Advanced Strategy for the CANADIAN Infinite Banking Concept

Decisions to buy something doesn't matter what it is, should not be based on your interest rates. Hey, I'm going to buy this house because it's a lower interest rate or I'm not going to buy this house because it's a higher interest rate. Well, I'm going to buy this car now because 0% interest rate. It doesn't matter what the rate is. Your consumer mind is always thinking in terms of rates, rates, rates. It's all based on how does that transaction fit into the holistic picture that you have in mind, which is your family wealth. That is how the decision should be made. There's cost of what money can buy and there's cost of what money can earn. When you take your cash and you send it away, that money will never earn a dime of interest for you.

Hello, my name is Saurabh Lokil and I'm an authorized infinite banking practitioner with the Nelson Nash Institution. And in this video I'm joined with my colleague Tarun Sousa.

Hello everyone.

In this particular video, we're going to discuss an advanced IBC case study for a couple. Now this couple, they've done a lot of education on the process of becoming a banker, the infinite banking concept. The way they got introduced to this concept is by watching a intro video on it. So if you haven't watched an introduction to the process of becoming a banker, I would advise you to click on watchibc.com. there's a pop up right on top. Watch watchibc.com, click on that and then watch that content before you come back to this video. It's important to gain some understanding before you watch this video. Now this couple, they were on watchibc.com, they had read Nelson's book. Nelson is the individual who's, he's our coach, he's our mentor, he's the one who pioneered and developed the whole process of becoming a banker. So they read Nelson's book, they consumed our content, they came through our education, more webinars that we host and we host plenty plethora of content. So after doing all this, they got connected to us and you know, in that particular meeting, after obviously exchanging the pleasantries, they basically shared their goals, their vision, what they wanted to do for the family. And they no different than most people that we meet. Their goal was to build wealth, which was number one. Number number two was they wanted to be in a much better control position when it comes to debt. Number three is they wanted much more control on their cash flow. And you're going to see how that all happened. And number four is they never wanted to lose control to access money for some opportunities that'll come up. See opportunities come up when you have readily available access to capital. So these were their goals. They read Nelson's book and then we just go into what we do in our meetings, which is to do some fact finding. Hey, what are you doing today presently to make sure that your goals are met? Let's talk about where is your money going? What are your assets? What are your liabilities? What are your income? And then expand on more discussion regarding your goals. So what I'm going to do is I'm going to share my screen and I'm going to walk through this case study. All right. So yeah, so we're going to discuss an advanced strategy for infinite banking using this case study. And then again, if you haven't already, I would advise you to click on watchibc.com this way you can get an intro on becoming your banker and then come back and watch this case study. So this client. So again, obviously to protect your privacy, we're not going to use their real name. So let's call them Jack in Jail. So husband and wife. Husband is age 45 and he's a T4 employee. He makes about $90,000 per year as base income. In addition to that, there are some bonuses that he may be entitled to. We're not going to factor that in our strategy discussion because bonuses unknown. It may be there, it may not be there. Jill, she's 44 years young and her income is $50,000. They have one daughter, Jazz, and Jaz is 10 years young. Now, in our fact finding, what we discovered. So they have a mortgage balance. They bought this house a few years ago. They started at $500,000 in mortgage owing. And over the course of years and being a little aggressive with their mortgage, the new balance is now $320,000. Because when Jack gets his bonus, he just takes that bonus and puts it right towards his mortgage. That's what he's been doing. But knowing what he knows now regarding the process of becoming a banker, he understands that your money, Jack's money, or your money, it has cost this cost of using money and there's cost of borrowing money and paying interest. So there's this cost of what money can buy and there's cost of what money can earn. When you take your cash and you send it away, that money will never earn a dime of interest for you. You just made a decision of not to earn anything on that money. So there's cost of loss, opportunity. So knowing what he knows now, after researching on the process of becoming a banker, he's going to stop that. He's not going to send his bonuses away to pay down mortgages. He's going to change the process to get to these objectives.

Now the fair market value. So as of today, his fair market value of the property is $600,000. And as you go through this example, you may be thinking like, hey, he's actually speaking to me. I'm like Jack, I'm like, Jill, I have a mortgage. I paid it down. I have car loans, I have credit card loans. How can this apply to me? To find out how this can apply to you, follow the same process that Jack and Jill did, get educated on it and then connect with us and have an expanded discussion how this can be applied in your life. So mortgage we talked about. Mortgage balance is 320. Started at $500,000. Their fair market value in the principal residence is $600,000. The payment that they're making to the bank is $2,100 a month. The interest on that mortgage is 2%. Now they have one car loan and it just so happened the loan interest is 0%. Not. Theran, how many times do we actually meet people with 0% interest rates on car loans?

Not, not a lot. But sometimes it does happen.

Sometimes it does happen. Right? So, so in this scenario they had a zero percent interest rate. Again, it's good thing that there's zero percent interest rate. But I'm going to talk about how that 0% interest rate is actually destroying the revolt. It's not about the rate. It's going to be all about who controls the function called financing. Even at the 0%, someone else is controlling the function. Someone else is getting that payment per month. What percentage of interest are they earning on that $500 per month that they make into what's car loan at 0%? Tehran the decline.

Nothing.

Yeah, nothing. So yeah, the cost of borrowing is 0%. But the cost of building wealth is also 0%. Money is gone. So the balance is 15,000. Payment is 500. Interest rate is 0%. Good for them for having 0%. And then they have some credit card debt. They recently did some renovation to their house. So the debt is on the credit card. The balance is 10,000. Interest rate is 15%. Now you know and I know that 15% is actually a good rate on credit card. It can go up to 20, 21% sometimes. Right. So but it can, it may Also come down to 10% but there's a high probability of increasing than reducing. Now $10,000 is their balance interest is 15%. Now the minimum payment that the credit card company month to avoid any extra charges is 125 which is basically interest only. But the actual payment that they're making is $300. They may send a little bit more some months because the whole objective is to pay it down. Debt is bad, let's just find a way to pay it down. And they're paying it down by sending more money away. Now they are also setting aside $10,000 per year. Sometimes they save more per year, sometimes less. It's based on the lifestyle but, but on an average they actually save at least 10,000 per year as a family and they've been storing that money in non registered funds in a combination of non registered tfsa. They putting that money to work in some investments because that is all that they knew at that time. What we know is limited to what we know.

Right.

So I'm going to stop the screen and I'm going to talk about a human mindset about arrival syndrome. Now Nelson in his book he talks about arrival syndrome, which is a human condition which describes an individual who knows everything that there is to know in this world and they cannot learn anything else. They have arrived in knowledge. If and you may know someone who is suffering with stage four Arrival syndrome today. And when someone gets diagnosed with arrival syndrome, it's all downhill from there going forward. See if this circle represents what we know we know, there's this circle that represents what we know we don't know. And then there is this circle that represents what we don't know we don't know. What we don't know is always going to be more than what we know. So never stop learning. That's a teaching point from Nelson's book later on.

Yes, that's a great point.

Now as I mentioned when they met with us their goal was to a get educated. So they're going to change their behavior, they're going to invest in themselves to get educated. They asked for more resources. The other goals that they had was they wanted to pay off debt, they wanted more control on the cash flow, they wanted to build wealth and they never wanted to lose control over access to capital for opportunities that are going to come up. So keeping all that into mind and then you know, I'm not going to dive into some other assets that they had like some rsp, some TFSA because it's irrelevant at this point to dive into all of that. See, one thing that Nelson has taught us, and it's in his book titled Becoming a Banker Again. If you haven't already, in the notes underneath the video, you can find a link to order a copy of Nelson's book. One thing that Nelson talks about in his book is you cannot get a better rate of return investing into anything without first controlling your banking function. And here's what he means. Basic numbers. What's their mortgage payment per month?

That would be 2,120.

100. Right. It's right here. Let me ask, what's their car payment per month?

That's $500.

And how much are they sending over to credit card companies per month as actual payment to pay off the credit card?

That would be $300.

For actual 300. Right. So per month they are sending away $2900 to someone else. Now, who is doing all the work to own that money?

The clients, Jack and Jill.

Jack and Jill. Now, $2,900 per month multiplied by 12, who is getting 34,800 of their money every year?

Someone else.

Someone else. Now, isn't that almost equal to net income that Jill is making per year? Approximately, yeah.

Pretty, pretty close to it.

Am I right when I say this, that Jill is actually working for someone else and not for her family because technically all her income is going to someone else?

Yeah. Yeah, that's a great way of looking at it.

They are accomplishing the objective of buying things that they need, but the money is permanently leaving them. Now, if someone is setting aside $10,000 because the whole objective is to build wealth, they're building wealth without really realizing what the problem is out there that need to solve. The problem that people always think is I need to take my savings and I need to put my money to work and I want to invest it, that is how I'm going to get ahead in life financially. Now they're sending away 34,800 per year to someone else. If they are setting aside 10,000 per year as extra cash to invest and grow their wealth for that investment to make sense, shouldn't the investment actually yield them 34,800 every year? Because if they have 34,800 leaving them and they have $10,000 that they're setting into investments for them to make financial progress, should not they earn what they're sending away to someone at least to just break even per year?

Yeah, yeah, absolutely.

Now what rate of return they need to earn on $10,000 for them to actually Break even with their outflow per year.

A lot higher than the average.

A lot higher than the average. And what's the average?

I would say maybe around 8%. Seven or 8%.

Bingo.

Yeah.

If they earn 8, 10% on this $10,000, that's thousand bucks a year. But they're sending away 34,800 per year. How are they making financial progress?

Yeah, they're not. They're not.

There's a problem that we all have. The problem is banking is how you go about banking, which is how you go about financing things in life. So to know more about it, if this is your first time being introduced to this, make sure you get a copy of Nelson's book and read it.

All right? So Taran, what were the objectives when they met with us?

Well, they wanted to increase their cash flow.

So their objective was a family objective. Increase. Well, control their cash flow.

Yeah, control and in the process increase it. Yeah.

Control the cash flow, reduce debt, right?

Correct.

Have access to capital and then build wealth. Let's see what we did for them. Let's show our viewers what we did for them. So, so this was their objective. Now they've been flowing this extra saving to the books of someone else's bank. You are flowing money, all your money to the books of someone else's bank today. Doesn't matter which bank it is. So when they met with us again, they've done their due diligence. They took that money that they're setting aside as saving. Rather than keeping that money saved in someone else's bank, they're taking control over that money and setting aside that money in an entity that they own and they control. And that's the entity that we use to practice the process of becoming a banker. And it is called participating. Dividend paying. Whole life policy is just a tool to get the job done. No different than how you have checking account as a tool to get the job done. How you have savings account as a tool to get the job done is a warehouse as a tool to get the job done. The job that is going to do for you is to control the banking function in your life. So Karan, if I may ask you to share with us. So participating so for short is par. Now there are a few things that are in the participating dividend paying whole life insurance. The number one thing that we have to put in is what? Premium, Right?

Correct.

Now when people think about premium, they can think about in terms of payments. Right. Now as a banker, we think about premium as a deposit money. That's flowing to someone else's bank. We are flowing that money through our bank as a deposit. They've been depositing the $10,000 in someone else's bank. So they started to deposit that money in their bank, which is their premium, which is their deposit. Now, who decides how much to deposit in a policy?

The clients.

The clients.

Jack.

And Jack, you decide that number. Right. Now, when we put that money into policy immediately, there's going to be certain things that are going to show up in the policy. Number one is death benefit, because this is life insurance. Now, we started with the policy on Jack, the husband, because he was earning more money and then he needed more insurance on him. So the policy got started on him initially. So when we put money into a policy, you will have death benefit. Now they're starting death benefit was just over $150,000. But I'm going to use $150,000 as a teaching point. It's going to be close to $155,000. Just running it off to 150. So if he puts $10,000 and God forbid he gets hit by a bus, he dies, how much does the family get?

150,000.

Now, if he puts 10,000 in a bank and he gets hit by a bus, how many does the family get?

The 10,000 account balance.

If he has no other insurance right now, immediately, what's going to happen is on day one, there is going to be cash accumulation in the policy. And that cash is called cash value. And the cash value, in addition to just being accumulated, is going to start to grow every single day. Based on insurance companies contractual guarantee and Tehran. What is insurance companies contractual guarantee?

The contractual guarantee is that the cash value has to match the death benefit by age 100.

You got it. So they're starting death benefit and the policy is $150,000. Let's assume that the death benefit never increases. It stays at $150,000 all the way to age 100. Now he's 45. And how many years he's going to be age 155? In 55 years, he's going to be age 100. And let's assume the death benefit is a constant. It never goes up. So how much cash values do you think he will have by the time he reaches age 100?

He's going to have 150,000 because it has to match the death benefit.

Bingo. So the teaching point is cash values must match the death benefit by age 100. So in this case, for example, let's just assume that if he never increases death benefit every year, his cash values are going to be $150,000 by age 100. Because cash values and death benefit must. But in reality, the way we design policies is where your death benefit is never a fixed amount. It's a moving target. Your death benefit in the policy keeps increasing every year. Every year you are one year closer to age 100. Your death benefit keeps increasing. So, Taran, if the death benefit keeps increasing every year, what will happen to daily cash value growth every year?

Well, it has to keep increasing as well.

You're right. So if in the first year the daily growth in the cash value is $4 per day, and next year the death benefit went up, do you think the daily cash value growth will be much better than $4 per day next year?

Yeah. It would have to grow faster.

You got it. Now, if the crypto value goes up, what happens to his cash value growth? Does it go up? Yeah. If the crypto value goes down, what happens to the cash value growth? Does it go down?

No. Still keeps going up.

It's going up now. If the inflation goes up, what happens to the cash value? It goes up?

Yes.

If inflation goes down, what happens to cash value? Does it go up?

Yes.

Stock market goes up, what happens to cash value? Does it go up?

Yes.

If stock market goes down, what happens to cash value? Still goes up. The teaching point is cash value has nothing to do with what happens in the financial entertainment world. It's a contractual guarantee that your cash value in the policy must match death benefit. So the possibility of Jack and Jill losing their money in the policy is zero. Because policy has all the attributes of a savings account versus an investment account. But it will beat the pants of any investment out there. Also because your cash and the policy can never be less than what it is today. Think about, you're familiar with GIC now, Tehran. If you were setting aside 10,000 in GIC and let's assume GIC is giving you 4% rate of return every year, but you had to keep the money in GIC for three years. When you put that 10,000 GIC, would you call that as an investment or would you call that as a saving now?

No, that's the savings for sure.

Because your money in GIC can never be less than what it is today, right?

Correct.

So think about those attributes and much more. That is what a participating dividend pink collab policy is. It's a GIC on steroids with additional control, additional contractual guarantees, and so much beyond, including, obviously the death benefit. Because it's an insurance policy. But I just wanted to compare. When we compare things, we understand better. Policy is not an investment. Now, for this particular client, if he puts $10,000 into policy immediately, he's going to have access to cash value. Now, we'll come back to how much cash value access that he's going to have. But before we dive into any of this, let's talk about what we're going to do with the client as of today. Based on where he is today, how can we add much more efficiency to what he's doing before we even get into a policy design? So let's go back to his situation. Now, Taran. How much is the fair market value of the property? This is his recent evaluation. He said he did that with another institution. Right. He evaluated his property. It was $600,000. Now, the fair market value of his property is $600,000. Now you, Taran, you know this already. There's two kinds of loans that you can have on property. One loan is a mortgage loan, which, which requires a principal and interest payment. And it's amortized over 25, 30 years, whatever it is. The other kind of loan that you can have on property is called a HELOC loan Home equity line of credit. It's a line of credit secured against the property. That's. That's basically what it is. But maybe you're not aware of this. You can. And I'm not speaking to Taran, I'm speaking to you. You watching the video? You can get up to 65% of your free market value as a line of credit loan on the property. And there's selective banks which do this. So if I take 65% of $600,000. Taran, what is that number? Yes.

So that number is 3,90,000. As it shows on the screen.

It's $390,000 right now. May I ask, what is the interest on line of credits today? Now, we understand interest rates are going up right now. What's the interest on line of credits today?

We can go with average of 4%.

Yeah, it's a little bit less than 4%. But let's use 4% in this as a teaching point. And I'm going to just do interest. Now, a HELOC home equity line of credit against the property, what does it need in terms of payment per month? Does it need principal? Doesn't need principal and interest, or does it just need interest?

It just needs interest.

Just needs interest. So if I take 4% of $390,000 divided by 12 what's the payment that the bank needs or expects every month?

That would be the interest payment of $1,300.

1,300 now. And banks are really flexible with the HELOCs, and they say, well, you can pay down the principal as you want. Now, the other thing you have to recognize is, you know, if the bank picks up in a habit where you're not paying any principal down and maybe you're just servicing the interest, they may start forcing you to stop paying them the principal. That may also happen. But what we're going to share with you as a strategy, stick till the end, and you're going to know why we are doing it this way. Because the first thing before we start implementing the process, we have to add efficiency to what you already are doing so that we can quickly get to your goals and objectives. We don't want to work any harder, Taran, do we?

Nope.

You want to work smart, Smart, not hard. Do we want to take any risk?

Nope, not at all. Try to minimize that as much.

Do you like losing control on your money?

Nope.

All right, so we're going to do all this without working any harder, without losing control over money, and with not taking any risk. Now, if you look at his mortgage balance, that's $320,000, right? So let's just do a tally on his debt. Let's total up all his debt balances, and then let's total up all his payments on those debts. I think we did that, but let's do it again. So his debt is $320,000 on the mortgage. This is a variable debt, by the way. The rate is variable. His car loan is $15,000. His credit card is $10,000. So total debt is how much?

345.

Now, what's the total payment that he's making per month?

That was 2,900, if I remember correctly.

Yes, 2900. Now, according to how we constructed the mortgage, which is we can also. We can keep it the way it is. And this is the outcome that you already see. This is the outcome that's going to have. Or we can restructure the mortgage and actually have majority of the debt not as a mortgage, but as a line of credit against the property. It is possible. You may not be familiar with it. So about 65% of that free market value, you can actually get that as a line of credit. Now, his total debt is $345,000. He can get up to $390,000 in line of credit.

Now, he only needs 345. So let's say, let's assume that he actually takes money from his HELOC for 345,000 and pays off all his debt. So this debt is paid off. It's not. His total debt is not eliminated, is just it's been paid off from mortgage or structured loans and moved towards HELOC. The debt of 345,000 now sits in a HELOC. He still owes the bank money, but it's sitting as a HELOC versus a conventional principal and interest payment. Now 345,000 on HELOC interest rate is 4%. So what's his payment now per month to the financial institution? So 345 multiplied by 4% divided by 12. 1150. See, there's cost of borrowing and then there's cost of opportunity as cash flow. What is this payment per month on the mortgage? Taran?

$2,100.

What's this his interest rate?

2%.

What's the interest on the HELOC?

4%.

Is it more than the interest rate on mortgage?

Yes, it is.

But what's the cost of payment or as cash flow? 1150. Higher interest, more. More access to cash. Low interest, less access to cash. Now I understand this 2%. Are you paying down the principal, which is great in this you're just servicing the interest. But how much cash access do you have now? Now the question is, but I want to pay off my debt and if I keep it this way, I think I can accelerate the debt payment. Will hold that thought. We are with you on that. We want to accelerate their goals, which is to pay off debt. We just want to follow a different process. Now this is their actual payment and Tehran, if they're going to follow this new process because we're working with them. So the actual payment is 2,900. What becomes their new payment on the HELOC?

So the new payment would be the 1150.

So if I take.

This number and I subtract this number, this becomes a new payment to the bank. So now how much do they have in access in their hands every month to cash?

1750.

All we did was we restructured the debt. We didn't find any new cash flow for them. They're already doing all this. We just found more efficiency for them. This is what we do for our clients every single time. See, process of becoming a banker goes way beyond what we are able to do for our clients. Because our role is as a coach to make your financials much efficient going forward. We think differently now. Isn't it good thing to have control on cash and then use that cash to grow before you send it away to the bank so that you net positive in that transaction. I mean the bank is going to get paid on the heat up anyways how you want to pay it. Do you want to just transfer your cash and pay them or do you want to actually have control on cash and grow the cash before we send it away? Which one would put you in a better financial position to run Control first? Control first. Now their mortgage balance is 320, right?

Correct.

So let's assume this is on mortgage and their payment is 2,100. Now let's assume the same debt on HELOC and the payment is going to be based on HELOC 1067. Now if someone has $10,000 that they have saved and growed using investments and their whole objective was to pay off debt. So let's just say the debt is on a mortgage. They take $10,000, they apply towards mortgage balance, the balance goes down right on that debt. But will that change their cash flow? Will they change their monthly payment to the bank?

No, because the 2100 is a fixed.

Payment, it's an amortized payment. It'll save you total number of payments that you have to make to pay off the debt, but it's not going to change any cash flow. Now if you have the same debt on HELOC and now you've you've invested and grown $10,000 or you've saved $10,000, you take your $10,000, you apply towards HELOC, the balance goes down. Right. Now when balance goes down and heloc, what goes down with it?

The interest only payment.

Now, in case they need access to capital for an opportunity that'll come up, can they not go back to the bank and access HELOC amount Because they just paid it down, they have access to that capital, they haven't lost control on that access.

Absolutely.

So this is debt at 2%, this is debt at 4%. It has nothing to do with rate. It's all about strategy that you have in mind that you want to work towards for your family goals going forward.

I think you should say that one more time Sarvo.

Decisions to buy something, doesn't matter what it is, should not be based on your interest rates. Hey, I'm going to buy this house because it's a lower interest rate or I'm not going to buy this house because it's a higher interest rate. Well, I'm going to buy this car now because 0% interest rate. I'm not going to buy this car because it's a 3% interest and I'm going to go buy something else which is a 0%. It doesn't matter what the rate is. Your consumer mind is always thinking in terms of rates, rates, rates, rates. It's all based on how does that transaction fit into the holistic picture that you have in mind, which is your family wealth. That is how the decision should be made. It has nothing to do with rate. I wish rate was the most effective way to build wealth. And the banks won't be building as much wealth on lower interest rate environment than high interest rate environment. All right, so let's go back. So we've shown them what's possible by adding efficiency. So now they have the whole debt on a HELOC. Now, what's the balance now to run? $345,000.

Correct.

And the payment is 1150, right?

Yes.

All right, let's capture those numbers here now. So they take the $10,000. They started death benefit. Now, immediately, immediately they will have about $4,000 in cash values available in the policy right away. Now here's another interesting questions that we get asked. I put 10,000, I got access to 4,000. Yeah. In the era of instant coffee, there's no such thing as instant gratification. Anything worth considering takes time. There's going to be time when your cash values cumulatively are more than your premium. This is not a quick rich get scheme. This is a process. It's all about controlling the function called banking. You need to control your process till the end of time, called banking. You need cash till the end of time. So think about not what the policy will do for you today, think about what the policy will do for you years from today. Because it's going to be there till the end of time. Now we have cash values. This is the access. Now there will be daily cash value growth. Right. I know this because I've done this so many times for my clients. If someone starts the policy based on 10,000 in terms of what the cash flow is going to be at age 45 now in just in the first year, I know this with really close degree of accuracy that their daily cash value growth in the first year is going to be $4 a day. And I say first year because every year going forward, this daily growth becomes better. The growth changes not on calendar year, it changes on policy anniversary day. So if you start a policy Today, today is April 1st. April 1st is your anniversary date. That's when you'll see in a compounding in your cash value growth, it gets better every year. And I know this again, in the first year based on this design, it may be $4 in the next year. If I was to have guess with a very close degree of accuracy, it may be close to six or even $7 per day. So every year it gets better. Now, Taran, this is a HELOC balance. This is their payment. Now, this is the cash value. Now, how can someone access money from the policy if the objective is to pay off debt?

So one of the ways that we suggest our clients to do is using a policy loan.

That's one of the ways. But there are two methods, right? Number one method is they can withdraw their own money from the policy.

Yeah.

So they can call the insurance company and say, I would like to make a withdrawal on my cash value and insurance company will do it for you because they don't own the policy. The policy is owned by you. So if you make a withdrawal, which is you're using your own capital, now that's Iran. If you withdraw money from your own policy, what will happen to this future growth in the policy in the first year is $4, and every year it's just going to get better. What will happen to all that growth going forward? Will it continue or will it stop?

You're going to slow it down or stop it.

Exactly. See, the whole mindset is I don't want to pay interest to anybody. I want to use my own capital because that's the most effective way to get ahead. If you use your own capital, yeah, you're not going to be paying in trust to insurance company for using your own capital if you withdraw it. But you're going to lose that interest or that growth that the policy will ever make for you going forward. And trust me when I say this, the cost of losing interest is far more greater than cost of paying interest. You're going to pay or lose interest on every transaction. You either borrow someone else's money and pay interest or you use your own cash and you lose interest. Now, if you withdraw your money, you're going to lose that growth, which means you're going to lose that interest. But yeah, you don't have to pay any interest to use your own money, but you're going to lose it. Now, the other way we can use or access money from the insurance company is via a method called policy loan. Now, Taran, is this policy loan something that they have to qualify for or is this policy loan contractually guaranteed?

Contractually Guaranteed.

So it's contractually guaranteed. Which means the moment you start a policy, you don't have to qualify for a policy loan. You're contractually guaranteed. Now what you can borrow from the policy is equal to 90% of your cash value. So I'm just walking you through the first day you put money in. This is how much cash you have. And what would that transaction look like? So policy alone is 90%. So what's 90% of $4,000?

Tehran 3,600.

Now this is the money that you can access from the insurance company as a loan. Now when you access money as a loan against this policy, Tehran, how does the transaction work? What's the collateral to the loan for the insurance company?

So the collateral is the policy, the death benefit.

The collateral is a cash value.

Right, Sorry. The collateral is the cash value.

So what does that mean? What it means is, well, if you access this money as a loan, you cannot access $3,600 again from your policy as a loan. Because insurance company has used 3,600 of your money as collateral. You can access it once you repay the loan. It's not that your $4000 has gone down all year. 4000 is still intact in the policy is growing every single day is just a portion of that money has been used as collateral. Now the lien for that loan is your future debt self, your death benefit. So God forbid you took that loan and you didn't pay it back and you died. Your outstanding loan will be deducted from your death benefit and the family gets the remaining money. That is why when you access a policy loan a there is no qualification. There's no income check, there's no credit check. And in addition to all that, there is no consent to repay the loan. The repayment is controlled by the policy owner. So Taran, if you borrow money like this, there's no qualification. Is that a good thing or a bad thing?

That's an amazing thing.

Have you ever borrowed money from the bank? Even $4,000 without qualification?

Nope.

They won't even give you a dime of money without qualification. Not bashing banks, it's just their process. Whereas with policy, with insurance company, you have the first right to refusal on the access to money. And you can borrow 90% of your cash value, no questions asked. And you don't even have to commit to repayment. When you don't have to commit to repayment, that puts you in total and absolute control. You can use repay based on your terms. But you get to repay. Why? Because if you were financing that $4,000 from a bank, you were obligated to pay the bank back. When you're borrowing money from a policy, be obligated to yourself to pay the loan back. Because you're banking, you're not leveraging.

Yes.

Now, thiran, what's the interest rate that insurance companies charge on policy loans?

So, as of today, it's 6.2%.

That's interest rate from one of the insurance companies. Right. But each company varies. Now, here's another interesting fact. There's no free money.

So if you're accessing money as a loan, there's going to be interest on it. Why? Because this is not your money. This is insurance company's money. While your money in the policy continues to grow, Because a policy loan never interrupted the growth of your money. Now, I'm going to assume, and I'm going to use calculation at the highest interest rate with one of the insurance companies that we use, it's at 6.2%, but the interest rate varies from maybe 4% to 6.2% from company to a company. But I'm going to use 6.2%. Now, 6.2% is a simple interest. Now, simple interest is charged on daily basis. So if you borrow $3,600 in this transaction, 3,600 multiplied by 6.2% divided by 365, this is going to be your daily interest on the loan. People look at 6.2% and they come to a conclusion. Holy smokes. Why would I borrow money from insurance company at 6.2% when the bank is giving money at 2%, they talk about the rate. Initially, rate doesn't matter. What matters is the strategy. Now, this is your daily interest on the loan. But does the interest or outstanding loan interrupt the daily growth on the policy?

Nope.

They're earning $4 per day as daily cash value growth. And the interest is $0.61 per day. So, Taran, if I say to you, give me 61 cents, for every 61 cents you give me, I'll give you $4 in exchange. How many times would you trade your 61 cents with $4 from me?

Every single time.

Every single day. And maybe multiple times on Sunday.

Right. See, this is the transaction. This is literally what happens. So what happened in this scenario was the client was able to recapture the cost of interest charged by the insurance company in the growth of the policy. That's the essence of becoming your own banker. Nelson says the whole objective is to recapture the interest that you're sending away to someone else's bank and build wealth. This is what he means. You're able to recapture the cost of interest in the growth of your cash value. That's a heck of a deal. Grow $4 at the cost of 61 cents. I'll take that every single day. No different than Tehran. Now let's go back to this case study. So $345,000 payment is 1150. Now how much payment did they actually save by restructuring their debt?

Tehran 1750 per month was. Yes, that was it.

So saved cash flow is 1750 per month for them. Now what is saved cash flow?

Saved cash flow is opportunity for them to use those funds for something else. Just.

That's right. So saved cash flow now becomes an opportunity for them and it's going to work for them going forward versus work with someone else. Initially it was all leaving them. Now it's an opportunity to put that money to work and then apply towards the mortgage balance so that then this where they're making progress, they're coming out ahead positive from the transaction. Before they were just giving up the opportunity to do something with that money, right? That's correct. Now going back to some of the goals. So what was the goal? So the first goal was to control the cash flow. So by adding efficiency to what they were doing before, before how the debt was structured based on where it is, how it's structured today. Did we accomplish that objective? Control their cash flow 100%. 100%. Now the next objective is to reduce debt. So let's go down to the next objective. How are we going to do that? Now going back to the policy, so we describe the attributes of the policy. The daily growth, the daily interest. Now they could have taken the $10,000 rather than putting into policy, they could take that money and apply towards the HELOC right away. Would they accomplish the objective by taking their saved extra money and apply directly towards that HELOC debt and reduce the debt and accomplish their objective?

Yes.

But what would they achieve after that if they did it the conventional way?

If they did it the conventional way.

They would have the same monthly payment. But in this scenario, because they're reducing the heloc, their monthly payment, the interest only payment reduces and so their cash flow goes up.

It does. But let's just say they don't take the 10,000 and flow to the policy, they actually take the 10k and actually apply it directly towards HELOC. What would they accomplish if they take the $10,000 and put it directly on the HELOC versus taking $10,000 putting into policy, creating death benefit, creating cash value and then using the policy to pay down debt, which we'll come to. But if they take the 10k applied towards debt directly, all they achieve is debt being paid down. That's it. Now what we have done is we haven't changed the goal, the number two goal is to pay down debt. What we've added is one step before they actually start tackling that HELOC now which is to take the money put into policy. Now they're going to be taking policy loans to apply towards their debt, not their cash. This is one extra step of efficiency that we added. The efficiency is what is to stop a financial leak. Because if they take the 10k applied towards debt, that's financial leak because money is going to be leaving them again. When they took the 10k they put into policy, they created immediate cash values of 4,000, loan available of 3,600 and death benefit of $150,000. So God forbid, in case they die, there's death benefit for the family. But at the same time now they're not going to be using their money to accomplish their objective of reducing debt. They're going to be using insurance companies loan available to to reduce their debt while their money in the policy continues to grow so their money will never ever stop working for them. So they stopped that leak, the leakage of transferring their money away from family forever. So they're still doing what they wanted to do, they just change the process and they're going to accelerate the building wealth while they're reducing their debt. Because when you take a policy loan, your cash flow is still keep growing. When you take a policy loan to apply towards debt, your debt balance keeps coming down, but your cash flows keep going up. So you end up paying down your debt as your wealth is being built up at the same time. So let's go through the transaction now. Today is April 1, 2022. Their balance on HELOC is 345. And then the payment per month on HELOC 1150, they take a policy loan on April 1. How much is the loan amount? $3,600 because this is how much they can borrow right away. And what they're going to do is they're going to apply towards the HELOC balance. Now when they take insurance company's money apply towards HELOC balance, how much of their own money has stopped growing. Now their money is still growing, their money's still growing. So new heloc balance is 345 -3600, right?

Correct.

Now when the HELOC balance goes down, what goes on with it?

The monthly interest payment for the heloc.

So what is your monthly interest payments? This is at 4% divided by 12. So now your monthly payment is how much?

1138.

So what did this save? So this is new monthly payment.

Right.

Now how much did they save on monthly payment by taking insurance companies money to reduce their debt.

So they save $12 a month.

So difference between this number, the previous and this number. Right. And the current, this is a savings now because that money doesn't have to go to the bank anymore. This is the whole beauty about restructuring the debt, right, Is to increase your cash flow as your debt is going down. But now the question is what to do with the cash flow. See what we created is no extra cash flow. You were already using this cash flow. We just found a different way to structure your debt so that we are able to free up some. Now what you're going to do is because you haven't changed your cash flow, what you're going to do now going forward is you're going to change who is getting your money. Now now remember, how much cash flow did we save by structuring the debt from a mortgage to heloc? How much did they save from a monthly payment standpoint?

So that's over 1750.

Yeah, that's 1750. Right. Now what they're going to do is so savings from restructuring debt which is 1750 per month. So they're going to take this $12 that they saved by using policy loans to apply towards heloc, add it to this, this is the new money and this is what they're going to pay back their banking system. They're not changing their cash flow, they're not working any harder, they're just changing who is getting the money. So if you go back to the first objective, which is to have more control on cash flow. So by restructuring the debt, yeah, they had more control but now by doing it, the process of becoming a banker and they also have their cash flow coming to their system versus away from their system. Money coming towards you becomes an asset. Money leaving you as a liability. The reason why it became an asset because that debt is now financed by your banking system. Whosoever controls the debt gets the money. Your banking system controls that for $3,600 of debt. Now your banking system should be getting that money. Makes sense of Karan. Yeah. So now new cash flow is not just their monthly payments that they save by restructuring the debt. Which is 1750amonth. But it's also the money that they saved by paying off the debt. Right. The paying off $3,600 on the HELOC, which is how much? $12. Right. So the new cash flow that they have is it's a combination of these two. Would you agree?

Yes.

So per month. So per month, this is the new cash flow combination of these two numbers. Now, per month or per day, how much is the cash value growth in the policy per day? $4. So equal to $4 per day. And let's assume there's 30 days in a month, in one month, how much do the cash values increase by?

120.

120. Right. Now let's fast forward now. Let's just fast forward three months. And there's a reason why I'm doing that. Just stay with me. Now this total money per month is now coming back to the system to pay back the policy loans. So they're diligent, they're paying it back every three months. Plus their cash values in the policy are also increasing every month by 120. So if we fast over three months from here now. So April 1st. So April, May, June, July to July 1st of 2022. Let's talk about what's transpired in the transaction. So they've been paying their policy back 1762 per month. That's what they paid back in three months. Plus their cash values have been increasing every day. And over the course of three months, that's 360.

For three months. So now how much can they access from the policy again?

So it would be those two numbers added together, 5, 6, 4 6.

It'd be combination of those two numbers. Right. Now, can they take this money again as a loan from the insurance company and take this money and apply towards whatever the debt balance was on the HELOC on April 1st?

Absolutely.

Now what will happen to the debt balance on heloc? Will it go down? Yes, but quick recap again, they're still servicing that minimum payment on the interest rate. So the interest is not growing, they just paying the interest. So the debt balance hasn't changed since April. But now starting July, they can access another 5,646 from the policy and they're going to take this money and apply towards their debt balance. And now what's going to happen to the debt balances? It's going to go down. So this is as of July. Now, you with me so far?

Yeah.

So as of July.

1, 2022, this is what's transpired for them, their debt balance has now gone down, so 5648. So this minus 5648. There you go. So now the new HELOC balance as of July 1 is 33-333-354. Now, when the balance on the HELOC goes down, what goes on with it?

The monthly payment.

Monthly payment now it's 11, $1,119. So what they are able to save now is actually $31. The first time when they did was $12. Now it's $31. Now they take that 31 per month, added to what the original cash flow to the banking system was, and then they pay more to the banking system. The system still grows. So every three months they're able to take the loan from the system and keep attacking the helocopter. So what's going to happen is ELOC is coming down, cash flows are still growing, plus you're getting the money back in your system. Now, if they wanted to accomplish the objective of paying down the debt, which is the number two, did they accomplish the objective? And now they can put the whole acceleration and velocity in what they already were doing because the frequency, how quickly they can pay down their debt will accelerate. How much time will it take for them to pay off the debt? If you go back to their objectives, what were the objectives? Obviously, so objective was to have control on the cash flow. We accomplished the objective to reduce the debt. We accomplished their objective. They're efficiently now reducing the debt. Now what about having access to capital? So as they're reducing the debt because they're maximizing what they can get from the policy. Right. There may not be some money left in the policy because they really focus on reducing debt. Now, as the HELOC balance goes down, if an opportunity came up for them, can they not go back and access that HELOC to capitalize on an opportunity?

100%.

So did they ever lose control to access capital to capitalize an opportunity?

Nope.

Now, as you're reducing debt on heloc, you have access to capital, but your cash flows are growing and you're also getting the money back in your system. How is that in terms of the fourth goal, which is building wealth simultaneously being able to achieve all the three goals?

Yeah, that sounds amazing. It sounds like it's an efficient process.

So if the objective was to build well, they didn't just accomplish build well, they were able to accomplish all other three objectives at the same time. Now, if they can do it, do you think it's stopping anybody else watching this video to do it?

No, not at all. Anyone can do this.

Anybody can do this. Here's what you need to make this happen a you need to educate yourself on the process of becoming a banker. So if you haven't already, and I'm going to sound like a broken record, get a copy of this book. The link to order this book is underneath the video. Comments and if you haven't already watched a introduction on the process of becoming a banker, the Infinite Banking concept, go to watchibc.com there's a link popping up right now. Click on that link. Get Educated Once you're educated, connect with us. Talk to us about what resonated with you on the process. What were your aha moments? How do you see yourself using this system? Let's talk about what your goals are. What are you looking to get accomplished financially? And most importantly, we cannot talk about achieving goals if you don't know where we are. In a life journey, it's important to understand how you structured the day from income, assets, liabilities. And once we know all that, our team will start working on setting up the system in place and we'll walk you through how to do it. You're going to get a lifetime of coaching by working with us on this process, and that's the true value that we can bring to our clients. Let us know with the comments below. What was your takeaway from this video? But again, if you haven't watched the introduction to IBC, click the link above watchibc.com and let's get started.