Canadian Infinite Banking Concept 101

Because when you really understand what you do, when you practice the infinite banking concept here in Canada is you end up controlling the banking function as it relates to your needs. And if you do that, that is where you get the value.

Hi. Today I'm going to go through the infinite banking concept 101 and I'm going to do a bit of an analysis of an illustration. Here's what I've learned. A lot of people when they learn about this concept and they get excited about it, hey, they want to see the numbers. What do the numbers mean? How would the numbers mean? Look for me. And I get that. But what I want you to understand more than anything is your focus should not be on the numbers. Because when you really understand what you do, when you practice the infinite banking concept here in Canada is you end up controlling the banking function as it relates to your needs. And if you do that, that is where you get the value. All right, so the other second, the second thing I'm going to do today is going to tell you a story. It's not my story. I'm actually going to read out of a book. And it's about a Canadian I and what he wrote about utilization. I think you'll find that interesting because he made some. He makes some interesting points as he goes through that. Now, with that, let's just start with having a look at an actual illustration. And now this is just a partial illustration, it's not a full illustration. And I just wanted to put enough information here to help you understand some of the basic things that you need to know about an illustration. So first and foremost, there's always going to be premiums. Now we call them premium deposits because you're putting money into a policy and you're building value. Now, this particular illustration shows someone who's putting $10,000 per year into a policy. It also shows what the projected dividend is going to be and it shows what the projected cash value is going to be at the end of that year. And it shows you what the death benefit would be at the end of that year. So as you can see, this one goes on. Death benefit keeps on getting better. The notice that over here, the death benefit keeps on getting better each and every year. You can just look at it and see the difference. This is always going to a greater numbers are getting better. This number never changes. In this illustration, it stays the same. 10,000 this year, 10,000 the next year, 10,000. It keeps on going with the same amount. The premiums here in any properly constructed policy for this Purpose, there'll be a limit how much you can put in and it can't go up from that. This here illustration is showing the limit for this particular contract. If it was in place based on this illustration, the most you could put in would be 10,000. Now that's not the least you can put in, but that's the most you can put in. In this particular example, the minimum required premium is $2,500. Now if you put in $2,500, because you could, if you owned the contract that this illustration was used for you, these numbers over here would all be different. So this is just an illustration. And what I tell people about illustrations is it's simply a mathematical calculated table, a tray. They take different parameters and they put it in and then it comes out with a projected number. And one of the things that every dividend paying whole life insurance policy in Canada will do is the cash value, which is the third column here, has to grow to meet the death benefit by age 100. So if we looked at this whole illustration, took the time to go all the way down through it, the last numbers in these two rows here would equal each other. So here's a key teaching point that I wanted you to understand as you look at this illustration. The contract, because a policy is a contract, it's a unilateral contract between you and the life company. The life company has a responsibility to grow the cash value to equal the death benefit. And they have other responsibilities. They have the responsibility of paying this death benefit out. God forbid anything happens to you, that's what they end up with right off the start. You know, the minute this policy is settled in this case, if somebody put $10,000 in to the policy, got it all settled, and the next day, God forbid, they got ran over by a truck, the life company would pay out the death benefit to their beneficiaries. And so what one of the things a life company does for our benefit is they. And their benefit is they start to build a cash value related to the death benefit. Now there's a couple of things that you can learn about the cash value. One is, is that this is the surrender value at the year end, first year end, if you surrendered this policy, that is the amount of money that the life company would give you back. You put in 10, you get 82, 23 back at the end of the year. And they would gladly do that because it takes them off the hook for $372,000 of death benefit. So the life company goes about building that cash value up to minimize the risk to the company over time that they're going to have to pay that death benefit. This person keeps on paying their premiums, we're going to have to pay that death benefit out. They know that. So they want to build up cash value to reduce the risk for them. Now this cash value is also a number that they show you and can show you anytime. And it always comes out in your annual statement what your surrendered cash value is. And that is the same thing. If you surrendered it, that's what they would give you back. So you can see after 10 years, you know, putting in the full premiums of 10,000 a year, that's 100,000 that this person, if this was an actual illustration linked to a contract, would have put in 100,000 and the value at that point is 115. So they could already get access to more value than they've ever put into the policy. These things work and they work extremely well. And the life companies that we use for this process have been doing it for hundreds of years and they're very good at what they do and they know the challenge that they have. And they put that premium to work when you pay it to them. They put it to work so that they can keep on growing a cash value related to that contract to minimize the risk to the life company. That's what they do. And the nice thing for us when we practice the infinite banking concept is hey, we get access to 90% of, of whatever's in this role, the cash value. We get access to that through a policy loan. And if we take out a policy loan versus just taking and surrendering the policy or taking the cash out, our money never stops growing because we've just used the cash value as collateral for a policy loan. So we get 90, up to 90% of our cash value and we can use that. Yes, we're going to pay interest to the life company for the use of that money. And why shouldn't we? Because a, if you and I are in the same life company and this is a participating dividend paying policy that we have, we're participating in a pool of money. And if you're borrowing from that pool and from that life company, you know, I want you to pay interest so that, hey, the profits for that life company get better and better because that's where the dividend comes from. The dividend comes from the profits that that life company experiences each and every year. And they forecast it on these illustrations. They forecast what they think the dividend is going to be. But there's a lot of moving factors, and I just know they're very good at it because all you have to do is go back and look at the history. These life companies have never failed. The ones that we use have never failed to pay a dividend. And if you think about the hundreds of years that some of these life companies have been doing this, it goes through what goes through the Depression, go through how many corrections on the stock market, and yet they stayed profitable and it kept paying dividends because they're very good at what they do and their experience speaks for itself. So just a few things I want you to know about an illustration, but I definitely want you to remember this point. And it's your focus shouldn't be on the numbers, it should be on how you utilize it, your banking system. You know, my first policy that I bought, quite often I will show people my actual numbers, my actual cash value that I've built up in it. Then I'll show them how I've used that policy. And I can tell you that my utilization is double what the cash value is. That's right. I've used double what my cash value is because I've been banking with that contract. I've been using it as a bank, just like a bank account. So I put money in, I take money out when I need it, and I pay money back in when I get paid, just like a bank account. So that you have, you may have at a commercial bank, you put money in, you get access to it, and then as you use that money, you have to put more money back in if you want to utilize it. Now, the biggest difference between this system and just having a bank account, even if you're getting a small amount of interest in that bank account, is when I take the equity through a policy loan out of my system. I haven't interrupted the growth. If you do that at the bank and you take out any amount out of your account, even if it's drawing some small interest, you've killed the growth of that money. When I take and leverage my cash value here, take it out as a pulsive loan, I haven't interrupted its growth. So every year it will grow. Every day it grows. And that's something that's really key and fundamental. So a couple fundamentals I want you to remember. Life company has to grow the debt, the cash value to equal the death benefit. But age 100, that's another key. That's the key thing in the contract that I tell people about. If you want to learn One thing about that contract, that's what they're going to be obliged to do. Grow the cash value to equal the death benefit by age 100. And they do it all the time. And with that, you know, so you think about that every day. My cash value has to grow. And as we design these things and the way we design them, we design it so as you see in the cash value has to keep on getting higher. We want it to be higher because then the life company has less time to get to a higher target. Well, if you have less time to get to a bigger number, what do you have to do? You have to accelerate the, you know, the growth rate within the cash value to get there. So we design them in a way, again, I'm going to tell you, your behavior is more important than the behavior of the life company because you get to decide, am I putting in 10,000 or am I putting in 2,500? If you put in the 10,000, you're going to get access to more cash and you're going to put more pressure on the life company to grow the cash value to a bigger number. And that's what you want for the purpose of banking, but still it's what you do for utilization. So now let's talk about the story that I wanted to share with you today. And this story is based on this book and the person that wrote it, it's Bob Shields is his name and he wrote the book you don't have to Die to Win. And I really like this book. Now it's a little harder to get here in Canada, but you can still find copies. Bob was a Canadian and Bob moved to Canada from Scotland. So that's the first thing I'm going to tell you. When I heard Bob speak live, he, even though he lived in Canada for quite a while, he hadn't lost his Scottish accent. And it took, you know, it really took concentration to understand what he was saying because of his strong Scottish accent. But I got to listen to him a multitude of times only once live, but a multitude times through, you know, videos. And so, yeah, I've heard this story and I've read it. And today I'm just going to read a little piece of his book and it's under chapter number eight. And it's about what life insurance has meant to me. So this is a story that Bob told all the time. I'm going to give you a little background. So it's all about the first policy that Bob ever owned. And that particular policy had a $10,000, death benefit. The other thing I'm going to tell you about Bob is he worked for London Life for years and years and years. So he was a life insurance agent, and he sold life insurance. So he had sold himself this policy, and it was costing him $198.20 a year. That's right. $198.20 a year for a $10,000 death benefit. And he bought that all the way back in 1959. Now, most of us won't even remember 1959, but that's the year that Bob bought it. And it was a policy that start, you know, was just a great little tool for Bob to provide protection in his life. And then what Bob does in this story, he talks about how he started to use it. And now he started his utilization in 1970. And he did this purposely so that people could understand the value that comes with the product, so that he could, in a way, he could utilize it. So in 1970, Bob took his first policy loan against that policy, and it was for $500, and he paid for a trip to Scotland. And I know when he told this story, he said he took his buddy with him. And so the actual flag flight back in 1970 to Scotland was only $180 for his ticket. But, you know, you know, when you get there, you're going to have to have spending money. So Bob took out $500 out of his policy, and he purposely didn't pay it back. That was a decision that he made. I'm going to show people how if I take out $250 every year and only put in 200, how my policy actually still continues to improve increase in value. So that was the first thing he did. Took a trip back to Scotland, said they had a whale of a time, and he got back to Canada and he got back to work. Two years later, he borrowed from the policy again, and this time he actually took out $700. And what did Bob do with that $700? Well, I don't know if you remember 1972. I do. What was happening in the world was the Canada Russia series in Moscow. And Bob actually went to Moscow and took that series in. And he used to always say, hey, I wasn't even a real big hockey fan, but I went. So he was there to see Paul Henderson score the big goal. So if you're, you know, most Canadians will. If they've been here and been around for a while, they'll know about that series and they'll know about how big that goal was for Team Canada. So that's was what Bob did the second year. Now, two years later, I borrowed money to buy a dishwasher. And Bob always, when he told this story, he said, because I didn't want to be one. And so he used the money out of take a policy loan again, bought a dishwasher. 1976, two years after he bought the dishwasher on, well, on a holiday in Scotland with my wife, we bought matching kilts. Now, I was a little bit surprised to understand what kilts would actually cost. And so, yeah, that was another investment that Bob made based on taking a policy loan from that small policy had. Again, he's putting in $198.20, and he's just demonstrating over a number of years how he can take out more than he's putting in. Next thing that he did, he bought. In 1978, he bought an executive package for the Canadian Open at Glen Abbey. So that was something to want to go and see all these professional golfers up close and up front. So he used a policy loan to do that. Again, just a reminder, his objective was to show you how he could take out $250 and only put in 200 all during this period of time, because that's what his premiums were, 198.20. Then in 1980, he bought his wife and a piano. Then in 1982, he bought a set of bagpipes. Now, God rest his soul, because Bob is no longer with us. But I know when he. When I seen him live and when he talked about this, he says, you know, there's still. Those bagpipes are still in the box. I've never taken them out. But he wanted to own a set of pipe bagpipes because, you know, that's part of his heritage. That's Scottish heritage. So Bob just talked about all those things to do. And I remember when he spoke about it, he says, with this one small policy, I've done more things in life than a lot of people will ever do. And so accurate. Like, there's just a lot of people that have never, you know, taken all those different experiences in. In life. And yet Bob was able to use this one small policy to do that. Now, the key thing is, over that period of time, from 1970 all the way through to the end of 1982, Bob had been taking out $250 and only putting in his premium of 198.20. And he said, my cash value at the start was 2,159 and in 1982, at the end, my cash value went up to 28 point. So even though he was utilizing it and utilizing not paying it back, his cash value had increased in that policy. And yeah, that's what the product will do for you. And that's just a great little story from Bob about how he used it in his life. And I just remember another story that Nelson always told. It's in his book, his second book, it's called Building youg Warehouse of wealth by R. Nelson Nash. And he talked about what does it mean to have access to capital. And he tells a very good story about how he was able to buy a timber lot for about $35 on the acre and he was able to sell it 13 years later for $500 on the acre. So he says that's the value. You know, you don't know what the value is going to be from those numbers. So don't just focus on the numbers. The numbers don't tell you the value you're going to get once you start to bank. Remember, that's what you're trying to do. You want to capture the banking function as it relates to your needs. So whether you're using it for investing or whether you're using it for trips like Bob Shields was different things in life. Think things that he bought wouldn't actually increase his net worth, those things. But there were things that mattered to him in life. It was utilization. The infinite banking concept is about that. It's about you gaining control over your need for finance. And once you do that, everything you do will be radically improved. Whether you're buying a piece of property or whether you're taking a trip, you're utilizing the concept as your bank account, then everything you do will be improved. So if you don't know how this all works, I'm going to encourage you to do two things. One, take in more content on our channel. We have lots of good videos just related to this concept. You can get more and more insight as to how it works. Two, I'm going to really encourage you and I know you've already seen the link it's come up. It's called watchibc.com that's a great way. If you don't understand this, you don't have an understanding of how this concept works and why would make a difference, go to that again. It's watchibc.com this works extremely well here in Canada and I've been fortunate enough to learn about it years ago and I started to put it into practice, so I'm going to encourage you to do the same. Thank you.