Infinite Banking Savings System
How To Save $3,000+/Month with Infinite Banking (Full Breakdown)
In this post and video, I’m going to talk about what I call the ultimate financial tool, and a way to systemize your savings, so you can grow your wealth with less risk.
It’s not get rich quick. It’s a safe and predictable way to take control of your finances, using the Infinite Banking Concept and good old fashioned, whole life insurance.
My mission is simple to help you protect your family and keep more of your money. I’m here to help level the playing field for families and those who seek the truth. There’s always a new way to make money, but at the end of the day, it’s your family’s security and your legacy that matter. And I promise to help you protect what’s really important for you.
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Full Video – My System
***This video is purely educational and not intended to be legal or tax advice.
Save More with Life Insurance
Let’s talk about how you can save more money, and create generational wealth using the power of life insurance.
There are of course, many ways to save money. But I want to talk about how you can systemize your savings and grow your wealth. So you can use it while you’re alive, and pass it on to your family in a way that encourages stewardship.
00:01:28:29 – This video will build on the last one. I’m keeping it simple.
And my next video will be on Securing Your Finances So make sure you check them all out. Simple, System, Secure.
00:01:41:06 – The Basics
Some of this stuff may sound pretty basic, but it’s worth repeating because we get distracted.
There’s all sorts of ways and methods to make money. It seems like everyone online is pushing some new way to invest.
That’s why I want to make sure you have a solid foundation.
Savings vs Investing
Now, I don’t want to confuse investing with saving because they are entirely different and serve different purposes.
Each can result in drastically different outcomes, but they are both important.
Look, I get it… It’s nothing flashy. It’s just a good old fashioned, tried and true way to save money.
Generally, the money we save should be protected from loss, so most are willing to give up some of the growth potential for this protection.
Liquidity is also important because we want to have access to our money in case of emergencies and opportunities.
On the other hand, most investments are illiquid.
Accounts like IRAs or 401(k)s typically are locked up for 20, 30, maybe 40 years without access to the money. They’re government plans, with IRS rules meant to stay in an account until you retire.
Why People Invest
People invest money with the hope of gaining a return, a return on the investment (ROI). Of course, with this chance of a return. Is the chance of loss. Investing has risk.
What I’m talking about here is, investing in yourself first. And, saving into an account that you own and control. One that offers multiple benefits and actually reduces risk.
As Warren Buffett, who’s known as the world’s greatest investor, said. Don’t lose money.
George Clason in his timeless financial book, The Richest Man in Babylon, put saving at the top of the list.
“Money is plentiful for those who understand the simple rules of its acquisition.”
Number one, “Start that purse to fattening“. In other words, we have to save first. And we have to form the habit of saving consistently.
Systemize the Process
If we can systemize this process, make it automatic, then our savings can be repeated without thought.
Now that we have the basics out of the way, let’s talk about the account that we’re going to save into.
Most people think about a savings account down at the local bank. But what I’m talking about is an entirely different type of account.
One that helps you become the banker.
Think about how banks make money. They use our deposits and leverage them to make loans. I want you to think like a banker.
These accounts I’m talking about are actually whole life insurance policies. They are contracts. And the policyowner owns the contract.
Now let’s get into how the savings vehicle can work and why we use dividend paying whole life insurance from a mutual company.
Some of the benefits of this financial tool include:
00:04:46:29 Guaranteed Protection
Guaranteed protection as long as you stay current with your policy and pay your premiums as outlined in the policy contract. Then you and your family will be protected from financial loss.
This means in the worst case scenario, your premature death, your family will be protected by the death benefit.
And in the best case scenario, you live a long life. You’ll be saving for the future, financing your major purchases and protecting your legacy.
00:05:18:12 Predictable Premiums
Your premiums, you can think of them as deposits, remain level.
Unlike other types of insurance, which may change over time. These base premiums will remain the same over the life of the policy as outlined in the contract.
This means regardless of your age or health, the premiums will not change.
And by practicing IBC, you can even add more to the policy via a (PUA) paid up additions rider. To optimize the policy and stimulate cash value growth.
Nelson Nash, the creator of the Infinite Banking Concept (IBC) said, every time we start one of these policies, it’s like starting a business.
You may already be in business. And if you are, it’ll make IBC even more intuitive.
Or, you could be on the opposite end of the spectrum, and have a fear of business. But that’s okay.
00:06:15:17 Anyone Can Do This. Anyone can become their own banker.
By becoming your own banker, you’re both the consumer and the business owner.
00:06:26:11 The Grocery Store
In his book, Nelson Nash Makes the Grocery Store example. Because we all consume groceries,
Someone has to perform the distribution function in this scenario.
That’s why we save money in the first place, right? To have it for distribution later, in the future. Whether it’s for income later, or to transfer to someone else.
Starting A Business
You understand that starting a business takes time and money. It doesn’t happen overnight.
But this shouldn’t deter you, because time will pass anyway.
And that’s really the point. We want to save money in an account over time that provides liquidity, use and control of the banking function.
The Numbers
Everybody always wants to look at numbers. They want to make comparisons. So we’re going to dive into the numbers a little bit.
Now you have to start somewhere. And when we’re talking about life insurance we’re going to start with the death benefit. Then we’re going to solve for finance.
Sticking with our theory of simple, I want to stay out of the weeds. But we have to discuss the PUA Rider.
Now, I’m assuming that you have not read the book, Becoming Your Own Banker. However, if you want to become your own banker and practice IBC, the Infinite Banking Concept, you want to read this book.
Get it here > Becoming Your Own Banker
This is what you need to know, and it is a paradigm shift. It is a different way of looking at money and finance over your lifetime.
00:08:04:04 The Secret Sauce – The PUA Rider
So, what is a PUA Rider? It stands for paid up additions, and there are many names, every company has their own name, but it’s additional life insurance.
Additional life insurance rider, or even a short term PUA, all of these names. But keeping with simplicity, Nelson just referred to it as a PUA Rider in the book, paid up additions. And that’s what we’re going to discuss.
I’m going to read to you from some company literature, because depending on the carrier, they’re going to have different names and they’re going to call it different things.
Just understand that the PUA Rider adds value to your policy. It can help you boost and turbocharge (I like to call it), your policy. The cash value growth of the policy.
Now most policies have the option to have the dividends accumulate in the policy. It actually creates a somewhat separate policy. They keep it separate, and they usually show you separate in the illustration.
So the first thing is the PUA adds additional protection. The death benefit grows as well as the cash value.
The cash accumulates on a tax deferred basis. However, if you use this correctly, it will be tax free. It can be tax free to you, and it’ll be tax free to your heirs.
Whenever the company pays dividends, you’ll also earn dividends on the paid up additional insurance.
So every company differs, but flexibility is very important with the pua rider. So I like to work with a carrier that has a flexible pay rider. What does that mean?
0That means that you can contribute more or less year to year, or you can just keep it level depending on the mech or the modified and down contract guidelines.
00:10:11:13 What is a MEC?
Modified Endowment Contract (MEC) is an IRS term and was originally created in 1984 with TEFRA and DEFRA. Basically taxing the inside buildup of life insurance,, if you cross this limit.
We like to fund right up to this line and call it a Maximum Efficient Contract.
They came up with the MEC guidelines based on a seven pay premium. This has changed over the years with mortality tables and what not. So let’s stay out of the weeds to keep it simple, and just understand there is a limit to how much you can pay into a paid up additions insurance rider.
You might want to check out some other videos if you’d like to learn more about the PUA rider and how it works with premiums.
Just understand that it’s all premium. Whatever you put into a policy, whether it be base premium or pay premium, it’s going inside the policy.
And over time, your cash value and your death benefit will grow just based on the company dividends being declared and paid. And the policy itself will have a guaranteed growth and a additional insurance growth.
Financing
So let’s talk about finance. And the first thing that you must understand is that you finance everything that you buy.
You either pay interest to someone else for the use of their money, or you give up the ability to earn interest on your money. When you pay cash. Because once you pay cash, that money is gone forever will never work for you again.
But what if you could borrow from your system, your banking system, and so your money was used as collateral inside of a life insurance policy.
00:12:03:22 You borrow against that cash value, the collateral for finance. That way, your money inside the policy continues to grow over time.
00:12:16:10 The book Becoming Your Own Banker, demonstrates that your need for finance is much greater than your need for death benefit.
Take Control
What do you want? Do you want to be in control of your money? Do you want to control the banking function so you can keep this money in your pool of capital and keep it in the family?
So the whole idea is to recove and to recapture some of this money that you may be transferring away, often unknowingly and unnecessarily, to the banks and the financial institutions.
We transfer away money in lots of ways. We transfer our way money to income taxes. This is just another advantage of whole life insurance. Or life insurance over time can help you legally avoid some unnecessary income taxes.
Just like with inflation and just like with taxes though, we’re going to keep it real simple and just keep it basic.
Now, IBC isn’t about investing at all. You may already be doing that through your 401(k) or IRA, or some other type of investment.
What this is about is saving and systemize and your savings in a system that you own, you control. It’s a life insurance policy, a contract.
Now, this really is a major paradigm shift from what you may have been taught.
So the question becomes if what you were taught and what you thought to be true turned out not to be true. When would you want to know?
How Much Should You Save?
Why put a limit on your savings?
The average savings rate in America is less than 5%.
Now, maybe you were taught to save 10%. This is getting closer. So how could someone save 20% or 30% or even more of their income?
Well, you have to learn how to control your expenses. And one way to do that is by controlling the banking function.
If you could recover some of that money, then that might be important. So we’re going to look at savings efficiency real quick just to show you how much difference it could make.
So keeping with our theme of simple. I’m going to try to keep it real simple.
Let’s look at an example of savings.
So if someone has an annual income of $100,000 and they were saving $6,000 or 6% separate from their investment, right? So most people may be contributing the maximum to their 41K at work or some will contribute less. But this could be $10,000, $20,000.
$23,500 is currently the max. And why is that? Because the government (IRS) puts a limit on how much you can contribute.
In this example we’re not talking about investing. We’re talking about savings. This is over and above what you may be contributing to another plan.
So here we look at $100,000, $6,000 of savings. And let’s say that’s a very safe, modest account.
Maybe permanent life insurance? Cash value life insurance. And the return on that is say 3%. Or maybe this money is at the bank. It’s in a CD. Or money market, it really doesn’t matter.
Just understand if you’re saving $6,000 and the interest on the savings is $180. Well, then your annual expenses, what you spent was $94,000.
So what if we could improve on the efficiency of that? What if we could recover and recapture some money that’s being transferred away to taxes, interest or fees?
This, of course, would improve the efficiency, the savings efficiency. So you could save more or you could look at it as what your investment would earn otherwise.
So here’s what it would look like if we could just reduce those expenses that transfer money by only 1%. That would save in dollars $940. That’s the return equivalent. If you had your money invested, the $6,000, a 15.67%, let’s just call it 15%. That’s a huge increase. That’s more than you were earning. Otherwise, just in the investment with less risk.
So savings efficiency is a big deal. This can be proven by the fact that 15.67% of $6,000 is that $940
00:17:07:09 Savings Efficiency is Good Financial Management
I have other videos on this. If you are, watch some other videos, you’ll learn a lot more about that. But let’s talk more about the system.
Realize that banking is a process. It’s not about the product. It’s not about the life insurance. We’re going to utilize life insurance as the tool.
There are, of course, infinite ways to build a life insurance policy, and there are infinite ways to use it for financing. Hence the name, The Infinite Banking Concept.
00:17:In the book, Nelson talks about imagination, reason, logic and prophecy.
Your imagination and how you think will determine how you fund your policy over time.
00:17:56:29 The first rule of Infinite Banking is to Think Long Term.
So this may wind up being a system of policies. If you want to practice infinite banking to the fullest, to optimize, to maximize your banking system over time, you have to think long term.
00:18:17:09 The second rule of Infinite Banking – Don’t Be Afraid to Capitalize
Don’t be afraid to capitalize. What does that mean? It means don’t be afraid to put money into your policy. But only you can determine how to fund this.
The question is how much money do you want in your system, in your own privatized banking system?
It all boils down to affordability. And you don’t want to over extend yourself. But sometimes it’s good to stretch, to go ahead and pay yourself first, and commit to a premium.
But again, it’s about what do you want? Not what you need.You should know what you need and only you can determine that.
That’s the beauty of becoming your own banker. You can determine how you find your system. You can determine the premium. But once you commit to a premium, you’re committed to it.
Now, the advantage of most of these policies, depending on the carrier, is that the premium can be flexible. But, I don’t want to confuse this with flexible premiumm IUL indexed universal life, because we like guaranteed level premiums. And the PUA is what can be flexible.
So we use the paid up additions rider for flexibility. This can allow you to adjust your premium, put more, put less into the policy over time. And as you pay premiums, your policy will grow, guaranteed. And with the paid up additional rider, it will accentuate. It will turbocharge your cash value, growth and your death benefit.
Once you read the book Becoming Your Own Banker, things will become much clearer. So it’s important to read the book.This is just an overview of how you can create your own privatized banking system using IBC.
00:20:14:17 Over time, you can add. You can create branch banks. You can buy more policies.You may have some term insurance that is convertible to whole life insurance later on, so it’s important to get the amount right in the beginning, especially since we all know that our health can change over time.
00:20:36:20 As you get older, life insurance is harder to acquire because our health changes, so it’s important to get that amount right from the beginning and possibly hold some as term insurance that you can convert without evidence of insurer ability later on.
00:20:56:26 This is again why it’s important to choose a mutual company, because they have these types of policies. You can convert the term to whole life without any more underwriting and whenever you like, maybe five years, maybe a year, maybe ten years down the road.
00:21:12:09 Nelson said that this will be a system of policies.
You may also want to purchase policies on your spouse, your wife, your husband, your children, your grandchildren. As you accumulate more and as your wealth increases, or your income.
Windfalls
You may also receive windfalls over your lifetime.
Where will you put that money? If you have an outstanding loan, may pay the loan back in a lump sum. You could also start a new policy. You could convert some of the term insurance that I have discussed.
Windfalls may come in the form of an inheritance or a raise, a bonus, or even the kids growing up becoming adults and getting out of the house, getting off of the payroll.
00:22:03:19 The Capitalization Phase
Realize that these policies have to be capitalized, just like you would cap the laws of business. You want to capitalize your policy. By contributing premiums, paying premiums over time.
Regardless if you’re paying PUA or premiums, that’s totally up to you. They’re all premiums going into the policy.
This capitalization phase will be different for everyone depending on how you decide to fund your pass.
Normally this capitalization phase is at least five years. However, you can take loans earlier. I don’t usually recommend taking a long before at least the first year, but it could be just depending on how your policy is funded.
As you grow your system and have more policies, you might take these loans earlier, but you definitely want to set up a repayment schedule, if you take a loan/
Later in life, perhaps you have come to passive income time retirement. You may not have to repay a loan. It’s totally up to you. Maybe the kids have borrowed money and they will have a reduced debt benefit, a reduced windfall, a reduced inheritance when you’re gone.
Just remember to treat your system, your banking system, just like you would a traditional bank, and repay the loans and set up a repayment schedule.
Growing Your System
You can grow your system. And you can systemize this by bank draft so it comes right out of your checking account. This is after tax money. And once it’s in the policy that will grow tax deferred and it can come out tax free.
So just a short recap. You finance everything that you buy. You either pay interest to someone else for the use of their money, or you give up the ability to earn interest by paying cash.
Everyone situation is different. I’ve tried to keep it real simple for you. It doesn’t have to be complicated.
00:24:11:14 The Bottom Line
The bottom line is you’re accumulating money that you can use yourself, that you have access to. You’re systematizing your savings by creating a schedule.
Form the Habit of Saving
You want to form a habit of savings.
The longer a policy is in-force, the more efficient it gets. You participate in the earnings of the company in the form of dividends paid to you, the policy owner. And you are in control of the contract.
Remember, you are the asset.
00:24:42:27 This is just been a big overview. You’ll definitely want to read the book and reread the book the coming year own banker. It is a paradigm shift. It takes time. It takes effort. It takes commitment. But you can do this.
00:24:56:20 We’ll talk more about security and protecting your assets in my next video, so be sure to subscribe and click the little bell so you’ll be notified when our new videos.
If you’d like to schedule a time to meet with me, and learn how IBC could work in your life, use the button below>
I really appreciate your comments and questions. So comment in the video description, if you have any questions and let me know if I can help in any way.
Your financial advocate,
Barry Page, RFC
Infinite Banking Concept (IBC) Authorized Practitioner
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Order the book > Becoming Your Own Banker
*This text was transcribed after posting. There may be grammatical errors.
*Not financial advice. Results vary. Consult a licensed professional.