When someone can't get approved for whole-life insurance, Richard and Dan show how to apply infinite banking principles anyway: insure a spouse, adult child, business partner, or corporation instead. The core moves stay the same, you just shift whose policy builds the capital.
Chapters
So you're amped up, you're super pumped. You're so excited to get started with the infinite banking concept. You just can't wait. You met with your coach, you went through planning, you designed your program, you submitted the application, you sat there like anybody does when their application is in underwriting, twiddling your thumbs to no degree, waiting for some magical response that says, woohoo, I'm approved. And then you get a phone call from your coach and you don't have the news that you wanted to hear. You found out that for whatever reason, the powers that be at the insurance company, the underwriting department, their job is to protect the pool, the big fat money pool that you want to be a part of. Their job is to protect that pool so that they don't have an early payout event. They've decided that for that this reason they're not going to provide coverage to you. Either postponed or potentially declined. Can you still do the infinite banking concept? We've had this come up recently. Recently a number of times. I, I think we even have some other videos about it. But I'm excited to chat with you about this today because we're going to give people some insight, some ideas on what they can do, how they can proceed, and we'll try to even use some examples for some recent client cases.
For you out there watching this, this happens could be because of some health event that that person's had in their life, or maybe they're just rated at a point that it's just not feasible for them to go ahead and practice the infinite banking concept with them as a life insured. And as Richard said, this is a deflator. I've seen it. I felt that on the calls that I've made to people, you can just feel their energy being depleted because they're excited, they want to get going, and then all of a sudden they're given this news. What happens and what are the possibilities? I've heard different people say it in different ways, but you got to find another body. That's kind of the piece that we coach people to do, because this concept doesn't change. You can still do exactly what you were intended to do. You just have to have someone else, somebody that you have an insurable interest in. That's one of the things that we, as coaches, we can talk to you about. Well, who, who might that be? It's just an opportunity for you to continue to control the banking function as it relates to your needs, so you don't have to give up on the idea just because you're not insurable. How do we consider doing this differently? We'll have a conversation about who else in your life that you know you'd have an insurable interest in that we could use. And sometimes it's a child. And I like the idea that works for a lot of people, they have children. That becomes a way for them to start to practice the infinite banking concept. And I kind of thought it was really unique. When we go to page 82 of becoming your own banker, Nelson speaks about this exact thing. One thing I just, he pointed out is that when that gentleman died and left his family, the cash value that he left back in that policy for his family daughter to use, that was very much like having a death benefit. Cash value had grown and he left something behind in a policy that someone else is a life insured.
In that example on page 82 of the book and, and the illustration on page 83, funds the policy owns, uses the policy passes away after he's done getting all of his money back out, leaves the policy and an asset behind to his daughter. The cash value component is very similar to what he probably would have left behind in a death benefit if he was insurable if he had gotten his own policy in a similar circumstance. So it still leaves behind something tax free instead of a tax free payout, it's a tax free bucket of cash value. And the daughter is now able to use that in continuity. He had a utilization for retirement, you know, passive income. And the daughter is able to have an even greater enhanced passive income to use later on down the line. And that type of multi generational thinking is part of what infinite banking concept is about. People like to think that it's just a matter of getting whole life policy and that's not true. We want that policy as a, as a tool to accomplish the objective in an efficient way. It's just an efficient vehicle to get it done. I mean ultimately the, the general premises of becoming your own banker can be utilized. You could use a shoebox stuff with cash. It's probably not a safe thing to do. I mean if your house goes up in flames, you're putting all that at risk. But the concept and the underlying principles of paying yourself first, paying yourself more than you would give somebody else, harnessing the potential of that capital, putting it to work for multiple things in multiple generations, those, those thought processes can still be applied to other things, just not as efficiently as if we have the insurance contract. So it's simply better with the insurance contract in place. It doesn't matter who the body is. Dan and I, we have fun conversations with people every week, all day long. And we have, we sit here and I say like most of the time I've got my infinite banking hat on, but through every conversation I have to take that hat off. And I also have to put the insurance guy hat on. And we need to make sure that we're doing certain fundamental things to ensure that family protection makes sense. We have the sensible people insured where we can. We're always seeking to make application on the body that seems the most sensible. But we're always trying to figure out who's our fallback. And I have a recent example actually happened here today. Dan, you know, speaking to a gentleman policy has been in underwriting for about 40 days. You know, they request an attending physician statement. Young guy is about 4 years old, makes good, good money. He's a sole breadwinner for the house. Wife does an amazing job looking after three rambunctious boys. They homeschool, he works out of town, so he's gone a couple weeks out of the month. So she's kind of on her own because she doesn't work. Because when you deal have three rambunctious boys in your homeschooling, you're actually doing more work, you're just not getting paid for it. And so the insurance company, they don't attribute the same financial value to that person in the household. Even though anyone listening to this, you know that person has tremendous value and tremendous financial value. But the insurance company has limitations. And so here we are in a situation we've applied for both people. The gentleman was declined for a variety of reasons. And because of that, now the only insurance he has is through his group benefit plan, which is insufficient. But they want to do ibc, which means we could make a pivot and we could say, look, let's take the big policy we're going to do on you, we can transition and slide that the same deposit or premium dollar onto your wife. We were able to negotiate and go to bat with the life company to increase the insurability, the amount of death benefit potential on her life than they would normally gr. So we were able to get the right size of policy in place and they still have the three kids. However, one of their kids is already uninsurable. Presently he has some ADHD related diagnoses that are interfering with that right now. So sometimes they have to be of a certain age with certain, you know, certain things that have happened consistently to be able to be in a position of insurability. So that's a future outcome that we're looking for. But again their pool of five bodies just got condensed down to three. Right. We've got two people out of the pool that aren't going to, aren't going to work presently but it doesn't mean that that'll always be the case. We may be able to reactivate them in the future. And I'll have another example that I think of recently some folks that attended a big event that we did in Edmonton. Fantastic event. Our family banking summit. Husband and wife of two adult daughters. The one of the adult daughters was there is going to be engaged here shortly which is great. The other adult daughter, the younger, she just turned 22. So pretty young and she's been an amaz saver. She's built up a good chunk of savings value because she's been very diligent. She's kind of that I'm always putting money away, always saving kind of person. She's got over $40,000 to save capital at 20, you know, just turning 22 years old which is not a lot of 22 year olds can say that. She wants to make it more efficient. She, she's thinking long range and long term. She wasn't at the big event but she's heard from her parents and her sister who are at the event so she kind of getting an idea what to do. We're able to get a policy put in place for her where we're working on that now. But additionally her parents can also get a policy on her. Her father is uninsurable, he's had a heart issue in the last two years and so we won't be able to get insurance policy. I'm still a young guy, he's under 50 years old. We don't yet know about, about his, his wife if she's insurable. They own a bunch of real estate. They have a couple of apartment buildings, other rental properties, roughly about 30 to 35 doors that they only control. They've had ups and downs with their real estate like anybody does. It's all in Alberta quadrant in an an oil based economy. So the values are up and down, rents are up and down, vacancies are up and down. But at some point in time those properties will probably be sold or they'll get sold when you know, mom and dad are gone. Well if the kids inherit those properties and they inherit the corporation that owns those properties. Even if we set up a policy that's on the kids, they still have that mechanism that's in place where, you know, when those properties get sold, there might be a whole bunch of money tied up in that corporation. We're going to be able to now create a multi generational impact. So now when the daughters, if there's policies on the daughters, and the daughters end up passing away at a later date, there's a capital dividend account that goes to a third generation that doesn't even live today. We're talking about using the concept over extended time frames, extended lifespans even, and incorporating the thinking of that longevity. So if the parents get policies, if both of them are uninsurable, one is for sure, then we can look at getting policies on both of the kids. It's reasonable to do that. The corporation can do so. And we're allowing now for a transition where mom and dad get to use those policies for whatever they need, renovations on units of the buildings, on paying down the mortgage on the buildings, et cetera. And then they have all that positive cash flow now from those properties to supplement the retirement. Mom and dad are gone, kids take over the corporation. Corporation has policies. Corporation owns rental real estate. The kids get to reuse the aspects of what's going on here. So you can still create this incredible transition effect by thinking things differently. We do have people who maybe they're not married or they don't have kids, they don't have grandkids. And so it does become harder to find an insurable interest if you're that person, if you're single and don't have kids and whatever, it does become more difficult. But another way that we've been able to establish an insurable interest for people is through business relationships or as an example, joint venture real estate. So a lot of times people will go and buy real estate with a partner. Boom. We just created an insurable interest. If something happens to your partner, you have a direct financial interest in that person being alive, not in there being dead. Right. The baseline for the criteria is, I think is pretty simple. The way the insurance company would say it is different the way I say it is. Look, you have to have an interest in that person being alive, not in the other thing. That's a pretty good mechanism to determine the criteria.
Any kind of business you're in, partnership or corporate together, that's going to give you that same opportunity. And we see that lots where people are looking for, you know, key business insurance. Well, this is a great way to not only build capital, because that's one thing that I can still remember Nelson saying as we Got to teach him to grow capital. You know, remember when he said that he was talking about farmers, he says kind of a rancher that's, you know, raising cows, doesn't want to grow his own feed. Well, most of them do, he says, but we don't teach them how to grow capital. So it doesn't matter if you're a life insured or not. This concept process doesn't change. There's a difference in when who passes away, when that, that contract will be fully paid out, but it still doesn't matter. You're trying to get control of your need for finance. So you got to capitalize, you got to build capital somewhere. And whether that's on you or that's on someone else, it doesn't really matter because you're going to be able to practice all the principles of becoming, you know, you become the depositor, you become the borrower, you become the banker. You get to make the decision going when you're going to pay that policy loan back, how much you're going to pay it back. You're also going to share in the profits of that life companies. You become all four characters. And that's what Nelson spoke about. Yeah, it'd be nice if we were all insurable, but that's just not the fact. As you were speaking, Richard, I thought of the book that Dwayne Barnell did, A Financial Peace of Mind. And for people that are really wondering about how could I do this on someone else, that's a book I'd recommend you get because Dwayne just goes through that where he used his daughter and he started a policy on his daughter and just how that will play out over her life and how Dwayne and his wife are going to use that policy that they started on their daughter to do everything related to the infinite banking concept to build capital, put that capital to use, to deploy it for different things in life and then at some point passive income that's going to pass on to the daughter. What a multi generational kind of way of making a difference in your family.
Nelson was referencing, you know, cattle farmers.
Couch.
Ow. And look, if you, if, if you, if you got cattle and you got a lot of head of cattle, if you, if you aren't growing some grass, if you don't have some fields, if you don't have some way that you're growing your own cow chow to feed that herd and you're getting all, you have to pay for all of your feed, I mean you're, you're gonna, you're not gonna have a ton of profit left over because you're gonna, especially now. I mean, the price of feed's gone through the roof. So you have to figure out how you can, you know, you can put seed in the ground or you have enough grazing lands or whatever in place that you can feed them through the different seasons so that you're not burning all of your capital on the feed to get the, to grow the thing that's actually going to produce the profit. And it's such a good analogy, it makes total sense. And Nelson himself became uninsurable. I believe it was in late 1987 or 1988 when Nelson went in for quadruple bypass surgery. And he used an analogy talking about, you know, the wonderful machine called the heart lung machine. And you know, he says, you know, he always asks the question, do you believe that you can live without a heart? Of course everyone would say no. He says, well, I did for two and a half hours. They took that thing out of me, they plugged it into the heart lung machine and they re plumbed me in four places and they put it back in. And he said, you know, would you believe that heart lung machine did every single thing that my heart did? But the problem is it only did it marginally, so just keeps you barely alive. And he would say that effectively, the population that we live with today, the North Americans, are doing, they're living on a heart lung machine when it comes to their financial life. They're running through the banking system, doing all their stuff without running it through their own thing. They're not creating the financial heart that they need to, to operate, to create the lifeblood energy of that flow of money throughout the rest of their lifespan. And being that he became uninsurable after that point, he didn't stop practicing infinite banking. He continued to buy policies. He just didn't get it on his life. Kids, grandkids, great grandkids. I'm pretty sure he got a policy set up about 45 days or 60 days before he passed away. He knew he wasn't going to be able to use it. Didn't stop him from getting it done because once the policy was enforced and improved, he would hand it off to the parent of that great grandchild and transfer ownership. But he was able to establish another asset that would continue after him. And that was important to him. He recognized that value. So having some understanding of what's important to you, getting clear that the process is something that you want to do, don't get dissuaded if a little bump on the road comes up and says that you. You yourself can't be the one to be insured. What Nelson would say at the beginning of the book is that this is an exercise in imagination, reason, logic and prophecy. So if you've logically determined and you've reasoned your way to believe and made the decision, this is something you want to do. The only thing that's missing is your imagination to figure out who is the person you're going to do it on. And if you don't have one yet today, if you keep asking yourself the question, I suspect it won't take you horrendously long to find one. Maybe it'll be a year, maybe it'll be 18 months. But if you want it bad enough, you'll figure it out.
