How Insurance Works

Ep. 5 – The Reasons For Whole Life Insurance

Welcome to the Farming Without The Bank Podcast,
the show with a no BS approach to money. Hosted by a farm strategy expert and authorized
IBC practitioner. Join us as we get real and expose the flaws
of traditional financial institutions in order to help farmers take control of their finances,
create peace of mind, grow their wealth, and leave a legacy. Now here’s your host, Mary Jo Irmen. Hello there and welcome to today’s podcast. We are going to talk about why we use dividend
paying whole life insurance to teach the infinite banking concept, which is what we do and what
we use for Farming Without The Bank. And so a lot of people think that it is the
Farming Without The Bank concept. And as much as I love that idea, that is not
what it is. Farming Without The Bank is just a book that’s
going to tell you about how to use the infinite banking concept for farmers. And so I am not going to take the spotlight,
let’s say, and over shine R. Nelson Nash. So if you missed our last episode, R. Nelson
Nash is the founder of the infinite banking concept and he was my mentor for nine years
teaching me the concept that I brought to you, the farmer. And in that concept Nelson teaches us to use
dividend paying whole life insurance. And so the last episode we talked about what
infinite banking was. And so today I want to talk to you a little
bit about why we use this life insurance. And so before we even start, I just want to
set the record straight that everybody thinks they have whole life insurance, but not everybody
has whole life insurance. And I shouldn’t use the word everybody, that’s
a pretty general term. But people that have life insurance, that
is a permanent product, believe that they have whole life insurance because there are
a lot of advisors, a lot of life insurance agents out there, who believe that they are
selling somebody’s whole life insurance and they use the incorrect terminology. So, if you’re listening to this and you believe
that you have whole life insurance, I highly encourage you to go home, if you’re in the
tractor or out driving around or whatever, I encourage you to dig in that file and look
at the top of your life insurance policy and see what it says. There are only two kinds of life insurance. There is term and there is permanent. Term insurance is obviously just for a short
period of time. So, let’s say that you’ve got a 10 year term
or a 20 or 30 year term, that’s going to run out. But if you have permanent insurance, it is
intended to go your entire life. Intended to go your entire life. So, whole life, dividend paying whole life,
will go your entire life. Universal life, variable life, index, and
a mixture of those last three will most likely not last your entire life. They are a permanent product and they have
cash value, but that does not mean that they are a whole life product. It just means they’re permanent life. They are tied to the stock market and the
return of the market generates the premium, typically you are sold a premium as if you’re
going to Walmart, because guess what? When you went in to buy life insurance, that’s
what you wanted because that’s what everybody teaches you to have. “Don’t overpay those life insurance companies.” And so you under funded the policy which means
you did not pay enough premium. The market should make up the rest and it
doesn’t. So, what happens is eventually they take money
from cash value, which goes to supplement what you’re not paying, what the market did
not make, and those policies will lapse before you die. In most cases. And so, we are seeing a lot of companies being
sued for that. We are seeing places like New York, who they
actually have a warning on their website about universal life products. And so when Nelson wrote his book Becoming
Your Own Banker and started teaching the infinite banking concept, he has in his book, “Do not
buy these products.” Use dividend paying whole life. Dividend paying whole life means it’s with
the mutual company. So, you always want to use a mutual company
that pays dividends because now you get a share of that dividend when the company makes
money. Because if you write a life insurance policy
with me, guess what? You and I are in business together. We own part of this company and Nelson refers
to the life insurance company as your new bank and you being part owner of the bank. That is why we use dividend paying whole life
because we want a share of the profit. We don’t want to just always work for somebody
else. We want a share of that profit and with dividend
paying whole life we can have that share. These companies are extremely stable. The majority of mutual companies have been
around far more than a hundred years. The companies that I work with are close to
140, over 140 years. There are some companies out there at 150
years. Just because it is a mutual company does not
mean it is always a correct company to use based on the flexibility of payment. So, when we’re using whole life insurance,
we have some flexibility of payment. We can put a rider on the policy that allow
us to have instant cash value, that will allow us to have a faster cash value growth. So, for those of you that have read my book,
you can see that we break even in year seven or eight for a non tobacco user. If you’re a tobacco user, I’m going to say
probably closer to year 15 but we can still do it. It’s just going to be a little bit longer
because of the tobacco use. However, we have the flexibility with that
writer to be able to have instant access to cash. A lot of people are under the assumption that
whole life is an expensive product and we don’t have access to cash right away. Well, if we don’t have access to cash, we
shouldn’t buy it because it’s a bad product and it’s not a bad product. It’s just a longer process to get access to
that cash. It’s still a great policy. I run across a lot of people that have good
traditional whole life insurance. They’ve got cash value and they don’t even
know that they could use it. And so they read the book and then they call
and then we start using that policy and I try to help them along the way. Now they were putting small premiums in because
that’s what they were taught to do. So in addition, we probably will start another
life insurance policy. But at the end of the day, great policy. Use it. Don’t ever counsel it. Don’t let somebody talk you out of it. I just talked to a couple the other day and
her dad had a whole life insurance policy and he canceled it. Canceled it. Why would you want to cancel it? And then you have to pay tax on any of the
growth when you can just borrow against it income tax free. So, that’s kind of silly. But there are people out there giving that
advice. Cancel that policy. You don’t need it. You’re debt free. What do you need that life insurance policy
for? My question is why would you not need that
life insurance policy? You’ve already paid into it for maybe 30,
40, 50 years. Why would you cancel it? You put a bunch of money there. Yeah, you can get the cash value out, but
my gosh, you’re buying death benefit for pennies on the dollar. Why would you cancel something like that? That doesn’t make any sense. Especially when a traditional whole life takes
that long to really maybe get going. So let’s use it. Let’s keep it going. Why would we stop increasing the value of
that when we don’t have to? And so that is a big reason why we use dividend
paying whole life. In addition, probably the biggest reason is
because we have liquidity control and guarantees. If we have money at the bank, it’s a little
bit liquid. We can go into a savings account and we can
get it whenever we want, but we don’t have any guarantee that that money is going to
grow unconditionally. So, in a whole life insurance policy, we have
a guarantee that we can borrow against our money and we can still earn interest on it
while it’s being borrowed against. So, we have uninterrupted compound interest,
but we have liquidity of it. If we put that money in a CD that returns
a little bit better interest rate. Right now I talked to somebody, they’re getting
2.5%. Wow, banks for really coming back up with
that interest. And so you can get two and a half percent
at the bank on a CD and then you can go to the bank and borrow money from the bank and
use that CD as collateral so you have uninterrupted compound interest. But that CD is not liquid anymore. You can’t have access to that money. When we start putting money into a dividend
paying whole life insurance policy that’s structured correctly, guess what? We have access to money in seven to 10 days. Some companies, 30 days. Company that I use, seven to 10 days. So we’re putting money to cash value. 75% of your premium is going to go to cash
value and it’s going to be liquid, so you have control of it. You can use it for operating, you can use
it to buy seed, feed, chemical, fertilizer. I don’t care if you go on vacation with it. It doesn’t matter to me. It’s not my money. It’s your money and it’s your liquid money
and you can use it for whatever you want. You can pay it back whenever you want because
we have control of that money. We have control of the payback. We have control of what we use it for. The life insurance company does not care. They’re a really nice bank. They’re not going to ask you what you’re going
to use that money for. They’re not going to ask you when you pay
it back because they’re going to have death benefit as collateral to that loan. So, there’s some guarantees on the life insurance
company’s side that you’re going to die. You’re going to die. That’s a guarantee. Nobody is going to live forever. So, now the life insurance company has a death
benefit as collateral to your loan. So, you can pay it back however you want. You just have to be honest, like we talked
about in the last episode. It’s not free money. You just have to be an honest banker and you
have to pay yourself back. You can’t just take free money and run. During your life while you’re still operating
your farm or ranch, whatever it is you’re farming and ranching. You should pay that back at retirement. That’s a whole different strategy. But during your working years, we’re going
to want to see the ins and the outs there. But you also have the guarantees that that
policy is going to grow at a guaranteed rate. Now, the dividends are not guaranteed, but
the majority of these mutual companies have paid dividends for well over 110 years. So, why would we be led to believe that they’re
going to stop paying? Most likely they’re not. So, it is a absolutely fantastic tool that
we can use to grow our wealth, borrow against it, have income tax free benefits, and then
leave a legacy to the next generation with the death benefit. And that is a huge piece that we are missing
inside of the farming industry right now, as state planners are not including whole
life insurance in the estate plan. They might put some term in there because
it’s cheap. They might put a universal life policy in
there because they don’t know better. And then those policies collapse and somebody
isn’t going to get any life insurance. So, is there a better tool? I don’t know of one. If you know of one, please email me, message
me on Facebook, let me know of a better tool than life insurance where you can have access
to your money while you’re alive to use it and then upon your death, your heirs get a
death benefit that you bought at a discounted dollar. If you can pay 40 cents for every dollar of
death benefit that goes to your heirs income tax free, don’t you think that will make it
easier for them to farm? They might want to stay on the farm. What could have been done for you had somebody
done that for you? Somebody has to start that process. Why not you? However, it is a great tool to leave a legacy. The legacy does not have to be cash. The legacy is the farm that you worked so
hard to build. So, why not leave this amazing legacy for
your children or whomever is going to take over your operation, leave this great legacy
for them that they have an opportunity to expand. They have an opportunity to take over all
the operating costs. Whatever it might be, they have a great opportunity. And so why in this concept of infinite banking,
are we using whole life? Because of all that awesomeness. And let me tell you, let me just be very frank,
I was pretty sure the people that shared this with me were going to jail. I was almost certain. I was really torn. I was excited and I was thinking, “Oh my God,
this is amazing. I hope that this is true, but I’m pretty sure
these people are going to jail. Holy cow. If this was really true, why didn’t I know
about it?” And so instead of just saying, “Yeah, okay,
whatever and walking away, I dived in deep and read five books in six weeks.” I could not get enough. And I thought, “Well my goodness, if people
are writing books about it, it must be true, right?” I mean, otherwise they’d be in jail, and they
have these books out there. But these books you can’t buy at Barnes and
Noble. You have to buy them from the people directly,
so it still could be a scam. Because nobody’s got their books on Amazon
or Barnes and Noble and even 10 years ago, I don’t even know if I had Amazon, let’s be
honest. We’ve come a long way in 10 years with Amazon. Anyway, I read all these books, took my life
insurance exam and thought, “I’m teaching this stuff. This is absolutely crazy.” And then I was still leery. I was still leery for about six months until
I really saw it working and it is absolutely a hundred percent true. You can go to your insurance website for your
state and you can see, you can borrow against cash value. You can see what these whole life insurance
policies are. You can see all of that. It is a true statement. You can use life insurance. It’s a fact. You can do it. However you have to do it correctly. And Nelson talks about in the book that it
needs to be dividend paying whole life, and I have seen hundreds of bad policies. I have seen far more bad policies than I’ve
seen good policies and I’ve seen bad policies with good companies and I don’t want to name
any names because I’d probably get in trouble and I don’t like getting in trouble. However, there are good mutual companies out
there that are over a hundred years old selling shitty universal life policies. It is unbelievable to me. They have an amazing whole life product and
people come to me and they have a horrid, horrid permanent product regardless if as
universal or variable, and it’s fallen apart on them and nobody has reached out to them. Nobody has talked to them because most life
insurance agents don’t survive in this industry past a year or two. So, they sell all their friends and family
a policy and then they go on and go someplace else and now you don’t even know who’s servicing
your policy. And so make sure you have the right kind of
life insurance. And I do it all the time and I look at life
insurance policies for people. If it’s a great policy, kudos to your agent. I’ve seen them. Fantastic. High five to your agent. If they’re not good policies, I’m going to
tell you they’re not good. If they’re good, I’m going to tell you they’re
good. But if you want a third party perspective,
let me know. I just did this for a friend of mine a few
months back and she doesn’t love her life insurance. She does not love it. Looks at it as an expense. They have a ton of money in there and they’ve
had it for a long time and they were sold amazing policies. They weren’t structured for cash value growth,
but they were sold amazing policies 20 plus years ago. Oh my gosh. It was awesome. Awesome, awesome. And she still has her agent and everything
is good with her. It does not happen that often. But I am happy to do that and no, I do not
charge for that. That is just something that I just don’t want
you to be sitting out there with the wrong kind of policy. I don’t want you to get close to death and
go, “Oh, guess what? Now I got a letter in the mail and my premium’s
going to be $20,000 a year. Or my premium’s going to be $100,000 a year.” I’ve seen those policies. So, don’t get stuck in that situation. Make sure that you have the right kind of
policy. Understand why we use dividend paying whole
life with the infinite banking concept. They go hand in hand and it all has to be
done correctly. That is, again, why you want to use a certified
infinite banking practitioner, which I am, in order to set these up correctly. In order to understand the concept and understand
what we’re trying to do inside the policy. Not just anybody can do that. It’s nice that they think that they can, but
they can’t because who are they hurting in the end? You. And it’s your money. I’ve had two people come to me, just recently,
who have friends and family that sell life insurance. But they said, “It’s my money. I want to make sure that it’s done correctly.” And kudos to them because that is not an easy
thing to do. To say, “You know what? This is important to me and I need to make
sure that I’m working with a practitioner, a certified practitioner that understands
farming, that understands infinite banking.” So, there you go. I get on my soapbox a little bit sometimes
guys, so just bear with me. Bear with me. This is one of my little soapboxes because
it really, really affects me when I see a bad policy, the policy is falling apart, for
somebody that is uninsurable and doesn’t have the money for more life insurance. That is not a good day in my books because
I have to be the bearer of bad news and tell them that they’re going to have to die. I don’t want them to die and I hope that they
live forever. But in order for this policy to pay out, this
is the day. You have to be 70 years old. After that, it’s not going to be there and
a lot of times it tells you that right on the policy. So make sure if you are using the concept,
that you are using dividend pain whole life, that it is set up correctly and that you have
a certified practitioner. If you have not gotten my book, you can do
that You can get Nelson’s book, becoming your own
banker on as well. So, I hope that this enlightened you a little
bit about why we use whole life insurance, what the difference between different life
insurance is. If you have questions or need help, you know
where to find me. You guys have a great day. Thanks for listening to the Farming Without
The Bank Podcast. We hope today’s episode is inspired you to
take control of your finances in new ways. Don’t forget to check out our website,
and engage with us on our Facebook page, Farming Without The Bank. Join us next week as we smash more financial
myths, empower you to accomplish your financial goals. Like the sound of Farming Without The Bank
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