MONEY INSIGHTS INTERVIEW – How To Use Infinite Banking To Supercharge Your Investments

Welcome to the Next Level Income show where it's our goal to take your income, your investments and your life to the next level. I'm Chris Larson.

And I'm Caleb Welborn.

You can get a free copy of our newly released book at Next Level Income Book. Today's show is sponsored by Money Insights. And today we have Rod Zabriskie, managing partner, and Ben Lonsdale from Money Insights. They specialize in helping high income professionals learn how to capitalize on some little known innovative financial strategies. And today they're going to teach us a little bit about what they call the investment optimizer. This is a strategy that helps utilize carefully structured whole life insurance to optimize your alternative investments like real estate. Ron, Ben, thanks for coming on the show today.

Absolutely. Thanks for having us.

Yeah, glad to be here.

Yeah. How are you guys? How are you guys faring during these interesting times out in Utah?

Not bad. Our business actually hasn't changed because we work with people across the country over Internet and phone and so it's been just kind of regular for us. Having the kids home, having that kind of stuff, that's been a little different, but from a work standpoint, it's actually been normal.

Yeah. Pretty blessed so far, so considering.

Yeah, glad to hear it. And yeah, technology is amazing. I mean, we use, you know, we use web, you know, zoom and other Internet technology to do, you know, podcasts just like today. So it's really trying to take some positives and learn some things. Even the boys, my two boys are home from school and they're doing the same thing. They're doing like online workout stuff and school. And it's interesting. We're learning some new things. So, gentlemen, we met about two years ago. I reached out to you guys to learn how to optimize my personal policies that I set up for our lives. And I really liked what you guys were doing, the material that I read and how you specialize in these things. I started my policies over a decade ago and, and I was using them for things like vehicle purchases and saving for my son's college education. But what I really wish is that I met you guys earlier because I think what you have to offer can supercharge investments in like you guys called it, alternative space, but specifically like real estate and income producing investment. So do you all mind giving the audience a little bit about your background, how long you've been doing this and you know, why, why you have focused on this area of the space?

Yeah, it's a great question. So Christian Allen and I started Money Insights. Christian's been in the financial services business for about 15 years. I have for about 10. And we've worked together for basically those 10 years. And, you know, it's interesting because we'll get into this, but some people might be surprised to find out that the vehicle we're using is life insurance. Right. And there are a lot of different things that can be done from just a strategic standpoint with life insurance to just make people's lives better. And especially when you kind of go outside of the mainstream investment or just kind of the way people work and get into business owners and, you know, high income professionals and people who are looking to do specialized types of things, then, you know, what we've done and where we specialize is taking life insurance what would be seemingly the boring conversation that people dread, but inserting it into these places where it actually becomes a pretty exciting thing that can change the way people invest and change the way they run their businesses and those kinds of things. So that's been kind of the evolution. Ben started working with us maybe know, three, four years ago. And so now, you know, like I said, we work with people across the country just, you know, helping them to get a vision for where we can optimize and just enhance the way that people are doing what they do from an investment standpoint. And so, you know, we'll get into a little more detail on kind of the strategy itself, but that's the way this has all evolved for us. Yeah, yeah.

A little bit about me is I first started working in the investment space in 2004, actually in real estate investing. And then I just had a whole career investing series 7, 63, placing capital into the stock market, you know, buying stock and putting people into different, you know, pre IPO opportunities. So I've just seen the market, you know, do what it does, seen lots of wealth lost. And so that's why we really gravitated towards this where there's a lot more security and just a lot more predictability for our investors and then to be able to be able to do some great things with it.

Yeah, it's been for us. I've watched I talk about this in my book. In the early 90s, I saw both my parents lose their jobs in the real estate space after the savings and loan crisis. I was finishing my MBA or in the middle of my mba. I had an internship with a technology company with Corning, and their Stock was like 300 and it dropped like a rock. Lost my internship. So I witnessed what was happening in the financial markets and specifically the technology space at that time. Then as I had built my portfolio in the late 90s, early 2000s, real estate, I saw the crash, I saw the crash in the stock market and my wife, we found out she was pregnant in 2009. I immediately started these policies in October of 2009 and people might say, well, geez, man, you missed out on this big stock run up. So I've been invested in the stock market the whole time and right now we're in an unprecedented period watching the stock market drop faster than it's ever dropped in history. But I know at the base of my investment strategy are these stable guaranteed life insurance policies. And it allows me not only to sleep well at night, but we have businesses and I'm able to access this cash almost like an emergency fund at times and have excess liquidity and also take advantage of opportunities because there's going to be some interesting opportunities to buy. You know, I have a lot of people that ask me what I do personally and I'm excited to share what you guys do because I've seen how it's helped me personally in my own life and given me comfort, especially during times like we're in right now.

Absolutely, absolutely.

Chris hinted on some of the benefits there. And for people listening though, who is this strategy a good fit for? Because I mean, Chris and I have talked about this a lot and the uninterrupted compound interest, the ability to borrow against your policy and have a dollar performing within the policy as well as somewhere else. I mean, we're going to go more into that, but it's kind of crazy to see. It's absolutely insane and a great strategy. But then the question is like, for me, I'm 26, I haven't decided to settle down and have a family yet. And then Chris in comparison has a family, two kids, a wife, all of that. So would it be a good fit for, for someone who looks like me or is it more for someone who has a family and all of that?

Yeah, that's a great question. We actually get that often, hey, I'm young, I don't have a family. Do I need insurance protection? And here's a good way to look at it. Insurance, how we design these policies is really the byproduct of it. It's a great byproduct. It's valuable for lots of people. But Caleb, for someone like you starting to put money into an opportunity fund now that's going to continue to grow tax free and have that uninterrupted compound interest. The sooner you start, the longer time you'll have for it to grow. And then you'll always have that opportunity fund available to you when it's time to do a deal. And also because it is life insurance, you're young, you're healthy, there's a little bit of a benefit, right. Because you're going to pay a little bit less for that small amount of insurance that we use when we build these, that it's actually going to be maybe a little bit more efficient than maybe somebody in their, you know, maybe in their 50s. So it is a good idea. I remember when I was, when I was young people, I'd be like, hey, Ben, start putting money into an IRA now. Because look how much money you're going to have when you're 60 if you start early. It's a little bit like that, right. You're going to have a little bit more capital available to you in that Opportunity fund even when you start young. So think about it like that.

Yeah, no, that's great advice for me and for people listening who might be more in my age demographic. So how is what you do different than term or whole life policies?

Yeah, so begin with, with term. I mean, especially in this, in this kind of comparison between term and whole life did the gurus out there would tell you, you know, walk away from whole life, buy term and invest the difference. Right. That's a really common saying out there.

Yeah, I work, I mean, I don't. Not a lot of people I know or that I know know that I was a licensed life insurance agent for State Farm, but this would have been back, oh, geez, I gotta, I gotta do the math here for a second, like 18, 19 years ago. And you know, that's what was like I was telling people, hey, you know, buy term, invest the difference. It seemed like a logical, cost conscious, you know, choice. Right. I mean, that's what, that's what we hear.

Yeah. And I would say, I mean, for somebody who really is focused on making the stock market their primary investment vehicle, then great, go with term and really focus on building up your portfolio that way. What happens though, is what we've seen when people shift from that more traditional approach to, we'll call it alternative investing with real estate with their own business or other people's businesses, or investing in notes or other things like that, there's a fundamental mind shift that happens because what do you do with the cash? Right? How do you flow that cash in and out of the investments? Most people are just doing it through their savings account. Right. And so what we do and what we're showing people with this kind of a life insurance policy is that it's, you get the same liquidity, you get the same safety of your principal, which is what, why people are using the savings account in the first place. But now we're adding to that some growth, some tax benefit, some additional efficiencies in terms of the way that you actually access the money, the fact that it adds that life insurance element to it. And so they're just a whole bunch of additional pieces that we can add by doing it the way we do it. Now, getting back to your question about just whole life in and of itself, we're approaching it very differently than you would normally get if you just walked down the street to your local agent and said, hey, build me a whole life insurance policy. And what I mean by that is like Ben talked about a minute ago, we're minimizing costs and we're maximizing the growth inside of the policy. And that makes a huge difference. So, for example, traditional whole life policy, vanilla whole life policy, you might have zero cash value for the first two years before it even starts to grow anything over the life of the policy. Twenty, 30 years later, you might end up with maybe two and a half to 3% net return, you know, tax free. You know, there are different pieces that may not be such a bad thing, but if, because the way we do.

It.

Cash value, immediately, generally what you've put in, you're going to have about 75 to 80% of that immediately, even after costs. And then over the life of it, you're going to end up with about a 5% net return, again tax free. And so at its core, it's just for the purpose of what we're using it. It's just very different than what people may be familiar with or may have heard the gurus talk about when they just kind of throw a blanket over everyone and say, whole life this or that.

Yeah. What's interesting to me is the more I've learned about this over the past decade, the more and more that the way you structure these policies looks a lot like real estate. So what I mean by that is some people might have been surprised when you just said the cash value you build up. So these policies build equity very similar to real estate. Over a period of time, you can access that equity like you can access the equity in your home through heloc, for instance. And then it's a lot like real estate. They have a fixed or a guaranteed rate of return or interest rate during these policies. Do you mind diving into that? Because again, to me, it's fascinating to see that you can take a life insurance policy and for somebody that loves real estate and has loved it for 20, 21 years now, and then on the backside there's also some really good tax benefits. Almost like a Roth ira.

Yeah, yeah. Actually it functions almost just like a Roth ira. I think it's important to know the capital you put into this is after tax. Right. So then as it's in there, this cash value that we, that we talk about, that's really the cash that's available to you and it's actually very easy to get to. There's no underwriting, you just request it, usually can get it within five days. It's very liquid. And so, yeah, this is, you know, this is really a vehicle that it's going to be growing. That compound interest is uninterrupted even while you're, even after you've taken a loan. And it's important to note that that loan is not, you know, it's not your money, it's the insurance company's money. So your capital, it remains uninterrupted. It's just going to keep growing even while you're utilizing the insurance general fund to take down a property that's then going to generate 15, maybe 20% return. You're still enjoying this return, same dollars, you're enjoying another return from the property. And it's all kind of compounding and building a lot of wealth for you. It's what we refer to as velocitizing your money. Right. Using that same dollar and really using it, you know, to the maximum. I love that kind of hit on what you're thinking.

Oh, yeah, absolutely. Because, you know, when, when people, if people want to learn more about this, you know, you can, you look up infinite banking and you, you learn more about this and it's like, okay, this is an interesting thing. I love what you guys have done, which is called, you know, utilize this strategy and taking it, you know, to another level and saying, hey, this is an investment optimizer. How can you take these policies and let the money grow within them and use the money somewhere else? Almost like you're double dipping. So my wife and I, we were using our policies to fund the construction of spec homes. So we were taking our money out, borrowing at a very low interest rate, guaranteed, and then we were investing it and making 50, 100% on our money, putting it back in and doing it all over again. I understand that one of the things I first reached out to you guys was how can I utilize this to fund a business? And I know we were talking here before the show. Can you guys share what you have done personally to help to utilize these policies and fund a business and how a business owner might look at this and be able to optimize their business financing, for instance?

Yeah, absolutely. And I think this is one area where it can be that there's a lot of flexibility built into it. Right. So usually when we think about loans, we're on the terms that the bank gives us, kind of at their mercy, so to speak.

Yep.

And what this allows, 5 year, 10.

Year, 30 year, 15 year.

Yeah. And so we want to, we want to build the best terms possible, but still we're going to have a regular monthly payment that we have to keep up with. If we get backed up on it, then bad things happen. When you turn and you look at the way these loans work, the payback is very flexible. I get to build my own payback schedule. Right. And so essentially what we recommend is that whatever the cash flow is that you're generating from the investment you've made, just funnel that right back into the policy. Number one, it's going to be working. You know, pay against the loan, the interest that you're accruing, but you're also kind of replenishing that opportunity fund to go back out and do it again. Right. So getting back to your question, last year Christian and I had a look to found a great opportunity to buy a spa, a day spa. And so we were using loans from our policies to do that, and it wasn't profitable. We still have months that aren't profitable. But because of the way that the loan works and we get to build the payback however we want to do that. And one of the key pieces to that is that the interest is only due once a year. So we're used to thinking of things on a month to month basis. But. And so if, you know, if we're cash flowing month by month and we're going to flow that back in our policy as we get it, but at a minimum, we know if we just even make that interest payment once a year, then we're still capturing this, what Ben talked about a minute ago, where we're keeping the interest on our loan simple while the underlying account just continues to grow and compound and do its thing all the while. So that's an example. And we've seen a lot of clients who do similar types of things with inventory or payroll or whatever it is, as maybe you get in a cash crunch or you're expanding your business and you just need some capital, then using these policies for that is really. It's much better than the kind of loans and leverage you can get elsewhere.

Yeah, and I love that what you just talked about was basically you're taking advantage of a simple interest rate and allowing your money to continue to grow and compound. And just because of that concept, and even for me understanding it conceptually, I think it's hard to kind of, at least for me, wrap my brain around the differences. So what we're going to do after this show is we're going to publish a webinar. So if anybody wants to really dive into how to utilize the strategy, they can get a deeper look into that. So I'll make sure that we have that in the show notes and we'll talk about that more at the end of the podcast.

Yeah, and in that webinar, we'll put some numbers to it, and so you can really graphically see the impact of that. I think a lot of people understand the difference between simple and compound, and we all would rather have the compound. In this case, it's not just the fact that it's simple, but. But it's simple on a decreasing value versus the compounding that, you know, kind of that exponential curve that you enjoy in the compounding world. So, yeah, it's. We'll really break it down.

Yeah, it's super powerful. Especially, you know, I always say real estate's a get rich slow strategy. And, you know, you get, you get five years in, it's like, this isn't super exciting. But then next thing you know, 10, 15, 20 years in that compound interest, you know, you're looking at that exponential curve. So it's pretty amazing.

Absolutely.

Yeah.

So, Rod and Ben, question we didn't go over before the show, but with how powerful this is and, you know, having $1 perform in two places, you know, seems like it shouldn't even be possible with what a great strategy this is. What reason do you think that everyone isn't doing this?

That's a great question. I'd like to hear what Rod says too, but I'm going to give an answer. Part of it is this is not your mainstream 401k mutual fund that just has a lot of capital, a lot of marketing, a lot of government support behind it that gets it out to the masses. That's probably one reason. And also, there's not a. Of money to be made off of this. So there aren't a lot of interest groups behind building these policies and taking all the cost and, you know, all the fees out of it. So there's not a lot of money to be made. There's obviously a living to be made. That's why we do it. And then the last point that I'd like to make is that it is based on life insurance. So sometimes you won't hear about it because some people aren't healthy. And so sometimes, maybe there are extreme cases where people don't qualify.

Right.

Or maybe they aren't healthy enough to have life insurance or there's a variable there. That's some things that I've seen. What about you, Ron?

And that's where I think the creativity comes in. So that working with the right people is invaluable because, number one, you have to build the policy in the right way. If you don't, it's not that you can't get some growth. I mean, I mentioned two and a half to 3%, and that may be okay, but I'm gonna pick five, right. If I can, you know, take comparison. But I think. I think the other thing is, I hinted at it earlier, but there's just. There's a fundamental shift in just the mindset of how you approached your investing for people who are investing in real estate and businesses and kind of the entrepreneurial side versus the more mainstream of. Of just investing in the stock market. And so I don't have any problem with people who do choose to invest in the stock market, but just seems to be the mindset of people that we work with is, I'm going to take more of this into my own hands. And if there's risk to be had, I'm going to at least understand that risk and have some sort of control. You just think of things differently to begin with. And so, you know, when it comes to watching the flow of cash and people come to us and they say, hey, you know, having that safety of my savings account is great, but it's just not doing anything for me. I have this, you know, anxiety that exists about turning around, getting the next deal going, because I just hate to see it sitting there. And so the beauty of this is that the money, whether you, whether you take that loan against it or not, it's there working for you. And so there's just a lot of different reasons and angles why it's better. But back to your question. The reason why a lot of people don't know about it is that it's not as mainstream. And in fact, the kind of sad part about it is the mainstream gurus are more likely to be speaking against it whole life as a category, not breaking down and saying, well, there are good ways to build it and bad ways to build it, but just throwing a blanket over everyone and saying, it's not for you. So those are my thoughts as far as. And maybe one thought on what Ben mentioned about some people not qualifying creativity, again, comes to bear on that, because we can put a policy on the spouse or on children or business partner. And so even if you're somebody that you feel like, oh, I had cancer a couple years ago, whatever, had a heart attack, so I myself can't qualify from any. From a health standpoint, let's still have the conversation, because there are ways that we do work around those things for those people who could benefit from it, but maybe from a health standpoint, they don't qualify.

Yeah, that's great insight, and that's why we're happy to have you on the show, because the big reason that we do this show and why people who like our show, like our show is we try to find people with great information like this that isn't as well known and get it out there. And so, yeah, that's fantastic.

Yeah. And if you guys. Let's walk that. Let's go back a little bit here. So, you know, I hear Whole Life, I think high Fees. And you made. You made a couple comments in there. Ben, you said there's not a lot of money to be made in this. And Rod, you said, you know, there are different ways to structure this. So this is. Again, as I learned about this, I was surprised that there are different ways to set up Whole Life. So this isn't one flavor. So can you guys talk one, about how these policy structures are different than a quote, unquote, traditional whole life, and then two, how are the fees different compared to, you know, a strategy?

So, great question, and actually it's a great point because just like any industry, there's all sorts of agents out there, right? There's different guys that understand how to build different types of life insurance policies. And that's no different than what I saw when I worked with different stock portfolios, different ways of managing money. Right. And different ways of seeing the client. So our industry is no different. And for whatever reason, there's been a lot of life insurance agents that. That build these with high fees because they are trying to maximize on the insurance, and they have their reasons. And sometimes those fees get really high, the returns are low, the access to the capital is low. And that's why you really want to work with experts like us, where we are laser focused on people who are building these accounts to then utilize the capital and make investments. So that's one of the major differences is you got to make sure you're working with the right specialist to be able to use these policies for that.

Yeah. And then go back to a comment, Caleb, you made a minute ago where some of the things we're talking about almost seem too good to be true. Right. The access to having it work for you in multiple places at the same time. And so I've heard it said it's not too good to be true, it's just too good to be free or without some sort of opportunity cost that exists. And so the fact that there are costs associated with it is true. But we're gonna just cut those down as much as we can while still keep getting those tax benefits and the ability to use the loans. And so if we'll do that, then we can build a strategy where over a 10, 20, 30 year, whatever, however long the person's gonna still be investing in these kinds of cash flow investments, we can make a difference of hundreds of thousands to millions of dollars as compared to the traditional just running it through the savings account because of what we're talking about here, just reducing those costs. And you know, there's an inherent conflict of interest that exists for the person who's designing the policy. Because, you know, if we came to you and we said, hey, we can get you all these benefits, don't you feel great about a 3% return, you know, in the background? And you may or may not know that it can.

Than that. Right.

There may be people who listen to this podcast who maybe have whole life policies that were built for them at some point in the past. And I'm not here to say they have to feel bad about what they have, but it may open your eyes just to realize that it can be better. We can create the kinds of returns that we're talking about if it's just built in the right way and just reducing the costs and keeping the focus on building the growth inside the policy.

Yeah, I mean, it opened my eyes and again, even that I had policies structured this way that you could even do a better job of optimizing it. Another thing I wanted you guys to touch on, so I called my State Farm agent. So in full transparency, I have our vehicles and other insurance through State Farm. I used to work for them. I really like my agent. I said, hey, I'm, I'm going to do this life insurance policy with a different company. Do you have to work with a specific company or what type of company do you have to work with? Because when I talked to my agent, he said, no, we can't do it that way. And could you kind of walk through the specifics, like, are there certain companies that are better for this or that help kind of optimize what you're doing?

Yeah, so I'll speak to it from a few different levels. So to begin with, we want to use what are called mutual life insurance companies. What that means is that the policyholders themselves are the owners of the company. And the significance is that in addition to a guaranteed interest rate that's associated with that policy, you also have a dividend that the company will pay that you can put dump back into the policy and create some of that compounding as well. So first we want to be making sure it's mutual company number two, not all. As with any company, not all insurance companies are built the same. And so we want to make sure that they're a rated companies that they've been around for a long period of time and have a consistency of paying that dividend financially, very strong. And so that's going to be our kind of first level sifting process. And then once we do that, we're down to maybe like 10 or 12 companies that we want to consider that kind of fit those initial criteria. Then what we're gonna do is just take the products that they offer and compare them. And so some of them are going to just be built better than others toward this very specific thing that we want, which is maximizing that cash growth. And so that's what we do is we just stay up to speed with the changes that happen inside of those products so that regardless of who we're working with and what we're doing, that we're able to maximize that policy for that individual. And so back to your question. Yes, there are some companies that are just, they're just built better. The policies themselves are built better for what we're trying to do. And so we'll just gravitate towards those companies. But we're agnostic as it comes to specific companies. We're not married to any one or the other. We have a handful that we're using currently. If another company rises up and has a better product, then we'll switch over and use that. Because really it is all about customizing it and building it toward the best solution for the individual we're working with.

So everyone's different, right, and have different tolerances for what they might perceive as risk. So say there's someone listening right now who is interested in what you're saying. But they say, I don't know if I would want to use that money to then invest somewhere else. Would you? Are there still benefits for someone like that? Would you structure the policy differently if they're just thinking of it more as a base for personal wealth rather than saying, I'm going to use that money and place it elsewhere?

Yeah, really, there wouldn't be any difference in the way that we would build the policy. And that's actually one of the cool things about it is when you get back to just the core basic principles of consistent growth, tax free, kind of some of these other benefits that come with the insurance and something we haven't talked about yet, there's some depending on the state you're in, but there's some creditor protection to that. And so, yes, I mean, the fact is the money goes in and it grows either way. So there are people that approach this from the standpoint of say an emergency fund. Right. They want to have that fund, but again, leaving it sitting in the savings account or a money market account doesn't make much sense. And so is there somewhere we can put it where we can get some growth? Yes, yes, we can do that. And building a policy the same way we can accomplish that. It can serve as kind of that bond portion of your portfolio, so to speak. So that since bonds are. So that the interest rates on bonds are so low these days, munis, again, when you include the tax benefit, all of those things exist. And so we can build these things here that you can't get in other places.

No, that's really interesting. So historically would have been the rates of growth in these policies. So again, I think people listening might say, wait a minute, you're telling me I can get a rate of return inside of a life insurance policy that's better than bonds? So historically, I think you mentioned 5% earlier. What have we seen historically and what are we seeing today with rates even as low as they are?

Yeah, go ahead, Ron.

Yeah, so the way the policies are, currently there's a 4% guaranteed interest rate and then plus the dividend. So then the question, okay, well, what is that dividend doing? Historically speaking, it might be a little bit higher. And so if I were to say over the last 30 years, what would be the average when you combine that guaranteed plus the dividend average might be somewhere around 8% that you'd be credited. Where it is currently is right around six, five and a half to six, depending on the company when you add that dividend and that's the gross credit. And so then you say, okay, well what about costs? And so that's where we say, you know, if you're getting about 6 as the gross credit, when we factor in costs over a long period of time, then you're going to net out about a 5% return in that policy. And historically speaking, that's, that's low. Right. With interest rates where they are currently. And because the reason that matters is because the insurance companies there, where they have their large amounts of reserves invested is in bonds and fixed notes and things like that. And so even some real estate. Even in real estate, right? Yeah, yeah, yeah. And so because those are, and because the nature of the terms on those. Right. So they're like 30, 40, 50 year notes.

Yep.

And so again, even in, even though the interest rates have been where they have the last 10 years, what the companies are paying is lower, but it's still a lot better than you could get at the bank or the money market or things like that.

Right?

Yeah. I called my agent, I said, hey, I'd like a full list of where the insurance company invests all their funds.

Yeah.

And he said, I've been doing this for decades, I've never had somebody ask that. He goes, I need to go find it. So he sent me this like, you know, dozens and dozens of page PDF that I went through and it's really fascinating to see where life insurance companies invest this. It's super high quality bonds, real estate, like in core markets, it's places like you, you know, like, wow, this really is like a bond portion, your portfolio and you know, to look at the rates of growth and you know, it's. I think the important thing to note is the cost in these policies is upfront, heavily weighted upfront, but over time it's around 1% of the fees, which is really lower than if you look at a mutual fund or the fees that you would pay a financial advisor. But you said dividend, Rod. Where does the dividend come from? You got a guaranteed rate of return which comes from the investments. But where does the dividend come from?

Yes, the dividend is, as with any other company, it's just the profitability of the company. So really it breaks down to three different things. Number one is the profit of the company that year. Number two, because we're Dealing with life insurance companies, there could be years where they have, where they're paying out more claims than in other years. Right. They've been doing a long time. So it actually is pretty predictable. But conceivably that could have an impact. And then a third piece is the kinds of returns they're getting on the portfolio and so that'll impact the amount on the dividend.

Interesting.

That's a good question. It's a good question.

Said they've been doing it a long time. Did I hear you correctly the other day when we were talking and you said you only work with companies that have been around for. Do you say the 1800, is that what you said?

Yeah, I mean, yeah, I mean there are some in the early 19s but yeah, the companies that we're using right now, all of them have been around for 150 plus years and been paying a dividend that long. So let's go back to that.

Right.

So not just the fact that they pay a dividend and kind of as policyholders we benefit from that. But I'll give you one example. One of the companies we work with was started in 1847, first paid a dividend in 1849, has not missed a year since then in paying a dividend. And so you know, we're not just talking about the recent stuff, but yeah, World wars, Great Depression, even the Civil War. Right. I mean, so it's just pretty wild to think about even. Just these companies.

Yeah. And even the IRS founded in 1913.

I think it was the 16th amendment. Was it for worst amendment ever?

No, I mean these policies, they really do have some impressive tax benefits. So let's say you get to the end of this policy, you're like, okay, terrific, Ben and Rod, I've got a 5% rate of return. How do I get my money out of this policy?

So it's actually on. There's a lot of strategy in this and this is why you want to work with people like us. When you, you've been utilizing that policy, right. For 20, 25 years, you're pulling money, you're borrowing against it, you're putting it back in. Now let's say you're 65, 70.

Yeah. So use me as an example. So I started my policies, let's say I was at, I think I was 31, but say I'm 30 years old, start this policy, I'm now 65, I've been paying into these policies for 35 years right now. What?

So then we'd say, alright, so Kris, you Want to start taking income from this, Right. You're like, hey, I'd love to enjoy from tax free income. It's not going to affect any of my income against my Social Security or anything else totally outside of that. Time to take some capital or maybe the market has dipped, but you still need income. You want to dip into this, Right. Okay, great vehicle for that. Life insurance is treated differently than any other investment. The capital that you've put in is considered return of premium. When you want to take that, it's called fifo or first in, first out is what they refer to it. So you have no problem accessing your premiums without any penalties or of course, taxes. You take that and then we get together and we're like, okay, when it's time to take beyond that, which is it's, you know, with our clients, it's in the millions of, you know, what they've generated over that time. What we do is we just start taking loans against that. Obviously you're not going to pay taxes on a loan and then it's structured. You're taking that, you're taking those loans as income. And then what covers the ultimate loan balance is covered by the death benefit. And I want to make sure that we're clear. Yeah. So the loans are still against the cash value. Right. That's built up.

Okay.

Those loans are ultimately paid back by the death benefit of the policy.

That's kind of, kind of funny concept to think about taking loans for income in retirement. Right?

Yeah. This doesn't. Yeah. Because I'm listening to this, I'm thinking, okay, like, do I want to take a loan? It's like if I'm taking a loan on my credit card, my, my heirs are going to pay for that. Right, Right. So it seems this, this piece seems counterintuitive to me.

Yeah. No, and it is. And that's why I think it's helpful to have had the conversation already about how the fact that when we take a loan against the policy, our cash value stays there and continues to grow. Right. So I'm going to have a loan on my policy. It's going to continue to accrue, but I also have my cash value that's accruing side by side and so I can carry that for, well, until the day I die. And then this tax free death benefit pays out because it pays out tax free. And because it's going to pay off that loan, that just completes that cycle of having received all that tax free. And so it doesn't pass on to the debt to the heirs. In fact, there's just going to be some additional death benefit that passes on to them that's tax free as well.

Well, again, like I listen to all these things and even for somebody that's been doing this for 10 years, there's a lot of layers to it. So for anyone that's listening, we talked before the show. After going through the notes, we're going to set up a webinar we're going to have access to on our website. So we're going to have that in the show notes. You can go to nextlevelincome.com moneyinsights moneyinsights and you'll be able to access a webinar and also get in touch with Rod and Ben if you want to learn more about this strategy.

Great.

So that was a great lead in to the question we ask on every show, which is we were just talking about what advice would you give Chris when he's 65. But the question we always ask is if you could go, if both of you love to hear both your answers on this, if you could go back in time and Talk to your 25 year old self with everything you know now, but just offer him one piece of advice for life or business or anything, what would that be?

Yeah, I'll go first. The advice I would go Back to my 25 year old is, Ben, invest in yourself and create the foundation so that you have the capital to do that. As I was growing up, you know, I have, I have teenagers now as kids and I just see them looking at other people and being, looking at them being, and going to be like, hey, what should I do? What should I do for a living? Where should I go to school? You know, what kind of degree should I get and what we need to do. If I could have just told myself something, Ben, invest in yourself, invest in learning, go get more bumps and bruises, but then build this nice secure foundation so you have the capital to better yourself. That's the advice I give myself.

So for me, when I think about the 25 year old, one of the things that I was told is I had a regular job. We had our HR director and they sat us down, they said, here's the 401k. Everyone in here should be, you know, contributing to this. And they gave us all the reasons. I'm sure everyone has heard that, you know, you're gonna be paying, paying the tax later when you don't have as much income, etc, etc, right? Bad advice. Especially with 25 year old. I've never made, I've never made less income than when I was then. And with kids and you know, with deductions and things like that. And so not that I'm saying that tax deferred retirement vehicles are wrong for everybody because they have their place and can be beneficial, but learn about what you're doing. Right? The irony of what we do is a lot of people are unfamiliar with it and so they'll really delve deep and that's great. Our whole platform is on educating and helping people understand what it is and where it can benefit them. But there are things like the 401k or like even just investing in mutual funds or things like that that people, because they're familiar people don't feel like they need to get in and do it right. Dad says I should do this, so I'm going to do it or whatever. Again, the HR director is saying it's a good idea, so I'm just going to do it. And so what I would tell the 25 year old self is learn about these things, understand it so that if you are participating in it, great. At least you know what you're doing and you're doing it with a purpose rather than just because someone said so.

I think it's awesome advice and from a personal perspective, I remember the day I sat down with my CPA and he said, you need to stop contributing to your qualified plans. I looked at him like he was crazy. I'm like, what do you mean? He said, well, look at all your investments. You're going to make more money when you're 65 than you are today. And it was one of those times where I sat back and I'm like, oh my gosh. I never questioned the assumptions. And, and one of the things we like to say on the show and here at Next Level Income is invest like the rich, not the poor. And if you plan to be rich, make more money, make good investments. Why are you investing assuming you're going to have less money when you're 59 and a half or 65 or 70? And then I think the thing that people maybe don't even know is that you hit 70 and then you have to take required minimum distributions out of your retirement plans, Right. If you don't, the penalty, you guys know the penalty is 50%. 50%. When I heard that, I was shocked. I was like. And that's what my accountant said. He's like, listen. He goes, what are you gonna do with this money? I said, oh, well, if I don't need it. I'll just leave it in. There he goes, no, no. He said, you're gonna pay 50%. And I was shocked. So again, we clear 50% of what.

You should have taken, right? Not 50% of the balance.

There you go. There you go. To be to be fair, it's still regardless if you want to take 50%, any $1 of mine or $100 a month. But look, Ben, Rod, thank you guys so much for being on the show. Like I said, I think this topic deserves a lot more attention. So we're going to have a webinar. Please check us out online. Also, you can get our free book, newly published on Amazon, but go to our website, get a free copy nextlevelincome.com book. Thanks so much, gentlemen.

Thank you.

Awesome.