IBC Policy Design Part 1

In this weeks #tbt, Mike and Chris go into more details about the types of life insurance, why most people buy life insurance, and how Nelson, through his own struggles, came to realize the true power of whole life insurance. This part 1 of policy design does really give context to how Infinite Banking works and really challenges us to think beyond death benefit. Take a listen, heck, read the transcript, this one will have you clamoring for part 2!







Chris Bay:

Welcome to the Life Success & Legacy podcast. My name is Chris Bay, and I’m joined today with the founder of Life Success & Legacy, Mike Everett.

Mike, we’ve talked in previous podcasts about how Nelson came to discover that whole life insurance, if designed properly, can be an unbelievable tool for really privatized banking, and controlling your own finances and all that. So, what we’d like to accomplish in this podcast is to educate people about different types of life insurance, why whole life insurance is the tool to be used, and why is this type designed differently for the purposes of Infinite Banking? So to begin with, can you just kind of give our listeners a broad perspective on the different types of life insurance that are out there, and why people buy life insurance?

Mike Everett:

Well, traditionally, life insurance was bought for one reason. It was bought for death benefit. If you go back, I’m going to say 40, 50, 60, 70 years, there was really numbers of different kinds of products out there in the life insurance industry, but the only difference was the design of what was going on. Some people, if you go back to my grandpa’s era, what they did was they bought whole life insurance and they bought it for death benefit. What they planned on doing was, they just planned on putting money aside just like you would for a savings account, but they just stored money into a life insurance policy.

There were all kinds of products out there. There was a 20 pay life. That means that you could pay the premium for 20 years and then it was paid up for the rest of the time. There was life paid up at 65. So you paid the premium until age 65, and then the policy paid for itself. Then you had your ordinary life or permanent life insurance, and you paid the premium all the way up to age 99. Basically what happened was, in all of those policies, the traditional life insurance policy, which was bought specifically for death benefit, the policy endowed at age 100. Meaning the death benefit amount and the cash value amount were equal amounts. What they did was, they turned around and they gave you the cash and said, “Hey, thanks a bunch for paying on this thing and thanks for not dying.”

Chris Bay:

I know from my past history in finances, personal, we were following some teachings of Dave Ramsey. Dave is famous for encouraging people to buy term and invest the rest. So can you just talk about term life insurance?

Mike Everett:

Term life insurance is exactly like renting an apartment. You’re basically renting your life insurance policy for a certain time period. There are all kinds of time periods that you can do. You can do annual renewable term. That means that you pay the premium every year and every year the premium goes up. It’s called attained age. As you get older, what happens to the cost of life insurance? It goes up because you’re just a little bit closer to death. That’s annual renewable term. You can get 5-year level, 10-year level, 15, 20, and even up to 30-year level.

If you think about it from an insurance company standpoint, the insurance company offers term life insurance for whatever time period you choose. Five years, you pay the premium for five years and at the end of five years, the premium goes up and you choose another term. 10 years, 15 years, 20 years and so on.