm gonna get 7% over here in this pretend situation, most people are gonna choose a 7% the stock market. But here are a few reminders. Here are a few reminders you're gonna need to make some major expenses, major purchases over the next 30 years. Are you gonna sell the stocks when they are down when you need the money or want the money for these major purchases? Would you rather have that consistent up every year and not destroy the compounding because you still need to live your life? In other words, how much of you of your cash do you want accessible? How much of your wealth do you want accessible whenever you need or want it so you can enjoy your life now? And how much are you willing to tie up in a long term stock market strategy, which is what these talking heads are talking about. They tell you to buy and hold to hold for the long term to buy stocks you plan to hold for at least 10 years, if not 30. So remember that's what we're really comparing here is what they're advocating versus what banker and yourself advocates for.
(09:01): And in this case, I'm speaking to some of those younger people too that they're jumping in to this, I get 30 and 20 and there are a lot of major expenses. There's vacations, there's cars, there's medical needs, there's home repairs, they're helping children transition to adulthood, helping yourself transition to adulthood and so on and so forth. I think most people underestimate just how much money they spend outside the usual monthly bills. So if you wanna learn more about that, we have an episode that we titled What's More Important than Life Insurance. So again, check out the show notes and there's an episode straight there for that one. Also, please remember that access to your money doesn't take away your options. You could use policy loans to invest in the stock market, real estate businesses that you wanna start and more. You want to be smart about any kind of investing and use of policy loans, but you at least have the option to do those things to grow your wealth in a stable way.
(10:12): So to kind of recap this, when we're trying to look at rate of return, we kind of feel like we're comparing apples to oranges that it's not a true fair comparison. First of all, there's volatility versus true compounding. We believe a much better comparison. Is your safe money account, a savings account at a bank or a money market account? Where are you putting the funds that you want to use over the next 30 years? And then use that comparison with the numbers that you might get when you're looking into a bank and yourself designed policy. When you start adding up the benefits of the uninterrupted compounding, the death benefit and more. We haven't found a safe money account that beats true bank and yourself designed whole life. And if you think you have one, please reach out to us and let us know. We'd love to hear about it for now, we'll leave you with the thought that as you're building wealth, I think most would agree, you don't want a hundred percent of your wealth in risky assets. You need some foundational wealth. You need somewhere that's less risky that you can count on no matter what's happening in the economy at large or what's happening in the stock market, what are you gonna do with those funds? And that's really what you wanna be thinking about
(11:29): Now onto the second criticism of whole life that those bullies love to talk about, that level death benefit that they say it doesn't ever build up or grow, right? Yeah, and we have to remind you, this is very much true of most term insurance. You set your death benefit day one, you pray your premiums for the duration of the term 10, 20, 30 years and the death benefit stays the same, plus at the end of the term, you lose everything. The premiums that you paid, the death benefit, all of it. It's like renting a house, but you don't even get back a deposit when you move out. Well again, some traditional whole life has a level of death benefit. The way bank of yourself design policies are structured. The death benefit can increase through several factors and often as we build them it does. Yeah, my very own first policy I looked up the death benefit this week to prepare for this episode, it's increased by over a hundred thousand dollars since I started it in 2013.
(12:35): Now again, another thing that these bullies will say is that they only pay the death benefit and you lose the cash value. The life insurance is just out to get you because they do not pay the cash value and they only pay the death benefit. Yeah, they're trying to bully eyes. The life insurance company with that statement. Now remember I just said we're gonna start with my own example here first and then we'll break it down. I just said my death benefit has grown by over a hundred thousand since 2013 when I started. If I had not woken up this morning, my family would be receiving more than my initial death benefit, plus the cash value I've built by a lot and I have a very relatively small policy because remember when I first started I was living off the tips in a tip jar of the coffee shop that we owned. Yeah, that was a challenging time to start those policies, but it was worth it, Totally worth it.
(13:34): The other thing I think it's important to point out is that most term policies never actually pay the death benefit. According to a Penn State University study, 99% of all term policies never pay out a claim. Sometimes they don't survive the term, but more often because they let the policies lapse. Now this next part is pure conjecture, but I know we all go through times in our lives that are hard and I can imagine seeing term life insurance as a luxury in that moment and stopping my payments or not following up in the, if the premiums get rejected because they aren't funds in my bank account, it's in those times when I'd much rather have some cash value to pay my premiums for me and keep my life insurance. Plus I could use the cash value to pay other bills too. And we have done that, and I'm not just saying this, we had one of those times in the last nine years and we were super glad we had saved money in the cash value to get us through it, right? Keeping the project protection for the baby that we learned we were having during that time. So we had a challenge and we found out we were pregnant and at the same time, because we were able to use this, it didn't interrupt our compounding and we are so much better off because of how the policy was designed for
(15:07): Us. Almost all of us go through at least one of those really challenging financial times within our lifetime. And we know some of you are listening are going through that kind of time right now. First and foremost, our hearts go out to you. Please reach out to us and we'd love to give you a boost if we're able to along your financial journey, even if it's not the right time to choose a financial strategy for building wealth. There are plenty of things that you can be doing to get closer to being ready to choose your wealth building strategy. Keep your head held high and keep asking for what you need from God, from the universe and from allies like us. Now the next one I get really fired up about and it's when those bullies come out and say, oh, those life insurance guys, they're just making way too much money. Their commissions are just way too high and you are just stupid for doing that. I literally watched a video where they said that and I'm like what? Yeah, where do we even start with this? Branded commissions are just too high. Where do we start?
(16:15): Yeah. First of all, for a true bank and yourself design policy, the bank and yourself professional takes a 50 to 60% commission cut compared with the average life insurance agent. So right then, and that's why there might be not be a whole lot of us, we take a commission cut from day one, like who on the other side is just saying, Hey, I'll take a commission cut. Well, second of all, we believe you do need to look over the long term to really see the impact of commissions compared with term costs and asset under management fees, fund fees, all the different things involved with investing with whole life insurance. The commissions go down over time, at least all the whole life we've experienced in our careers so far. And as consumers with asset under management and other investment fees, they actually go up as you have more money that's going into your account and you're building that paper wealth. And don't forget that choosing a fee free investment account still has a cost. We discussed that in one of our previous episodes earlier this year. How to stop overspending without Budgeting. We'll put the link in the show notes so that you can find the truth behind the no fee investment accounts in that episode.
(17:33): Third, who is paying the commissions or the fees with life insurance? The commission is paid by the life insurance company and does not come out of your cash value with investment funds. The fees are paid by you and destroy the compounding effect of your money. So there's again, compounding is being broken where this system, it is not. Plus, don't forget if your money is tied up in a long term investment strategy of stocks, bonds, mutual funds, EFTs, and even real estate, you're likely to be paying financing costs to get through emergencies and take advantage of opportunities. Again, go back to that episode we did what's more important than life insurance for more about how important it is to keep access to your cash when you need it or want it for an opportunity. So those are the main four critiques of whole life in general and how we would talk about how bank and yourself design policies stack up compared to by term and invest the difference. What we need to do now is take you back to the 1980s where it all started,
(18:46): Where kids are still carrying lunch money in their pockets. back in the eighties now while Nelson Nash was crisscrossing the country teaching about infinite banking, and as we described in our last episode, which we should totally check it out, what we wanna do is tell you about the other really clever marketers and sales people who are knocking on doors all across America and talking to average Americans. So they'd knock on the door. Yeah, they would go on the door knock and say, do you own life insurance? Whole Life insurance? And if yeah, the person said yes, they would respond with something like, you're paying way too much for whole life insurance. Can I show you how to save money on your premiums? Then they would proceed to pitch them to by term and invest the difference, and then who's gonna sell them the term insurance and help them invest? The person who knocked on the door and got invited in. Of course, these clever salespeople were so successful they built one of the biggest life insurance sales forces of the 1980s and also grew another company that would of course do the investing side.
(19:54): Yeah. I wanna follow up with something that Brandon just said there, slight history, side note here. They had two different companies and here's why back in, and I'm not a legal scholar, this is my understanding of it. Those who study congress and how laws are made, you can check me on this, but back in 1933, Congress passed what's called the Glass Steagall Act. Remember the Great Depression? They wanted to protect Americans from some of the behavior that was happening in the 1920s. So there was a bunch of acts that were passed during the Great Recession and 19 33, 1 of those was the Glass Steagall Act.
(20:30): That was a great after the Great Depression, not the Great Recession, Oh, I'm sorry, did I say that wrong? My bad. Okay, 1933 way back. So one of the things that this Glass Eagle Act did was separate banking, investing and ensuring a bank could not invest their client's money and they also could not underwrite insurance. An investment firm could not allow customers to do banking or underwrite insurance, and an insurance company could not allow customers to bank or invest. In the 1980s, this act was still in force, so these sales people were in a kind of gray area, technically representing two different companies, an investment company and a life insurance company, but they were merging the two concepts, insurance and investing in a way that was borderline, if not entirely illegal. Now, in 1999, the Glass Eagle Act was repealed, so that's why you see today some of the same companies will offer banking, investing and or insurance, and they kind of offer all of them or some of two of them at the same time.
(21:36): Now today, you can decide for yourself if the repeal was good or bad. Well read these couple sentences from Investopedia on the topic and then what they said is, after the repeal of the Glass Act, commercial banks resumed taking on risky investments in order to boost their profits. Many economists believe that this increase in speculative and risky activities, including the rise in subprime lending led to the 2008 financial crisis. Now that's investopedia and we'll have again a link in the show notes for that. Yeah, let me rephrase that before you move forward cuz this is really important. Basically what the invested Ds saying that many economists believe is that because banks were able to invest and take more speculative, risky behavior and because they could merge the two together, that's what led to the Great Recession and insurance companies were a lot slower to adapt. After the Glass Eagle Act was repealed, we had hundreds of banks that failed During the Great Recession in 2008, there was only one life insurance company that failed that went bankrupt, and it was a small little Rin repeat Inc. Life insurance company in Texas that would've never qualified for bank and yourself anyway, so that there's real world consequences to this act for you history nerds. You like people that love advocating for laws to be passed. Hi, I think we should totally be talking about this more. Okay, I'm gonna get off my soapbox. Yeah, take us forward, Brandon.
(23:18): Yeah. In true wealth wisdom confession, we invite you to consider the historic roots of whole life as we shared it in our last episode that has been modernized to become infinite banking and banking yourself. Then consider how by term and invest the difference is a more recent phenomenon that was borderline, if not downright illegal until 1999. And enough history here. Let's come to today. I was just watching a Shark Tank episode earlier this week and there was this inventor on the show who had a company with a bunch of different products, all like in the same industry or serving the same customer, but a bunch of different products. Spoiler alert, she did not get an investment because the Sharks accused her of Inventor I, she needed to focus on one product perfect, it make it successful as it was, her business was not investible. Now, we're told when we go into business as entrepreneurs, one of the most common pieces of advice out there is to focus. It's actually turned into an acronym. Follow one course until Success F O c US Follow one course until Success. Even in my certified Financial Planner study materials, they encouraged us to find an area of focus to specialize so that we could serve our clients best. We share this today to say, if you're at all intrigued by what we've talked about, make sure that you evaluate a bank in yourself designed policy with a true bank in yourself professional. You can either connect with1@bankinyourself.com or with us@wealthwisdomfp.com.
(24:56): Specifically, we invite you to schedule a quick discovery call with us again@wealthwisdomfp.com slash We're happy to answer any initial questions you have and talk about our process From there. We now, today we only covered four of the main criticisms, right? We could go on and on with questions criteria and things to consider when choosing what financial strategy is gonna help you accomplish your unique goals. So have another criteria you'd like to banter with us, then reach out to us. Let's schedule a chat, so just go to wealth wisdom fp.com/call And even if you're not sure if you're ready for or a good fit for bank and yourself, cuz it's not a good fit for everyone. It's what we specialize in, but it's not all we do. We carefully weigh each individual or couple's unique situation and goals before helping them develop a strategy and sharing our expertise as it relates to that strategy. The first step in working with us in any capacity is to schedule that quick discovery call, and you can do that in two minutes@wealthwisdomfp.com.
(26:09): Now, we look forward to chatting with you again soon, whether it's in that discovery call or in our next episode when we're going to round out the year with an episode about building your wealth creation system. Hit that subscribe button so you don't miss how we've combined several concepts and systems to create our ultimate money control dashboard. Yes, we have a money control dashboard. Until next time, keep building and protecting your foundational wealth so you're ready for the next adventure. Life brings your way. We hope that you live long and profit and never get bullied again. The topics presented in this podcast are for general information only and not for the purposes of providing legal, accounting, or investment advice on such matters. Please consult a professional who knows your specific situation. Also, a special thanks to all we've learned from Pamela Yellen, the trademark owner of Bank and Yourself. We did not get her permission to create this episode, and our words are our own opinions, not hers. For her specific information and for the best information you can find about bank and yourself, visit bank on yourself.com and if you've listened this far, we know you are very serious. Book a call with us. Mention that you'd like to get one of Pamela's books and we'll send you one right away. We'll even cover the cost of shipping. Go to wealth wisdom fp.com and schedule that call now. We look forward to chatting with you soon.
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