186. Whole Life Policy Design: What You Need To Know

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What did Nelson Nash mean when he talked about de emphasizing the death benefit to create a policy? When you want to begin the process of becoming your own banker, what exactly was he talking about?

Well, let's emphasize that.

Yeah, he, he de emphasized it. So we're going to emphasize what he de emphasized now. Jason, we, we spent a lot of time with Nelson and you know, he, he, he talked a lot about how people would misinterpret things in the book. He wanted people to think, but also to some degree, people would often take what's stated there in black and white on a page and they, they would jump to their own conclusions, etc, and I think this is one of those areas. And so the reason I wanted to talk about this is because we have or we see from time to time, whether it's a policy that's been designed a certain way or, or even just conversation and questions that we get, hey, is this policy that we're looking at or is this, this, this insurance contract doing what Nelson said in quotations, air quotes of making the death. You know, see, what I really want is I want the death benefit to be really small and I want to have as much cash value as possible. Like, so we hear comments like that, which I get it, that it makes sense that you might interpret something like that when you read the text. And for anyone who's got their Nelson Nash book becoming your own banker in hand, we're talking about page 38 of the book.

Yeah.

And so what, what people don't really realize is what we wrote about in our book, which is cash falls a leader and that the thing that actually makes the cash value grow is the death benefit. That's right. Reality is you actually want to continue increasing it to create cash value. So Nelson was trying to reference something very specific and one thing that he wasn't referencing was the fact that you still need to make sure your family is protected. He doesn't talk about that in the book because that's not the purpose of what the book is about. So Speak to me a little bit about that and what comes out for you. Sure.

Well, I mean, it's, again, it's this whole emphasis on the product and not enough emphasis on the process. But if you were to use the words human life value with Nelson. So this is a, this is a term that's used in the life insurance industry, call it vernacular, where it's. This is what's been taught to the industry where you have to determine someone's human life value. And that would send Nelson into a frenzy, literally, because this whole notion of just calculating what someone is worth really, really rubbed him the wrong way. And what we're describing in this episode is we're talking. We're talking about someone, a family who wants to implement a process, but we're also talking about the necessity for death benefit and.

The way the policy is engineered and all of that. There's, there's, you know, this back and forth, a lot of this noise that goes on out there in conversation about what's right versus what is wrong. And Nelson would often say that it's not that you're right and I'm wrong, it's just that we think differently and there's a big, big difference. And then when you get the policy put into place, you're also dealing with the human condition. And we spoke about that in a prior episode around. Hey, you can build a policy that has literally virtually no base.

And watch what happens as it relates to the human condition.

As the policy owner begins the process.

Of paying premium, or to some degree doesn't pay premium to a very high.

Degree, like we're, we're running into. We're meeting people now regularly.

Yeah.

And we're having conversations with them and they're telling us their words, not mine. I don't want another 991.

Policy.

Because when the pre. When the policy statement comes in and it says, look, you have the option to pay a dollar, but you only have to pay us 10 cents.

What do you think the human condition is going to do? You got to be very careful what you feed your brain because eventually your brain's going to buy it. And so the human condition is, do I pay what I able to or do I pay the minimum amount required? Just think about that. And this isn't theory or.

Assumptive. These are real conversations now that are having, that are coming up with policyholders that are saying, I get it, but it's not what I want. And so you've got. This is an exercise in imagination. But there's also a duty of care that we have to make sure that people are properly life insured. So you're kind of, you're putting that train on two tracks simultaneously and there's a way to get it done and you've got an, an awesome use case that you're going to lead us through, which I'm super excited for our listeners and viewers to, to see.

So and on, on the note of Human Conditions, you know, part two of Nelson's book, it's an entire part of the book. It's. It's 12 pages of a 92 page book. That's 13. 13 of the book is spent simply focusing on the psychology of the human brain and the way that we think.

That's right.

There's, there's other aspects of it dripped all the way through and there's many areas of the book where Nelson refers us back to one of the human condition pages because all the things that he goes on to as the book progresses are basically assuming it, it's, it's to some degree assumptive that you read the human conditions and you understood them. And every once in a while he says, well if, and if you don't get that, go back to this and reread Parkinson's Law. Right. So he's always bringing you back to how whatever the book progresses to is, is, is something that was built upon from your understanding your knowledge base of human conditions and human behavior first. And so with that in mind, you know, one thing that again in Nelson's book, so just flipping to page 38 for a second, one of the things he talks about here, he's got a, he's got a graph about, you know, his, you know, I guess for lack of better terminology we'll say recommendations or general understanding of the premise of building a policy. He has a little graph there that he talks about and he says that the whole idea is to snuggle up to this mech line which is a term for the, for friends down in the United States. But don't cross it. This will de. Emphasize the immediate death benefit but accentuate the banking qualities. Right. The irony is that doing it this way will result in providing more death benefit at the point where death will probably occur more than any other plan.

But he neglected one item that he didn't put in the book.

Provided that you follow his second golden rule.

Don't be afraid to capitalize.

Be afraid to capitalize. So if you read what he wrote in that section of the book, understand that there is one piece of it that he did not Include there. This will all happen provided that you actually pay the premium.

Which also, again, goes back to the assumption that you, you know, by the time you get to page 38, you've already read the Human conditions, you've already understood Parkinson's law, and that you're recognizing that you need to do that. You know, he goes on to say that the objective is to get as much as you can into the policy with the least amount of insurance instead of trying to put as little money in to provide the greatest amount of insurance. Right. So people latch on to the first part of that sentence, but not the second of that sentence. Right. He's. He's not saying that this is, this is the end all, be all. What he's suggesting is the way of thinking is the inverse of what the rest of the financial industry has been thinking and preaching.

Precisely.

Everyone thinks, oh, insurance, I want to put as little in as I can to get as much benefit. That is, that is how the bulk of society has been training people to think about insurance. Yeah. Nelson's saying, flip that around. I want to be able to get as much in as I can with, within, with reasonability to the least amount of insurance. And if you design the policy to such a degree to do that, then that's great. He's not saying that you want a policy with no death benefit at all. That's not the suggestion. You still want to protect your family. If Nelson was here and you asked him, nelson, is it important to protect your family? I'm like, I'm pretty sure I know the response that I would get from him as a guy who had 17 death benefit checks payout when he passed away.

That's right.

And left 28 other policies behind for his family members.

That's right.

You know, he, he was getting a policy on a great grandchild, what, two, three months before he passed away.

Yeah. So right in that time frame. That's right.

What we're gonna do, I'm just gonna summarize some of the details here. I've just put like, like a, like a case together. It's based on not a specific client, but, but kind of a, you know, amalgamation of a couple clients with some similar circumstances. Keeping it very simple and high level, just to show everybody. So I'll bring it up on the screen here just to, to make sure everyone can see and follow along. So we've got, you know, husband and wife. Their, you know, husband's 42, wife is 40, they have three kids. We've gone through a needs assessment. So we have a duty of care to make sure that we've taken a look at assets, income, debts and what are some of the objectives they have in mind and relative to them. Things like, you know, family members, all those considerations being in place, we've already determined, okay, they've got a need. The husband, he makes $150,000 a year. The wife makes 25,000 a year. 150,025 is a pretty big gap. So if the husband dies, there's a huge income shift. We need to replace that lost income so that the wife and the children who have a right to go on living have the money available to go on living. So that's part of what that helps solve for. So we're replacing 16 years of replacement income of the net income for the husband until the youngest child is going to be age 21. We're going to make sure there's enough insurance to fund college for the kids, which is something they determine as important. Pay off two mortgages. They have their primary mortgage and they have a rental property mortgage. We have final expenses, things like burial and those kind of things. And they wanted to make sure there was enough set aside they could fund a minimum of seven years for all three kids of premium for about a $2,500 a year policy. They're already spending money into resps for the kids. They're already doing that. They're just taking that money and reallocating it to a policy on their children. They're not changing their behavior or working any harder. They're simply changing where the money goes and where their control over the money is.

This is what we did for my late father in law is that we, we baked in enough death benefit to ensure that each of his nine grandkids would have policies funded for a minimum of a decade each. And that would be part of his, part of his legacy. So this is amazing. Yeah. This is smart on their part as well.

For sure. Yeah. And so I know for me and everyone's a little bit different for me. I have a standard amount that I set aside when I do a needs analysis for usually it's a $50,000 allotment and it might get adjusted or tweaked based on the family dynamic. It's basically like the equivalent of an emergency fund slash premium funding account. You know, we're going to set aside and plan for the premium funding a minimum amount that you want to have in place. Yeah. And then there's a conversation with the client about that. Okay. So they're redirecting money. They're already putting money into savings and investments and they're making extra payments on their mortgage and stuff. Meanwhile, they have really crappy insurance coverage. Their insurance coverage is going to, you know, they got some group plans and then they got some stuff that's about to renew and get very expensive, some existing term insurance. Well, we're going to redirect the premiums that they're paying for that. We're going to smash all that stuff together and we've got 30, $600,000 a year that we can put to work for these cup this couple. The money is already going to work for them. It's just going to work very inefficiently. It's not doing the things they want it to do. Right. So with their new information, they've read Nelson's book, they've gone through our content, they're ready to implement this process in their life. Okay, so we're going to do 30,000 on the husband and 6,000 on the wife in 10 years. Okay. So the kids are 5, 8 and 7. So in 10 years they're going to be 15, 18 and 21. They're at the point where they're getting much more self sufficient and over a 10 year period their mortgage balances will begin to decline. Assuming that they don't do any refinancing. Well, if they're having regular meetings with their coach and they're plugging into our resources, the probability of them doing that is probably going to go down as well. Plus they want that paid for because the, the rental property they have is part of their retirement income plan. It's going to be there to support retirement income. The wife is planning to go back to more full time work once the kids are a little bit more independent and she's got a little bit more time on her hands. All right.

And, but you don't know when death will come and so you've help them plan for. Okay, if the unthinkable occurred before these plans could get carried out, do we have more than enough of a tax free windfall to address all of that?

Exactly. And so we're going to end up getting, I believe I'll double check the number here, but it's like 2.25 million on the husband of coverage to get started and we're going to get 1.1 million to get started on the wife. So we're going to, we're going to secure these things in place and that's what we're going to basically look at next so before I jump ahead to any of that, you know, Jay, we basically talked about. We established a need. Yep. We, we went through a process because we, again, we have a duty of care. We have to document that in our file, and we have to inform the client what we're, what we're doing. They, they might have called in and say, geez, Richard, I'm really excited about going and doing this. Can you give me the least amount of death benefit possible so I can get all my money in?

Hold on. Pump the brakes.

Yeah, well, and this comes from.

Where did you get that idea?

We, you know, we've had, we've had to honor that duty of care on a number of occasions and deliver death benefits. And.

I've said it over the years, I'll continue saying it for the rest of my lifetime. You know, we've never had a single family say, gosh, I wish the death benefit proceed. Check was for less money.

Not once has that ever happened. And so through our process and it, you know, it's, it's. In this case, it's not the client who showed up and said, richard, this is exactly what I think I need. I think I need 2.2 million on my life and I need 1.1 million on my spouse. No, this, this was a, this was a process where you arrived at the need and then your prospective client determined what they wanted to purchase. And you're setting this up, you've set this up so that they're able to also utilize the tools to implement a process. And so you found an incredible.

Just package.

That takes all of that into account.

And, and the client makes the decision on how much they want to put in. We can help them see the flow of money. They, they're going to help us identify it. We're going to point out some things that maybe they didn't recognize, which is very commonly the case. They make the choice what they want to move forward with. And we get this other conversation point. This happens a lot. Could be in a text message, an email, or a quick phone conversation that someone says they want to. They're excited and they want to get started going, hey, how much does. Hey, how. You know, I'm getting a little bit older. How much is a million dollars of insurance going to cost me? Like, well, first off, who cares? Do you need a million dollars insurance? Why does a million matter to you? What does the cost matter? If you get all the money back, how much do you have to. How much money do you make? Do you have family members? What do you Want to leave behind? Like, what? How about say hello first? Like, why does any of that matter? Let's have a real conversation and actually just figure it out together instead of demanding a bunch of things that just don't matter. They don't make any sense.

Or, you know, I, I saw a TikTok video and I just want to buy cars and get rich buying cars. Okay, well, the, the path that you're on, God forbid the unthinkable happens. A, you're not going to be rich, and B, all your family is going to have is the car.

Has a bunch of. A bunch of cars that are devalued that they can't sell for anything.

Cannot get rich buying cars. I don't know if that came through. I'm in Chicago here right now in. In a hotel after an amazing strategic coach session. And so is that coming through?

Okay. Yeah, we got you.

Yeah. This is not, this is not siloed. Nelson didn't say anywhere in his book. Like, if you want to get rich doing. Insert whatever it is here. Buy cars, buy hair blowers. Like, whatever it is that you're talking about. That's not what this is. That is sensationalizing the message. It has no place in the. The truth of becoming your own banker. The infinite banking concept. This is about taking control of the banking function as it relates to your needs. That's what Nelson said very clearly. He didn't sensationalize it and talk about how you can get rich buying. Insert whatever here. And so in that instance, again, going back to the great work that you did for this family, it's a process of getting to.

What'S best for that particular family. You took Nelson's book into account. You took all of your knowledge and the, the immeasurable blessing that you had of spending the time with him. With him. That I did and that so many others that we know did. But you didn't just cookie cut and say, well, look, I need to do it this way or I'm doing it wrong.

According. There's only one.

According to everyone else except Nelson, there's.

Only one way that we can possibly.

Yeah.

According to this tool. To give you a policy. Like, that's just it.

According to everyone else but Nelson, the pioneer of the process, if I don't do it this way, I'm doing it wrong. Like, my God, go and get a psychiatric evaluation, for heaven's sakes. We're. We're dealing with human lives here.

Families.

Yeah.

People.

People have people that need. They need to support. Yeah. Houses, children, yeah. And so forth. Yeah, absolutely.

So if you, if you think there's only one way to design a policy or one way to design a policy to implement this process, you need to have your head examined sooner rather than later. It. I would and I'll pay for it. Just reach out to us on the show and I'll cover the fee.

Become your own banker and take back control over your financial life. Hey, is this even possible? You may be asking, can I even do this? Well, you better believe it. In fact, it's easy to get going. So easy that we put together a free report, 7 Simple Steps to becoming your own banker. Download it right now. Go to 7 Simple Steps CA. That's 7 Steps CA. Now let's get back to the episode.

One of the things that, so what we're going to look at here in this example is, is what we're talking about is just getting clear on how a policy designed for this particular set of circumstances for a family is matching their objectives. It's matching the things that they need plus the things that they want. Yeah. Where reasonable. Given the amount of deployment of capital resources that they want to commit. I repeat, the amount, the amount that they want to commit. Not that they just want a willy nilly. Maybe one day sort of kind of, we might put some money in the policy. No, they're, they're making a commitment because they read the book, they've understood some human behaviors and they're coachable. Yeah. So let's, let's bring that up here. And so we've got, we'll see an example on the screen. So very simple. We've got the premiums that they intend to pay. The minimum premium. This is just for the husband. We're only looking at the husband here. 30,000. The minimum premium is, I think it's around 8,008, 500 bucks, something like that. And we've got a cash value column. So cash is accumulating and we have a total death benefit. Well the starting Death benefit is 2.285. That's about $7,000 below what the recommended amount on the needs analysis was. Pretty, pretty on target. Now the moment they fund the policy for the first year, they're instantly going to get a boost of paid up additional death benefit. That'll put them over the recommended needs amount like immediately with the very first payment. So they've got 2.36 million at the end of the first year. Two million of that is term insurance. So we can do some third grade arithmetic as Nelson would say. And that means we have $360,000 of whole life insurance. Yeah. So yeah, we have a much smaller whole life amount, but it doesn't mean that we deemphasize the death benefit to leave these people destitute in the event that the primary income earner died in the next day. Right. Okay. We added the necessary components to make sure that the family was well protected while they were building their system over time. Okay, so just carrying forward, you can see we have the 2 million a term insurance for the first 10 years. And in this example, because the kids are getting older and the mortgage balance is declining, we put a term rider for 10 years on $4 million. And in year 11, you know, if you're watching the screen here, you'll see the term rider for a million, it drops off. Or we manually cancel or surrender that, that.

But we could renew it.

We knew it.

Some or all of it.

Yeah. It's totally the policy owner's choice. If they choose to renew from year 10 to year 11, there will be a substantial premium increase on the term insurance. So they don't even have to renew the whole million. They what? If they wanted to keep 250,000 of that million, they could reduce the benefit amount to 250 and they could have the premium drop precipitously and still maintain more of that coverage. That's a choice they get to make which they won't even know is possible unless they're maintaining a good communication relationship with their advisor. That's right. Hence, if you've got an insurance advisor, you know, reach out to those people, you know, they'd like to hear from you every once in a while. It's important to reevaluate all the crap in your junk drawer. So reach out. Okay, so they have another term rider, which was a 20 year term rider for a million dollars. So that was what we locked in that price point at the beginning and it carries forward for the remaining 20 years. Then at the end of the 20th year, they also have the right to continue it on if they choose, drop it to a certain value or get rid of it entirely, the insurance company will automatically renew it if the policy owner doesn't give them some new instructions. Okay. Some people think that they'll drop off automatically and that's not the case. They automatically renew. So what I want to point out is that the total death benefit of whole life that remains, assuming that this policy owner can kept funding the policy the whole time, is now 1.945. So $1.9 million. Let's just say, yeah, well, we started with $2.2 million, so it's pretty close 20 years later. But now there's no term insurance. It's all whole life. Well, the original whole life amount that we began with would have only been 285,000. So we've gone from 285,000 a whole life to almost $2 million a whole life. That seems pretty good.

Yeah.

So that goes right back to what Nelson said in his book, that essentially the, they'll have more death benefit at the point where death will probably occur. So if we continue down this process, I showed this person paying the maximum premium for 25 years, then choosing to stop paying the premium. So there's, there's a small premium that needs to be paid. It's being paid internally by the life company or however they choose to make that, that happen. And if we cruise out to pick a, pick a day that we want to kill this guy off. Jay, what, what age do we want to say goodbye to him?

Let's say 92.

92. Okay, 92 is highlighted in blue. It's $4.8 million. So we started with $285,000 of whole life. We funded it for 25 years. We had some term along the way to protect our family, pay off the mortgage, support income for people who needed it. That's all taken care of. Now the mortgage is gone, the kids are out of the house. The day that we leave planet Earth, there's $4.8 million tax free we get to leave behind. That's assuming we didn't borrow anything out of it. So if we just settle on how we're protecting the family and creating a nest egg, that's, that's pretty impressive. But there's $4.2 million in cash. So what if we borrowed out 4 million? We had an outstanding loan of 4 million. Well, then the death benefit is 484.8. Minus the 4 million, there's still 800 grand tax free. That shows up for the family. So there's, there's tremendous power in this. Most people that get out past age, that live past age 85, the likelihood they have any insurance is virtually gone. Term insurance, at least in Canada, generally you can't even get term insurance that goes past 85 unless it was, unless it was a term to 100 when it was set up originally. Yeah. So if you, if you actually had term and you kept paying the really obnoxious premiums that get created and you kept it all the way to 85 and you live to 86. You put all the money in and you have nothing to show for it because that policy is done. It expires. So people that live are living longer. A lot of them aren't going to have any coverage whatsoever because they haven't been well designed to have permanent coverage that will actually be there when they need it. I just went over with another case today. I got to share this with you.

I was meeting with our colleague Frank and we were looking at a universal life policy that was set up 20 years ago in a professional corp for a client. The death benefit is dropping. He's still putting premiums in. The cash value is going up. The death benefit is dropping. He's now at a point now where he's only got a little over two times the cash he's put in for death benefit and it's continuing to drop. And it's on a last death, which means it's probably not going to see a payout. But the death benefit is declining for like another 30, 35 years. Wow. It won't create a. It won't help their family because they have, their, their children are American citizens. It's going to create all kinds of tax issues. And he's putting, he's throwing good money after bad for absolutely no reason. And so these kind of things happen. Yeah, it's a permanent policy, but so what does it matter? You're just moving your like anyway. I don't want to bamboozle or confuse anyone. I'm just saying these are the things that we see on a regular basis. And it's so frustrating when you run into stuff that's just so illogical, that's doing absolutely nothing for the client and the client doesn't understand what it is. I had to go through like four people to verify and understand what this policy even was like because of the date when it was sold. Like, they just don't sell them. Like they don't. Those ones don't exist anymore. So you need to go find someone. There's not even a person who works at that life company anymore that even knows what that policy does.

There wasn't a person who worked there at the time who knew what it.

Did either, or it probably wouldn't have been created.

It's. That again, you know, it's so important. And I think you mentioned it earlier too. Like, if you're, if you're working with an advisor, you know, some, some will proactively connect with their clients, which is great. We're one of the only professions that do that. I mean, your dentist doesn't call you out of the blue to ask you if you have a toothache, but your advisor would be contacting you periodically to ask how you're doing, to check in, to maybe create a time to go over how the policy's doing, remind you of the key, you know, attributes of it, so that they stay top of mind. But if you haven't heard from your advisor, reach out and say, you know what, I'd like to kind of go through the characteristics of my program and refresh, you know, on the key aspects of it and refresh on the reasons why we put this in place. And knowing that over time, throughout life, changes happen. Changes in income, profession, financial objectives, family dynamic. You have a lot of blended families now. You have families that are growing and so really important to have those periodic conversations and just stay connected so that you can course correct along the way throughout life. And that's why the advisor is so important to, to make sure that things stay on track for you. But the advisor is responsible to you, not for you. And so if, if you haven't taken it upon yourself to get a hold of your advisor, well, you couldn't turn around and point the finger and say, my advisor never contacts me, that's just a fact.

Right.

In that instance, who's the accountability, who's.

Responsible to, like, are you responsible to you and your family? You need to take some initiative sometimes.

That's right.

If your advisor right now hasn't contacted you and in two or three years, I mean, you have a telephone too, don't you? Yeah, Nelson used to say, so, so what if you've got a telephone? If there isn't anyone on the other end of that phone, you don't have anything.

That's right. And you know what you walk through? Another important reminder that comes up for me is that.

Solving for the need for life insurance, which is great, you, you walked through the device of one policy. And Nelson said in the book that, you know, to, to become your own banker, to implement this process. It's not meant to be achieved through the device of one policy. And that's not what you're doing here. You're, you're putting a program in place for husband, wife, kids. You're creating a system, and the likelihood of the entire family dying simultaneously is much lower than one spouse predeceasing the other. And then eventually the kids growing into adults, growing into, you know, senior years of living and then passing away. And then there would be ideally grandkids or even great grandkids as well. And you create this cascading effect where death benefit is literally cascading from one generation to the next. But it's the utilization of the death benefit proceeds. In other words, what does the surviving spouse or beneficiaries do with those death benefit proceeds and do they have a place to store them? Otherwise, it's just a windfall of money that typically gets spent very quickly, especially when there's still a lot of very understandable raw emotion and grief and a lot of money in the mix. Whereas if you have a great coach, you have a good program in place, you've clearly documented the reasons why, now you have a guide, you have someone who's right there alongside you when death comes to say, let's revisit what we had decided would happen with this windfall and let's make sure that we follow through on, on that objective and refreshing on all of here's what comes next. Because death is going to come. Everyone who's watching, listening death is going to come. It's not a matter of if, it's when. And.

We can.

Gosh, you know, with.

All of the, again, the death benefit proceeds that we've had to deliver to grieving families over the years.

Having all those other items in place that I just referenced.

The family felt an even greater sense of relief, not just because they didn't have to worry financially any longer, but they didn't have to worry about the stress that could accompany such a large windfall. There's already a plan, there's already a mechanism in place to say this is exactly what we're going to do when that day comes. And that's all part of the life insurance program that you put in place for the client, but also the family banking system and all of those processes and approaches that we're teaching in our client community.

And on that note, I want to show the, the example again just for a second here, because I want to, you know, we talked about all the death benefit aspects and again, that maybe the whole life amount was de. Emphasized here, but we didn't deemphasize the whole death benefit. We made sure that the client was covered. But you know, let's just briefly talk about the, the banking qualities for a moment and what's available here to work with from, from the client's perspective. You can see here in year, year three to year two. So we have 82,000 and 52,000 a little bit greater. We have a slight increase than what the premium was funded in year three. So that's pretty Good. And in fact, if we took $30,000 and we went by six years, that's $180,000 of premiums funded in this particular contract. The minimum required, plus the flexible amount, which is voluntary optional by the client. They made that choice and we have 182,000 at the end of the year. So they're at a point at the end of year six in this contract. If they followed through on what they said they were going to do and their commitment was high enough to prioritize the premium, then they would have an asset value in this contract that is greater than every dollar they funded since day one. Right. And it's, it's growing at a pace, a pretty effective pace, you know, in year seven. What's two? 220 minus 180. 182. Let's just do that real quick. 220 minus 182. So 38,000. They're, they're at a point where they fund 30,000 in year seven and they have 38,000 of accumulation over the year. That's the live steam that we talked about before on other, other episodes, other content. And this is the power of what they're creating. And now these folks, they don't want to get too crazy complicated. They're fairly risk adverse. They've got a building nest that of cash value. Probably the primary thing they want to do is to pay off some of their mortgage so that they can take control back from the bank. Well, every five years on their mortgage renewal, maybe they just send a lump sum of money down to buy that thing down and they stretch out the amortization, bring the payments down, they increase, they increase cash flow, confidence, and then by the time they get the 10th year, they've got enough capital to blitz that thing out and they've taken back control over the banking function in that one area of their life. So there's a lot more that obviously that could be done here. But this is the power of putting it to work, seeing it accumulate, making it do functional things in your life. All the while that's happening, it's backed up by this ever growing death benefit, which in this particular case was designed based on the time scenario of this family's life. The age of their children, the time frame left on their mortgages, the current working age, the current working income, all of these things are taken into consideration. There's not like we're not looking at just one, two or three things. We're looking at a whole hodgepodge of stuff put together and really trying to craft something that makes logical sense given the person's unique circumstances and what some of their plans are for the future. You know, there's another thing that's come up for me recently in a couple of conversations is the idea that, you know, people want the mansion, but they're working with the tent trailer budget. Does that make sense? You know, everybody wants the big mansion, but, you know, you really can only afford the tent trailer right now. So it's good to have big, grand goals. And, and everybody we, you know, you're a massive goal setter. You like to set huge targets, Jay, and that's one of the things I absolutely love about you. But when it comes to getting started with your policy, you got to start somewhere. Just because you might want to do this, if that's not functional in your life, you got to pick a starting point and you got to commit to getting started. Nothing is. Rome wasn't built overnight.

You have to begin, and you can, you can commit to starting anything. Following through is an entirely different chapter. And that's, again, what we emphasized earlier. Like, we're, we're just. We're running into these discussions where people are saying, I set up this deal.

I have the option to put a dollar in. The minimum required is 10 cents. Would love to see that. How's it been going for you?

You know, I'm in my fourth year, but I only put 10 cents in. Oh, I thought you said you had the option to put a dollar in.

Yeah.

Well, why did you only put 10 cents in? Because that was the minimum amount required.

Hey, remind me again, how does that compounding work? Doesn't it take time to work? You got to put some in, and it also takes the time. So if you don't put as much in in the front end in the early time frame, doesn't that severely impact you on the back end? You know?

How long are you going to need the use of food?

Well, I mean, I have been doing some fasting, but not to that degree. So I would, I suspect, on average, once a day, at least at a.

Minimum, for the rest of your lifetime, right?

Yeah. Yeah.

You can't survive without it.

I mean, maybe three weeks.

And. And food doesn't just show up on your front doorstep un unpaid. You have to pay for the food.

Right. You know, to be fair, every once in a while the neighbor lady will bring, like, some cucumbers over, but that's about it.

Hey, so be it a gift every now and then, no problem. But if you imagine for a second you want to get into the grocery store business. And you set your grocery store up and you tell everybody involved in the business.

I set this business up so that I could stop capitalizing it as soon as possible. Okay, but once you're done capitalizing it, where are you going to buy your food? I'll just go get it down the street.

Like again, everything begins with the way that we think.

If you're getting into the banking business, it the sense that you're implementing a process. We're not referencing a bricks and mortar bank of any kind. We're talking about implementing a process in your life. And you set up the tool that you're going to use to implement the process and you set the tool up in such a way where your intention is to stop paying premium into that tool as fast as possible.

Who do you think.

Who do you think.

The, the issue should be with? The person who sold the policy or the one who asked for it to be set up that way?

When, when this is done properly. Your question, I promise you out there on the Internets and social medias, your question will be for your advisor. How long can I pay the premium for?

How much can I get in there?

Because I understand Nelson's second golden rule and I also understand the fundamental truth that he shared so repeatedly that your money must reside somewhere. What better place to have it reside than here? It's ridiculously simple. And if you design, engineer, assemble, craft, dream up whatever word you want to use the policy.

And you design it so that the minimum premium required is as minimal as possible.

You'Re going to get exactly what you designed as minimal as possible.

I promise you. The human condition will take over and that policy owner, not if, but when they're going to start putting in the minimum amount possible.

I did a recent update on my family system, so I only have 12 policies only. And I've got another one that I'm going to be applying for here this, this year. I just haven't, I just don't like paperwork, so I haven't got to that part yet. But I did this quick update and I'm like, oh wow. Like on the whole system like that, you know, my daily cash value growth is like $156 a day. That's pretty sweet. That's really. So I, I did the, I did the math and okay, so that's like, that's $56,940. So let's just round it up to 57,000. My minimum premium is, which includes a bunch of riders, some guaranteed insurability riders, term riders, et cetera, is around 45,000. It's maybe couple. Couple dollars more than that. So that's a. That's a guaranteed cash value increase or an increase every day over the course of a year, which is $12,000 more than my minimum premium. So that means next year all the policies are more efficient.

Yeah.

If all I did was just put the minimum in, that amount that's going to grow is going to be better than it was this year. Right. And then the year after that. If all I did is put the minimum in, the amount that it's going to grow is going to be much better than it was the. Than the year before it, and so on. So it goes back to the live steam analogy in Nelson's book. And. And I have three. At least three of those contracts are. They're. They're two years. They're only two years old. So they're not even at a point where they're, you know, producing the way that they. They should be. So I just think it's important people understand the reference point. You. You got to begin somewhere. My first policy was $4,200 a year. Little under that I got started. The next one was 200 bucks a month. The one after that was $6,000 a year. The one after that was $235 a month. Yeah. And I just kept stacking and stacking and stacking, and eventually they got progressively larger. And so the next one I'm looking at is probably going to be about $25,000 a year. So we're always looking to see at this point how can I increase my system and get more into the program. We asked Nelson. Nelson, when did you know it was time to get another policy? Richard? As soon as my feeble brain could envision doing so. That was his answer. Every time. That was it. Yeah. So, yeah, this is. This is a lot of fun, man. I appreciate this is a good conversation for everyone watching. Tuning in on the YouTubes. Go ahead. Boom, right there. Down below. Check out that video. Click on it. Watch it is good. Thanks for listening to the Wealth Without Bay street podcast where your wealth matters. Be sure to check out our social media channels for more great content. And hit subscribe on your favorite podcast player and be sure to rate the show. We definitely appreciate it. And don't forget to share this episode with someone you care about. Join us on the next episode where we continue to uncover the financial tools, strategies, and the mindsets that maximize your wealth.