47. Don’t Steal The Peas When Doing Infinite Banking

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Why the policy owner's behavior is far more critical than the behavior of the insurance company.

You mean the, the insurance company doesn't really matter? Jay?

Well, let me start with this. When, so when a person first gets going on this process and they're, they're really excited, they, they start capitalizing their system, they're, they're putting premium into their policy or their system of policies, they begin to access policy loans. Now the scenario that we're going to describe is a scenario where things can go wrong. So the policy owner begins to access policy loans. They not only have a daily rise in cash value, but they also have a daily rise in loan balance. Now, they don't either remember the grocery store example or they've never been exposed to the grocery store example in Becoming your own banker, authored by the late R. Nelson Nash. And they get to a point where they see this increasing loan balance, they haven't repaid anything. And then a few years into the process, they forget why they began doing this in the first place. And all they remember is what they purchased, which is the policy. And people have an aversion to debt, so they look inside the policy and they go, gosh, I've got this loan balance and I got to pay this premium and this just isn't working for me.

And, and they don't, they don't seem to recall or mention that they're the ones that created the circumstance by which they are now upset with.

So the levers that can be pulled right are I'm just going to go ahead and cancel the policy, which is a fatal error, or.

Especially if it.

Leaves your family unprotected.

Oh yeah, absolutely.

We could, we could, we could, that could be like a three episode deal just right there, right?

And so, and it, and it's happened, unfortunately, it's happened and, and death occurred and there was no in force coverage in place. And that was obviously incredibly saddening and you know, disheartening, of course, for, for the family.

And again, this is so important to emphasize that the policy owner's behavior is far more critical than the behavior of the insurance company. The insurance company itself is going to administer that contract, that insurance contract and grow the value every single day. And so if you are accessing Policy loans and you're not repaying them, what do you expect is going to happen? The loan balance is going to continue going up, and if it gets to the point where the policy implodes, who's accountable for that? The insurance company.

Nothing. The life insurance company did.

Not at all. So the policy owner needs to have a good coach, but the coach is responsible to the policyholder, not for them.

You can lead a horse to water, but you can't make a drink.

And, you know, I really give credit to. Gosh, it was probably about a year and a half ago. So one of our colleagues in the business who's south of the border, Ryan Griggs, he was in a podcast with his business colleague, James Nethery. These are two gentlemen that we know very well. They're. They're dear friends. They're great, great colleagues.

Should you be listening? We appreciate both of you.

Yeah, they're awesome. And so they have a podcast, Banking with Life. If you haven't tuned into that, you would love that podcast. A lot of great value there. And one of the things that Ryan was talking about in this particular episode is he said, you know, my focus is to create independent client relationships where I'm really, truly trying to help the policyholder to become their own banker, to truly become their own banker. And I really loved his focus on that because, again, it's so important. Whereas if you. If you are. If you're dependent upon the advisor, then you're not really, truly becoming your own banker because you're not truly taking control of that function. You're dependent upon someone else to continually lead you through that process. And so that shifted the way that we think.

We've changed gears on that. And our clients are loving it. Shocking. We're teaching them how to do it, having them demonstrate to us that they can do it. Asking them if they're comfortable doing it on their own. The answer is yes. We're always here to support and help and coach and be available. Of course we are. But if. If you run into a circumstance where you're in that situation, then there's either been an absence of communication with you and your coach, or your coach has been providing you with coaching and you haven't implemented what you've been coached to do, and your system gets to the breaking point, you forget why you're doing it. You only remember what you purchased. You have an aversion to debt, even though policy loans on the balance sheet of the insurance company are an asset. And so understanding money must reside somewhere. And that you can repay your policy loans on your terms. If you don't get on track and get a plan together and start working that plan, then there's a high degree of probability that that policy is going to implode.

Well. And you know, another thing that could, you know, you added a couple reasons why, how that plan could go off track because there's been an absence of communication. Well, you know the one of the best coaches that's always with you is Nelson.

Yeah.

So if you've got Nelson's book, first of all, if you're doing this and you don't have Nelson's book, what are you doing?

Or if you haven't read it, you.

Have an opportunity, you should immediately go and get a copy. Because if you've started down this process, you don't own the book. I would seriously wonder just like what's going on. But if you haven't been opened it or cracked it open or even like glanced in and read a single page in the last 12 months, you have an opportunity. By the way, it fits perfectly on the back of a toilet tank.

You could probably blow through this book two or three times a year just in that alone. So this is a golden opportunity, a thing that provides non stop value because it's there with you all the time, even if you can't, if your coach isn't necessarily or you don't have a meeting book with that individual. Because Nelson is always with us and he teaches us. We often learn best as human beings through repetition. And that's why I don't, you know anyone I know who does this successfully, who in our space, Jason, who's an authorized practitioner or whatever they are constantly referencing. They're like a broken record as Jason and I are, that we constantly go back and reread the same book.

Yeah.

Well, success leaves clues. We're not doing that because we don't, we don't enjoy the book or because we're not getting value. We're doing it because there's a, it's, it's working. The more actually works, the more you.

See this process, the more you'll see you didn't see. Nelson would say that all the time. And there's not a single time where I've reread Becoming your own banker where I've put the book down saying I didn't see anything different than I saw the last time. Every single time we, we are exposed to something new. Because your eyes and your ears only see in here what your brain is looking for.

Yeah.

Courtesy of Dan Sullivan of Strategic Coach.

And so referencing the book. So on page 63, Nelson had to add an addendum here on one of the additions because he kept getting some questions from people, he got frustrated. He's like, fine, I'll add an addendum into the book. And just reading from one of the pieces here, he says, this is as stated at the outset of the presentation. Anytime Nelson delivered his 10 hour seminar, he would always start it with, this is an exercise in imagination, reason, logic and prophecy. None of the figures you are going to see are set in concrete. They will vary with things such as interest rates and more importantly, how you treat the system. Your behavior in managing the system is the most important factor in the entire equation. So he really, really emphasizes that. So he says, please use your imagination. Of course results can be affected by the administrator system, the life insurance company, but the primary driver of this thing is you. So you could have the exact same policy. I personally could have the exact same policy, have the same starting death benefit. And if I stepped into a parallel universe and there's two Richards, we have the exact same policy, the exact same age issued by the exact same insurance company. If we shoot forward 40 years down the line, the numbers in those two policies are going to look different. Right. The difference isn't going to be what the life insurance company did because they did the same thing in both situations. The difference will be how each parallel universe Richard interacted with that policy, how did he fund premium, et cetera, throughout the life of that policy will be the deciding factor because the more premium put in, the more capitalization, the more deposits made, the bigger impact to any future dividend that is provided by the life company, regardless of how big or small that dividend is. It's a direct correlation on what I've already done leading up to that event. Agreed.

And I'll expand on that with what Nelson referred to on page 21 when he said, if you know what's really happening, you'll know what to do. The same thing applies to the infinite banking concept in creating any product. It all begins with engineering. The automobile you drive started out as lines on a piece of paper. If the production workers don't do what the engineers designed, you won't have an automobile. But they did. And your car rolls off the assembly line. Now suppose I get the next one and it's identical to yours, so same color, equipment, features, etc. They are identical in every way. Can you safely predict that they will both perform identically during their lifetimes? Of course not, because you and I know someone that can get 2-300,000km out of a car with no trouble. But we both know some people that can't get 50,000 kilometers out of their car before it's worn out. How you drive the car and, and care for it is far more important than anything else. Keep this in mind as we look further at the life insurance product. Brilliantly, brilliantly put.

Yeah, and, and, and then circling back to what, what you talked about, the, the, this idea or this circumstance where someone, they've been taking loans from the system, they've been using it, they've been putting it to work somewhere in their life, probably wherever they're putting it to work, who knows? But they're not making some kind of a plan or an attempt to, to repay. Well, Nelson, again, he added another addendum into the book because of some confusion being created by people. It's on page 44 of the book and he says there are only two hard, fast rules in building and carrying out this concept. Number one, don't be afraid to capitalize a system. The more capital you put into it premium, the more you get back tax free at passive income time. Some folks refer this as retirement income, but I'm removing the word retirement from my vocabulary. We did another podcast episode on that not that long ago. Number two, don't make policy loans without making provisions, provisions for paying them back, which in essence would be stealing from your system. Just as in the grocery store, don't steal the piece.

Right.

Furthermore, this procedure provides a place for you to put windfall money in quotations for things that do come along in life, such as inheritances, proceeds from the sales of property, death benefits from policies where you are the owner and the beneficiary. The these possibilities are real in life, and I have experienced several of them. So what, what Nelson is saying is, yes, we recommend fall finish your loan schedule. Complete a complete a tracking mechanism for how you're going to put money back into the system. In other words, if you're going to take something out of the system, don't take it out unless you've already started, you've already made a plan, or you set an intention as to how you're putting it back right now. Can, as the banker, can you create some flexible terms that work with your cash flow, that work with the things that you're doing? The answer is yes, but you have to have an intentional plan in place and you should be writing it down. Take a simple document, take a scratch pad, piece of paper, sign it, date it, show it to your spouse, make sure they understand what's going on so there's no confusion. Stick it in a binder, stick it in a file folder. That is, you're making this. The act of signing that document, putting a date on it is the part that glues you to the commitment. And that's how we get committed to everything else in life is you gotta usually gotta sign something for it, don't you?

Well, and.

We coach our clients on how to set up repayment schedules, but then it's up to the client to execute to that schedule. Let's just agree. Getting a membership at a gym and working out there are two entirely different things. And if you hire a personal trainer.

The personal trainer is going to help you use the equipment properly to make sure that your form is correct, that you're doing the exercises to obviously reduce the possibility of injury. The objective being to get healthier, to get more physically fit.

And they'll also recognize perhaps, maybe an exercise they originally had in mind for you might not be the right one. We might need to pivot and, and maybe we need to choose a different exercise based on what's going on in our life.

Right.

That's part of how the coach can recognize what's going on.

But the personal trainer is not going to say, richard, thanks for showing up to the gym today. Take a seat and let me do the workout for you, because it's not going to be of any benefit to you. And so you're the one. Here's the thing. Do you know how you become a really good.

A really good policy owner? Sometimes. Sometimes it's by being a bad policy owner.

Yeah.

Because you don't, you don't know that you're making a mistake until you make the mistake. That's how it's identified. So the coach, the coach is there to say, hey, I've identified a mistake and I want to coach you on how to remedy it. And then if it happens again, it's a choice, it's not a mistake. And so super important, if you're an existing policyholder, if you're contemplating putting a system of policies in place, recognize that the objective is to help you truly become your own banker. And.

If the coach is good at what they do, the coach is going to create an independent relationship. We want our clients to be independent, not dependent upon us to do it for them. It defeats the whole purpose.

They are independent already. It's just a matter of them recognizing that that's the case. You're in the driver's seat of your financial life. You always have been. You are at all times. Often we try to convince someone else to drive the car for us, but you're the one that's always in the driver's seat. Now, I think something that really comes up for me, Jay, as we're talking this through is I recollect this story that we've heard a number of times from one of our colleagues down south. Really amazing guy, a firecracker of energy, this individual. And he told a story and he shares it with his own clients at their own events where he had a. How would you call it, a coming to Jesus moment with Nelson. They were walking down the street one day and he was really feeling quite sheepish. And, and you know, he had. He had to be honest with Nelson. He says, nelson, I've been stealing the piece. I've been using my policies and I haven't been putting the. Putting the money back in yet. And he was really, really concerned about what Nelson was saying because he was a proponent of this and he thought he was doing the right thing, but he was realizing, coming to. Realizing that he wasn't doing everything correctly. He wasn't necessarily practicing what he was preaching to the effect that he thought Nelson really wanted. And Nelson says, well, just. You got space on the shelf? Yeah. Can you put some peas on it? Yeah. Well, just get started.

That's right.

You know, it doesn't have to be that complicated if, if, if you haven't been doing it and you can make a plan, get started.

You got it. You got it. The policy owner's behavior is far more critical than the behavior of the insurance company. So thanks again for tuning in. Rich, great being with you again today. Continue to take in the podcast. If you're new to Wealth Without Bay street, welcome. Thank you for listening. If you're current subscriber, thank you. Thank you for tuning in and we'll catch you on the next episode.

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