Jayson Lowe hosts a roundtable on infinite banking, using whole-life insurance as a family banking system. They walk through self-insuring small costs like warranties and phone plans, show how a $5,040 annual premium grows at 3% over 40 years, and explain how to access cash value through policy loans without triggering taxes.
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If you're going to go pay for the cost of the warranty replacement or go pay for the insurance to replace the glass on your phone or an electronic item, these types of smaller ticket things. If you are happy to pay someone else the money, why on earth wouldn't you be happy to pay your own family the money? If you would give the money to these guys, why wouldn't you give the money to you? So that it can work for you and your family for multiple generations. Now we're not talking about huge sums, but these are little nickel and dime events. The death of a thousand paper cuts. But in your financial life you can stop bleeding all the paper cuts of money that's draining out the lifeblood energy of your financial life that's draining away. You just think about every time that you bought a warranty, every time that you bought a new piece of electronic or every phone that you're going to use, you, your kids, your, your spouse for the rest of time. And I'm guessing our cell phones aren't going away. So as soon as you break the habit in the cycle, you're self insuring for those items. You will build up more capital, less capital will walk out of your life, more capital will be in your life. Having a roundtable discussion about infinite banking. Bunch of advisors getting together for no good reason other than to talk about how amazing infinite banking is and how it's helping a bunch of people, including their clients, bless themselves. So we've got a lot of fun things we're going to talk about today. Everyone's got a little bit of a topic that they want to kind of bridge the gap on. At the time of this recording we're about to have this really incredible event live in Edmonton. We're getting back in a live events in a, in a post Covid world and Vern has an opportunity to share a really amazing story about how he's operating his family banking system. And you talked about a really interesting ratio. Walk us through a little bit of about part of the topic and discussion that you're going to have. Give everyone a bit of a preview as what's going to come up with a live event during the Family Banking Summit. When you talk about your own family system.
I'm really excited about this personally because the whole idea that we, you know, want to create here is a peaceful, stress free way of life. Right? That's what we want to do. I always say to my clients, you know, there have been, you know, whatever your belief is, spiritual belief, whatever you're here for a bigger purpose than, than to worry about just like keeping the lights on, paying the Visa bill and like going to the grocery store and making sure like it's pretty important, we have food in our bellies. But there's more to life than that and you have more to offer the world than that. And your attention units are all jumbled up because you're focused on all those things. I gotta work harder again, gotta pay the Visa bill, gotta pay off the car, gotta pay the mortgage. Hopefully I can send my kids to school. Maybe one day I'll pile up enough money to live until I die. Gosh, that is a pretty bleak outlook. I just think, think that there's more to offer the world. Everybody has a gift. And so one of the ways that I've chosen to serve the world is to help people solve that money problem, create a peaceful, stress free way of life. So you never have a bad financial day. We all do that here on our team. And one of the quick easy wins that I talk to my clients about is there's a very specific problem that we talk to our clients about which is, well, banking. You do all the work, someone else gets all the money, all the money gets put to work for that bank, right? And so you work real hard, money shows up in your bank account, you feel good for about five minutes and then the automatic debits kick in. What I talk to clients about is how to shift, I call it your debit to deposit ratio. Most people in my experience have a whole lot more automatic debits coming out of their bank account than they do deposits. So that's one of the major topics that I'm going to share with people at the Family Banking Summit in this process. I need to do a bit of math to get this more accurate, but I can tell you 36 to 40, 48 months ago, all these payments are just flowing out of my bank account, out of my control and really not doing anything for me. So that didn't feel real good. Over the course of that time I've been able to take that 25 plus automatic debits and shift that to a zero. And so I don't have to think about moving money around. I don't have to worry about NSFs because I had money in this account and forgot to move it to that account. Oh, it's the 15th, I don't have to think about any of that. I control all the payments and the entire financial function of banking as it relates to our needs. In the month of September, not enough Cash showed up for me to fulfill upon the loan agreements that I created for myself and my family. Those repayments we're collecting all those payments we used to send to other people. I wasn't able to pay the entire amount back to my loan system, so I can make up for that in October. And what I did not get was a call from those organizations who I didn't pay because they don't exist. That organization is the McCarty family banking system. So no one's going to come looking for my keys to my Ford F150 because I own it outright, even though I'm technically still paying it off. But we're the ones collecting and accumulating the payments that were flowing to Ford Credit Canada, God bless them.
We are the ones collecting and accumulating those payments. And if you just, you know, just stop and think that through for a minute. What would your life be like today? Imagine your life if you had, and just think back to over the last year, the last two years, last decade, you had every single payment that was walking out of your family's life and, and just focus on the credit cards, the lines of credit, the loans, the mortgages, the cars, etc. And you just focused on those items and you just added every single one of those up and you took it out over 10 years or 20 years. What is that sum of money? And how would your life be different right now, today? And you had every single one of those payments stacked up in a pile that you could access if you needed to. And on top of that pile or surrounding that pile was a giant protectionary mechanism that even if you didn't touch those payments and something happened to you and you got taken out by Covid or a city bus, big boatload of tax free money shows up and so you still got all your pile of payments back. And it's a self fulfilling system. What an incredible magical way of thinking about your financial life. Now it's okay to think about it, but it's so much better to actually implement it. And that's really what you're talking about. Vern is going from the thinking realm to the implementation realm and actually putting this into real action in your life. And it didn't happen overnight, did it?
No, not even close. And to your point about putting things into action, like that's one of the things even Teran was kind of mentioning that earlier, before we hit record, every time we sit down with somebody, you know, some people just immediately catch it. As Nelson would say, more caught than taught, right? They Immediately just get this concept, they understand it. They're like, all in, ready to go. Some people just like anything else. I always joke and say I'm a little sort of. Some of the other kids takes me a little longer to learn some of these ideas. Right. But, you know, repetition, they come back and practice and then ideas start showing up. But we want to help create some quick wins for the family. People are always looking at, you know, we. You hear the concept, you read the book, you go and watch some of our videos, and there's case studies and stuff where people are talking about vesting, buying real estate, doing private lending, or recapturing a large amount of debt or even building up their system for an inevitable thing that we know is going to happen. Oh, I don't know, a large expense like a vehicle or whatever, in a few years down the road, they're building up for those kinds of things. But then sometimes, if I'm going to plan to put 2,500 bucks or 5 grand or maybe even 10 grand into a policy, it's going to take me a while to get to the point where I can, let's say, finance my $60,000 truck that I need to buy because I work in Northern Alberta or whatever. Well, what does that mean? Oh, I got to wait. No, no, no. We want to find ways to put the system to work immediately so we can start to experience it. Start to, and start to get some of those quick wins. And to your point earlier, I still have to pay my home and auto insurance, but I used to pay it monthly, and they would just pull out 424, $20 per month, two different automatic debits, money just flowing away. Now I'm not lucky enough to get a discount on my auto insurance and home insurance When I pay it annually, the discount's just a bonus. They charge me the same either way. But it's the $420 a month that's leaving my family and being put to work for someone else's family that I'm real upset about and really excited now to recapture that because I've been able to build up my system, access a smaller loan, four or five grand, whatever that is, pay the home and auto insurance. But now for the next 11 months, I get to collect and accumulate and get use and control over the money that was leaving me before. So if something happens in three months where I need access to money, I can access the money from my system and then repay it later on my own terms. But if I'm sending it to the Big green insurance company that takes my, takes the money every year. I can't access that money and it's being put to work at some other entity. But now, now it's being put to work at a company that we all.
Collectively co own, getting people started right away and talking about implementations. We spend a lot of our time, a lot of our education, a lot of our videos is based on bigger ticket items because those are the ones, let's face it, they're ones that stick out for people more. Cost of your car tends to rattle around in your brain a little bit more than maybe the cost of. You know, as an example, Vern mentioned home and auto insurance. But you know, give us an example of some of those quick win items that you've been talking about where they can start putting this into traction mode in their life like right away.
Just to piggyback off what Vern was saying with regards to auto insurance and home insurance. There, that's a quick win right there. Because most auto and home insurance companies give you the option to pay annually and monthly. It is very common for people, including myself, before I discover this process, to pay monthly. And people don't realize that there is some savings. It's not, it's not gigantic by any means, but if you look at it percentage wise, it can be 10 to 10%, 15%, which if you change your perspective around it, is a return on an investment for most, some people and considered a really good return. So if you looked at it from that perspective, you could immediately look at expenses in your cash flow where you could change the payment to annual, get savings right off, right up front just by doing that. Because now you're no longer paying monthly. And in order to pay it annually, most people, the reason why they do monthly is because they may not have the means of putting down the annual amount right up front. That's why they tend to go the monthly route. However, if you implement the process of becoming your own banker, you start your system, you could do this right from day one of starting your system. They just start with $5,000 a year in premium. You may be thinking like Warren said, you know, it's going to take me a long time to get to 60 or 65k in terms of loan availability, to purchase a car or a truck or whatever I wanted to purchase as a big ticket item. But if you start at 5,000, you can easily fund an annual bill like auto insurance or home, home insurance or telephone bill or Internet bill. And so you could easily take out the loan to pay it annually. And then that same monthly payment that you would have otherwise put towards the billing company that you would have been sending it to, you just send it.
To your own system, as you were speaking there, trans. Because I got this little office. I rent it. It's in a commercial building. And one of the requirements that, you know, was handed to me when I signed the lease is I had to put insurance in place in case, you know, somehow I caused a harm to that building. So it's not a big ticket item, really. It's like less than 600 bucks a year I pay for insurance on this little space I got here. But again, when I had the conversation, just like you were saying, tranquil with the insurance company, they gave me the option to pay it monthly or they. Or I could pay it annually. So the first question I had is, okay, if I pay it annually, how much less would my bill be? And so they told me, and, well, there's an opportunity. It's not a lot of money because not dealing with a lot of money, but think about it. It doesn't take much of a system to be able to cover off a $600 annual kind of payment, which is going to give you a increase in your wealth. That's what we're focused on here. Like, that difference increases wealth. For me, even if it's a small amount, every little penny helps to make a difference. And as you get that mindset going, and I think this is what we coach people to look at, what are those little things you can do to make a difference? And I know even when we go to Nelson's book and he. And he talks about it, he says people will look at what's the biggest bill I have, what's the biggest debt I have, and it's a mortgage for a lot of people. And he says it's going to be overwhelming if you start with that. And he coaches you right in his book to start with something smaller. So I think what. What you're speaking about, Taran, it just makes so much value for people to consider because we're building a tailwind financially. That's what we're after. Get some tailwind building. Whether you start with a simple example like the insurance one you used, or something else that's going to make a difference to you financially over time.
So this is another item that isn't necessarily a big ticket item, but it's very common for people, especially in Canada, to get a cell phone plan where you're paying monthly to use the cell phone or to get a Brand new cell phone and the big advertisement is, oh, you don't have to pay upfront, you just paid over time and bundle it with your monthly payment of your phone bill. And what you don't see is over time it actually adds up. In some cases, yes, you may save on it, but in most cases you're probably better off buying the phone outright. That way you're not even locked in into any contracts. And then you would apply the same idea that we, we've been talking about. Take out a loan from your policy and you purchase the phone outright. Again, you're looking anywhere from 600 to 1000 bucks depending on the phone you get. Right. Set up a payment plan. It doesn't even have to be the same one that you would have been sending out to the phone company. You could be something that works comfortably with you with your cash flow.
That's a really good one. And you know what, I, you know what, I also used to pay for it monthly. I used to pay for the insurance to replace my phone when I smashed my screen. Now I self insure my phones. I don't pay that insurance premium anymore.
Yeah. What I found even to building off that is like, you know, if you go to a provider and you say how much could I buy that phone for outright? They'll give you a number. But I know you go right to the manufacturer, you get a cheaper yet that just saves you money. And then it doesn't matter which provider.
You'Re with, you go to that provider.
And set up you know what data you're going to get and all those kind of things. And every little piece of that adds to your wealth. And that's what we're talking about.
Brings me to page 48 of Nelson's book. Expanding the system to accommodate all income. He says in time the total cash values and all policies are adequate enough to take the next step. Self insuring the automobiles for comprehensive and collision coverage. Please note that I did not say liability coverage. This is the insurance that covers you in the event of a lawsuit. Comprehensive and collision coverage is for damage done to your car in an accident. This is required coverage if you have the car financed with some other banking service. But if you are using your own banking system, it is your decision to make. What's really cool about that is at the time that this book was written, yeah sure, cell phones were starting to become a lot more popular, but there's no iPhone. In 2000, just think about that for a second. There was no such thing as smashing your phone or glass Replacement insurance on, on cars and electronics when this book was written. So this is an area now where, Vern, you've identified and drawn with some of the thoughts you have here, where people are spending money on these things. We don't even think twice about it because you're there, you're getting the phone, you're marketed, you've already had a smash screen, you've already had this, you don't want to deal with it. You know, same idea with like the upsell and like warranty items when you go to the electronic store and that kind of stuff. If you're going to go pay for the cost of the warranty replacement or go pay for the insurance to replace the glass on your phone or an electronic item, these types of smaller ticket things. If you are happy to pay someone else the money, why on earth wouldn't you be happy to pay your own family the money? If you would give the money to these guys, why wouldn't you give the money to you so that it can work for you and your family for multiple generations? Now we're not talking about huge sums, but these are little nickel and dime events, the death of a thousand paper cuts. But in your financial life, you can stop bleeding all the paper cuts of money that's draining out the lifeblood energy of your financial life, that's draining away in all these little areas. Well, if you just think about every time that you bought a warranty, every time that you bought a new piece of electronic, or every phone that you're going to use, you, your kids, your, your spouse for the rest of time. And I'm guessing our cell phones aren't going away. So as soon as you break the habit in the cycle you're self insuring for those items, you will build up more capital, less capital will walk out of your life, more capital will be in your life. And you don't need to go and invest any money to do that, it doesn't mean that you shouldn't or that you can't. It just means that if we start and focus on the efficiency of the flow of money first, there's going to be more money. And if there's more money, well then isn't there more opportunity? And if there's more opportunity, well, doesn't it just kind of cascade from there? It's just a rock and a pond and all we're seeing is the ripples of your financial life expanding out further and further because of what you did first, which is you focused on this thing, this, this brain power that You've got to start re engaging the way that money is flowing through your life. All these little things, they might seem small and trivial, but they all add up and they add up over time. And that's why we don't see it. We don't see it because it's just little slices of money disappearing out of your life all the time. All you want to do is you want to get that money coming back into your life so you can optimize it and choose how to utilize it moving forward. But it does require commitment and it also requires a little bit of intentional tracking. I never once considered until today replacement cost of whatever cell phone, electronic items or something. What, what a, what a genius idea of. It's literally taking exactly what's in Nelson's book and it's just relating it at the you and you and I level on the smallest kind of components of life where we're getting, you know, nickel and dime on all these little things.
I also remind me of page 15 of Nelson's book about the grocery store example. Nelson mentioned that grocery stores operate on a very small margin on such items. You know, a can of pee, the margin is only $0.03. You, you ship it from the back door, it costs you 57 cents. And when you sell it from the front door, it's 60 cents. Is inevitable. Is just such a small margin when you sell the canopy, but yet you need to have the velocity, you need to have this, this canopy to sell many times so that your, your store is profitable. Now we're talking about banking is a business. Even though when we use this very small item that just make a very small amount of money in our own banking system. But when we do it many, many times, when we do it on multiple items, it will make a huge impact. And this is our banking store, right?
Further to these little ideas, we talked about insurances. Here's several of the items. I was on a call recently with a gentleman and his wife. They have policies with a particular company. This particular company is very well known in North America. Their big focus is of course to sell term insurance. Now there's nothing wrong with term insurance and having it make sure your family's covered, that's good. They suggest that you have it for a rainy day. What's interesting though is I was looking at it, I was assessing the policy statements and he's looking at implementing ibc. Didn't know what that was when he got the original insurance. He just needs him to cover his family. And there's this whole multitude easily One of the most, I hate to use the word, I'll say confusing or I guess less clear to identify type of statements essentially. And as you go through it, there's all these different riders and all these different pieces bolted on. But when you look at the monthly cost versus the annual cost, if you were to pay it out annually, the savings value mathematically was 13% or 12.85%. So here everyone's out there trying to hustle to go and get a great rate of return on their money and they're taking it on the chin. Getting beat up like with a baseball bat, you know, we're just getting like, you're already down and you're just getting kicked and kicked and kicked because the market's doing that to you. And then inflation starting to get to you. It's like imagine a person who's getting beat up in a parking lot and it's, you know, it's you and your financial life and it's the banking system and it's the inflation guy and it's the tax man, it's the government and they're all just like beating the crap out of you. Now there's this other insurance over here that's beating you up because you're paying monthly and no one thinks to call you and say, hey, by the way, if you just flip that to annual, you would get an instant 13% return on that line item. It's like, wow, here's a guy, he's spending, at the time, he was spending about $4,000 a year on term insurance, on multiple term insurances for him and his wife. Not a small amount of money for what it, what it was. Not only was it costing him more than necessary because he was paying monthly, it's also costing more than necessary because that particular company, their rates that they charge for their insurance is pretty high. We could go get him equivalent coverage. Even if he just stuck with term insurance. He didn't do IBC or anything. Equivalent coverage for the same amount, same value, even though he's four years older and he's going to save him money with a different company because it's much cheaper rates. Plus now he understands that he can pay himself. So it's like a double win, double win, double win. And all he had to do was get a second opinion consult to, to have someone show it to him. No one explained this to him at all. And it's just frustrating to me because there's a lot of people who are sitting around and they've got a junk drawer full of insurance statements. They have no earthly idea what's in there. And you know what, go and get us, go get opinion from someone, go and actually have someone explain it to you. And if they can't explain it to you, go and talk to someone else.
Just a really simple basic opportunity cost calculator. Now earlier I did the math, I said that my home and auto insurance and again insert any kind of a monthly bill here, something that needs to be paid anyway. You can see that probably 420 doll times 12 months, right? That's what my auto insurance was. Again, I wasn't lucky enough to get the discounts of the double win there. So my annual, look how insane that is. My annual premium just for insurance for my home and my car cost me about 5,000 bucks a year. If you're out there, hey, send me an email. Maybe you can give me a better quote. I'm always looking. Let's have a little fun gang, as a team here. So what we've got, what I show my clients is we got to think differently. We're talking a lot about the unseen here, right? And what do we hear? Hey, I don't want to borrow money from somebody else because then I have have to make a payment and I got to pay interest and da da da da. We can see the interest that we're going to pay because it's wrapped up in the contract. You can see what you're going to pay for whatever purchase you bought or whatever.
Right.
It's still a permanent transfer of money away from the family and we've got a double whammy there because we're paying interest to somebody, but we're also giving up the opportunity to earn interest on that money. So we, we don't think about the giving up the opportunity to earn interest. So people think, oh, I'll just pay cash for something instead of I'll save up my money in someone else's bank and let them have use and control over it for a number of years until I build up this pile of cash so I can go buy my next car for cash only. Well, when you make that 30, 40, $50,000 decision, it's not actually a 30 or 40 or $50,000 decision. The good hard working Canadians that are out there right now paying five grand a year for property taxes or home and auto insurance or whatever it is you're paying for, you've paid cash for it. You're not actually making a $5,000 decision. So let's take a look at what does Vern, what's Vern talking about here? So in this case, we have $5,040. That's the cost. So what we want to do is we want to imagine this imaginary fictional account. If it were possible, if it existed, imagine you could put $5,040 into an account today. For context, Vern's 38 years young today. Statistics Canada says I'm going to be around for a good about another 48 years or so. Okay, now, Taran, what is a very, very extremely conservative, reasonably easy rate of return that we could get on on our money anywhere? I'm not picking up specific investment. I'm just saying, hypothetically speaking, what's a really conservative number for our investment return?
Go at six.
God bless you. I'm going to cut that in half.
I have clients who say to, I don't know, 12%. I go, Holy snap. Let's have a further conversation with that. Six is great. If we can get six, we're doing good. But three, if we can get six easy, three is like walk in the park, bear. Okay, so let's imagine we put $5,040 into some kind of a fictional account, and now we can earn 3% per year, uninterrupted for the rest of the days that we're on planet Earth. Like I said, me being just a youngster, I'm going to be around here for quite a long time. That's at least the objective. So now when I show my clients, I say, look, you're not making a $5,040 decision. You're making closer to a $21,000 decision every single time. That's just one transaction, one time, one year, paying that insurance. That means I gave up the opportunity to earn over $16,000 for my legacy, for my future self, or passive income. Time to take advantage of future opportunities. And just by shifting the way that we control the banking function, implementing the process of becoming our own banker, we have the opportunity to recapture all that lost opportunity cost. Because not only are we collecting and accumulating the payments that we're sending to somebody else, we're storing our capital in a system that allows us to grow our capital uninterrupted, day after day, week after week, year after year. The darn thing just keeps growing every day, whether I like it or not. And it just keeps getting better year over year. Even if I, pardon my French, suck at being an infinite banker, if I suck at it, I still can't break the thing.
Opportunity cost is something we do talk about. We mention it on our, on our channel and things quite a bit, but we don't really get a chance to dig into it or debrief it, I think to a degree where people really understand. And so you showing that visual, and there's many tools and calculators that are kind of like that, it really does make a difference. And so with that in mind, you know, one of the things that's missing out of your example, and so in this example we talked about quote unquote and investment. You, you did exactly what I expected. You do, you heard someone throw out a number and you cut the number basically in half to say, well let's be, let's be more conservative than that. But if you had capital growing inside of an optimized vehicle where you could get constant growth on it, even though if, you know, we're not, not home run growth, but just steady, stable, consistent every single time, all the time, and on top of that you would also have constant growth and accumulation on a tax free basis of protective death benefit, which is what is taking place inside of a well designed, you know, infinite banking style. So policy, we are able to create a very powerful way now because in that same, you know, I guess example or description that Vernon indicated there, now imagine on top of that $21,000 number, there is also, let's, you know, ballpark, let's say fifty, sixty thousand, a hundred thousand dollars worth of tax free death benefit behind it. So there's the opportunity cost on the capital itself that you have through your working life. And then there's the, you know, people talk about rate of return. Well, what about the eternal rate of return? What about what you're leaving behind and doing it in a way that no one else can get their hands on it. That's a really, really impressive thing that you're able to do with that, that example you just gave us, Vern. I think it's absolutely phenomenal. I think it'd be interesting just to kind of piggyback what you just shared with us, Vern, about you know, the, again, the idea of that opportunity cost and you're talking about you Give the number $5,040 looking at your, you know, your, your home and auto insurance kind of combined value. So just for the, just for the heck of it, let's take a look at what it would be, what an example of plugging that into a policy might look like. And, and just talk through, you know, again, no, we haven't prepared this in advance. We're just doing this on the fly to have some fun and just to just to have an open discussion about what would that opportunity cost look like and how might that come back to support or be utilized by a family. I just put, again, very random, I put an age 40 male, because, Vern, you threw out 38, you know, and I actually think you're probably, you know, you act younger than that. But for the purpose of our example, I'm going to give just because it was an even number. And so I just plugged in the number of $5,040. This would include the minimum required amount of premium plus some flexible paid up additions premium. There's no extra bells and whistles, nothing else. That and just, just the very basics. And we can see here, we're putting in this, this value which is basically, you know, kind of the same amount Vern identified for his home and auto insurance. We can see the cash value. This is the asset, this is the equity, the accumulating asset of that policy. Growing and growing, growing. We started off with, for the age 40 year old, $87,000 of death benefit. By the end of that first year, we've increased that death benefit by about 11 grand. And so that death benefit, the paid up additions, which is the death benefit accumulated, is growing and growing and growing and growing pretty rapidly. And, you know, just a couple high level things. I'm just going to, you know, pick on year 10 here for a second. We have, you know, we put in $50,400 and we have $55,000 inside of the machine. In other words, we have every single dollar that we've been chunking away for that home and auto insurance available in a capital pile, plus more. Another way of looking at this is that we put in, you know, $50,400. I mean, you should see that right here in the little sum line at the bottom. And the insurer we have, we have about $5,000 more than that or which means essentially the insurance company paid us $5,000 for the privilege of owning the insurance is one way of looking at it. So that's fun, you know, you know, it's nice to actually have insurance that pays you for a change versus the other way around. You know, just go ahead and type in the comments. I'm sure that you would be happy if you had something like that. I'm just going to scroll down real quick just to show the example. So I ran this down, Vern. You threw out 40 years, so that's exactly what I did on the fly. So we got 40 years. That takes this person down to age 80, assuming we stop Putting into it at that point in time. We've got a middle column here that's called dividends, the annual dividend, you can see that that dividend is now over $11,000 at that point. Again, will that be exact? Not quite. It's going to ebb and flow a little bit as the insurance company is profitable. It's based on their profits, but you know, they've been very consistent over a long period of time. We have a nice good capital pile of money. Our cash value, our asset value, our equity in this contract is $467,000. Well, if we add up all of these deposits, these inputs, looks to me like we've got $201,000 of deposits. So we were going to spend this money anyway. In this case, in Vern's example, this is a home and auto insurance for 40 years. That's $201,000 of money flowing through the light, through life. And we have an account value now that's worth $467,000. Would everyone agree with me that we've got more than double the amount of deposits available as working capital? Are we on track there? Okay, I didn't make that up. Right. Okay, good. Just, just double checking. And then we've got this big thing over here like I was talking about earlier, it's this tax free death benefit. So the worst case scenario is you rolled all that money that's running through your financial life through a more efficient vehicle, you get more money than you ran through it, available to work with over your lifespan, and heaven forbid, at some point in time you die. It's hard to break the news to you, it's going to happen anyway. Like you're not getting out. You know, there's only one way getting out of here, and unfortunately it doesn't end well for anybody ultimately. But what determines how well it ends is what you leave behind. What's the legacy you're creating and how are you doing it? How intentional are you being about that? So here we have, you know, 600,000. Even if a person didn't take a dime out of this, they just put the capital away, they were efficient with the money, you never used it or put it to work. Don't you get three times more than three times the amount of capital that you contributed? I can't see that being a bad deal for anybody because sometimes we look.
At numbers on a T on a chart, we go, oh, that looks real good. But guess what? It does you absolutely no good if it just sits in the safe. If it Just sits in the vault. It's no good to you, has zero value. So we want to put this money to work. If I'm hearing you correctly here, Rich, what you're telling me is I could be accessing those values from that system to the tune of approximately 90% of the total value. I could borrow that out of my system, not withdraw. Because if I withdraw it, I kill the compounding, right? I interrupt the compounding. I want to borrow against that value, go out and do things. Before, when we were on a call one time, Rich, you talked about, hey, look, if you know that there's a guaranteed outcome, something is going to happen, you need to make a major expense or, you know you're going to die or whatever it is, wouldn't it be good if you knew that now to plan ahead for that today so you can deal with the problem that you know is going to come in the future, Right? We were on a group call a few weeks ago. We were doing our typical learn with Jay every week. Do you remember how, like flabbergasted, like Jason, I get the sense he probably doesn't go to the grocery store a whole lot like me. Do you remember just how floored he was at the prices in the produce section? Yes, because we know our friends.
Regardless of political leanings, we know that our friends in Ottawa are spending like drunken sailors, in the words of Jason Low. And that bill has got to get paid somehow, right? And a lot of the way it shows up is through inflation. The prices are going to rise. Now, I don't know what 5,000 bucks is going to buy in 30 years from now, Rich, but I know it's going to buy whatever 5,000 bucks buys, and it's going to be a heck of a lot less than what it buys today. So a lot of times I talk to my clients and I don't know if you guys have ever experienced this, and they say, geez, Vern, we might be talking about a premium that may be a little bit north of 5,000, maybe 20, maybe 30, maybe 40, $50,000. And they go, gosh, you know, today I've got X amount of dollars built up. I already put that much money aside for the next 10 years. I could easily make that deposit. But Vern, what happens when I'm 65 and I don't, you know, I might need that five grand to live? And I kindly point out to the client that they've got an consumer mindset, see, because the 5,000 bucks is. Has got it. It's not a Cost to you, you're already paying the premium. As Rich said, that money's all going to flow through the commercial bank as it is before you use it. And your options are deposit the 5,000. The Commercial Bank. Dan, how much do you get to spend if you deposit 5,000 the commercial bank?
Well, you can spend that 5,000.
Okay, great. Now if I just do some, what does Nelson say, third grade arithmetic. If we look at, just for fun, year 30. If we look at year 30 to year 31, do those values increase there by, is that about 17, about 16 grand? Am I seeing that right?
I would say that that looks probably about right.
I can do a quick double check grand and change. Right. Okay, so you deposit five grand into, into someone else's system, you get to spend five. You deposit five grand into your own banking system, and you get to spend three times as much. Like, which one's going to be better for you and your family? Which. What we're doing is we're, we're, we're battling against purchasing power. 5000 bucks is going to buy what 5000 bucks buys. What if we could triple the purchasing power by just practicing this concept? If we fast forward to, let's say, legacy time, because you're talking about that a lot. And I got to share this because it popped in my head like, I don't know what a condo is going to cost in 40 years, but maybe you want to buy your grandson a condo. Maybe you're, you don't know when your final expiration date is. So at age 80, you're strong, you're healthy, you feel good, you feel built up. This nice policy system, we can now take out more than two times the amount that you put into it. 400 grand. We take that, we go buy the condo outright. Now it's owned by the family and the, the grandson, well, he could be making a mortgage payment back to Grandpa. Couldn't grandpa use that thousand or two thousand bucks a month as passive income? Couldn't he just use that in his retirement time to help his, you know, lifestyle at that time, maybe metal expenses or whatever. He could choose to repay the policy loan or not, or he could keep.
Paying the premium, and the premium would keep increasing the death benefit and the death benefit would keep outpacing. And then the end result is he still controls more financial value. He has enhanced dividends, and the estate value comes in and probability is when, you know, grandpa's gone, he doesn't really care about the mortgage payments so much anymore. He might just wipe that loan clean. It's really his call to determine how that's done. But there's still a bunch of tax free money that shows up to solve a bunch of problems. I love where you're going with this, Verne. And I want to expand on that a little bit more because you identified a really important thing. Inflation's a hot topic right now. People are talking about, well, how is this inflation protected? Well, if you're exactly what you identified, if you're putting in a dollar and you're getting 2 or $3 back, maybe that's not 100% beating inflation right now today in its exact status, but over a pretty long track record. It's, we're getting pretty darn close. And the more and more you do with this and the bigger you make them and the more you put in, the more efficient they become. Here's a really interesting thing I want to highlight. In our little example, we've got age 80 to 81. Well, it looks to me like that's just shy of $10,000 in increase in cash value and how much money went in at that point in time? $0.00. $0.00. You get 20 grand or just shy of 20 grand back. I think that's a pretty good exchange. What we're showing here is stunting the potential of the policy by choice. This is why we talk about the policy owner's behavior. The policy owner's behavior, that's you, listener, is more important than the behavior of the insurance company. The insurance company at this stage of the game doesn't, they're not forcing you to make this. A premium's got to be paid. It's just a matter of whether it's coming from your resources or it's coming from the internal resources of the policy. And if it's coming from the internal resources, that means the policy is stunting its growth to some degree, whereas it's coming from your external resources. It's going to be much greater. And just to piggyback on that a little further, we have these Canada pension plan plan, old age security GIs, these different kind of benefits that are anticipated for Canadians. Now there's, there's, there's a lot of. I'm not going to go down, I'm not going to go down that rabbit hole just right now. There's other videos we can maybe link to right here that you can go, you can go learn about. I just did one recently on the Wealth Outburstry podcast with our friend Henry. But if we're, if we're thinking about, okay, here's Some resources that are going to be in there right now, the average Canadian, if they're collecting CPP or what's expected to collect, you know, they're going to be collecting roughly between around 9 to $10,000 a year in gross income, taxable income by the way. Some people will get more, I think, I believe the current maximum is around 14,000 or something a year. If you're going to be getting CPP or OAS and it's going to be, you know, around 10 grand a year anyway. And if you can take 5,000 of that, plop it into a system that gives you 20 to 25 and it increases your tax free estate value, you're literally moving the government's money that you've been, they've been stockpiling on your benefit because you had no choice in the matter and you're now running it through a system of your own control that enhances the overall total value for you and your family. And if you can move money from this account and have more than that money in this account, why on earth would you not do that? Why wouldn't you take the revenue that's coming in and apply it appropriately to maximize your advantage in society? So the idea of stopping to make a premium payment, what people really want to know is they want to know they have the ability to do that. And they've never been taught how to think beyond the capacity of how you might have the ability to also do a lot more. So that's part of where we come in as a coach and we start to say, okay, let's rethink your future capacity. Everyone else telling you to wind down and deplete resources. We want to teach you how to build more abundance of your resources so you have more resources available to do all the things you want to do.
That's one I have with people quite often is when I'm speaking to them and they get to know that Magic age. A lot of people have it in their mindset, it's in that 65 kind of range, plus depends on where. And they start pulling those government support programs and cpp, which is, you know, something you put into all of your life if you're getting that and all those good things. But yeah, just show them. Why wouldn't you want to do that? Because it just, you know, again takes out $1 and makes it more than $1. And it's just a great way for, to help people understand. And I loved how we went down the, you know, you know, the conversation about inflation because I Can remember doing a nice little video on inflation just showing like use, use average inflation rates. Like you can just go back and look at it, what they've been, yeah, the inflation goes up, inflation goes down, but you want to be able to stay ahead of that. And that's one thing about utilization of this concept. And again, we're not even talking about banking here. We're just talking about using the product that we use for the platform. It really supports you keeping, you know, putting capital in place where you're going to stay ahead of inflation. And then, you know, as you guys have done such a good job of speaking about, we haven't even talked about banking and how much you could, you know, those things you can't quantify. When you look at an illustration, you used it here. This was the outcome always. You know, I always go back to Nelson and his example in his second book, you know, building your warehouse of wealth, where he talked about that one example where his rate of return was just phenomenal and an opportunity that he came on his plate and because he had access to capital, he could, you know, get that opportunity, exercise it and then, you know, made a great rate of return on that opportunity.
We talk about inflation a lot, we mentioned it here today, but what we haven't really talked about is the generational inflation. So what you've identified, Dan, is that this, this mindset, this thinking, this opportunity cost.
Capacity that Vern's identified today, that we did a little example of really has to do with thinking beyond our own lifespan and that inflation's not going to stop because you, because your clock did it continues on. So we're creating, now we're extending that opportunity cost value, you know, past everyone else.
So you know, talk about generational inflation. $5,000 in 40 years will look quite different from $5,000 today. Today might be a big sum of money, but in 40 years I'm not sure if it's just for one meal, I don't know. So thinking about generation wealth and also thinking about a well house of money when I become an old lady and holding that pool of money, I would love to finance that to my own family, right? I would like to, you know, become the banker to my grandson. So in so he's going to pay me the mortgages where I'm going to continue to fund the premiums, right? So consider this as a family banking system is for generational wealth. Add to what Dan was saying, just think long term and also is infinite. So thinking about all these different possibilities and I don't know, I'm just so excited. And remember that Vern also said that what we wanted to do with this policy is to use it as a policy loan. So whatever you see from that visual illustration, it is just a snapshot because we're not touching that money. That money continue to grow no matter what you borrow it or not. So that is on a different.
Dimension that you are not going to see from that piece of paper. Those numbers, it doesn't show whatever you are using, because that's a snapshot. It's just like a picture. If you see a picture of five of us today, you just see five of us. You cannot see what the conversation, what the knowledge and what the value that we brought. That's just the same as the illustration you see from the numbers. You cannot see all the opportunities, all the time, this wealth and cash that you captured from all those actions that you're using from this family banking system. So that, my friends, I encourage you to continue to imagine.
Remember we were talking about, you know, I used that example of, hey, maybe grandpa wants to buy grandson a condo or whatever, and that cash flow can come in. And Jingen kind of alluded to that as well in her example that passive income is the mortgage got to be paid to someone. It may as well stay inside the family. And Rich, you said that earlier as well. He could choose to repay the policy loan or not. You said, well, better yet, he could just put more premium in. In this case, you know, that example that we shared earlier, Grandfather's receiving, or grandma or whatever's receiving that cash flow, they can go out and spend it. They can go to Vegas, put it all in black. They can do whatever they want. They can replenish the policy loan, they can keep paying premium. And the reason why I'm pointing all this out is because a lot of times people get on calls with us, go, okay, how do I do infinite banking, Vern? How do I do it? How does this all work? And I go, well, you see that thumbprint there? Your system's going to look about as different as my thumbprint to yours, because infinite banking is infinite, as we keep saying. And it's an exercise in imagination. So I'm here to coach you. We're all here to coach you, to support you, to create the result that you want to create for you and your family. I'm creating the result for my family as Dan is, as Gingen is, as Duran is, as Richard is. It's very, very similar because we're practicing the same concept, but we Might not be doing the exact same thing. I may choose to replenish a policy loan where Rich may choose to pay premiums. It's going to look different for everybody. So I just wanted to point that out. And that's why you need to work with a good coach and do your studying and make sure you understand this concept, because it's not a product, it's a process that you're going to get coached on. And you want to create more independence in your life. That's why you're watching this video right now. You don't want to create more dependence. And that's what we're here to do, is help you create more independence.
And, like, redecorating your house is kind of like a. Like a concept. He doesn't really say anything specific, but let's say we all wanted to redecorate our houses, and we're just. We decided, okay, well, we're going to pick one area. We're all going to paint. We're going to paint the house. But that's all we said.
Well, we're.
So we all agree that we're going to paint the house. We're all doing that. But if we. We take a couple of months and we, you know, chip away at it, when it's all said and done, we take pictures and a little virtual tour, are any one of our houses going to look the same? Heck, no. We did the same concept of redecorating by painting the house, but we certainly went about it a totally different way. We ended up achieving a different result. The end result is it's. There's many areas that you could draw a similar analogy to, like that and Vern, the thumb, you know, the thumbprint. The fingerprint is one of them. Circling back to Jingen and her. Her inflation kind of comment that she made, I really want to highlight this. That $5,000 that we looked at today, that $5,000 is today's dollar that we put in today, which means every single day that inflation is rising, which is a big problem that people are working at, didn't we lock in today's dollar, which was stronger than tomorrow's dollar dollar? So if we shoot out 40 years and we're at age 80, and the little example that we had, and, you know, we have a person that's putting in today's strongest dollar 40 years from now, yes, that 5,000 is, quote, unquote, worth less, but that means the premium. We locked in the strongest dollar today, and we're putting in $2022, and we're getting out $2062 in the growth of the policy that exchanged. So it's kind of like a double WH.
By the virtue of the contractual elements of that policy. And again, how this all. A lot of this comes down to user behavior. There's some customizing design of the policy aspect, but then there's also the user behavior, because if you didn't fund the policy very well, you're not going to have the same result as someone that did fund the policy very well. The end result of this, though, is you're locking in today's stronger dollar. You're getting an increasing growth rate as you go forward in time because the policy is becoming more efficient based on its contractual elements. And the result is you've got a pretty good hedge against the boogeyman that everyone's freaking out about, which is inflation. Now, we know you got a ton of value out of this conversation. I know I sure did. You guys had a ton of value. Your next step is just to make sure you pick up the rest of the conversation.
