Vernon and Roman explain how dividend-paying whole life insurance from mutual companies can let families become their own bankers in Canada. They recommend insuring parents, spouses, and children early, since kids can become uninsurable later, and prioritize the death benefit over growth projections.
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Who should be the life insured, Vern? Should it be my youngest child? Should it be myself? Should it be my wife? It all comes down to what's going to have the best growth, right?
How you allocate that may vary based on your objectives, based on your, you know, amount of premium you want to put in, but make sure everyone is protected in terms of protection, in terms of death benefit, and make sure that, hey, you can practice infinite banking using all policies now. Not just your policies, not just your wife's policies, but your children's.
Okay, Canada, you've heard enough. Now you're familiar a little bit with the process of becoming your own banker. You now know that we're using a specially designed type of dividend paying whole life policy to implement the process of becoming your own banker. Okay, Vern, I understand the problem. My money's all flowing to someone else's bank. I need to have that money flow into a bank that I own and I control so that money will work for me and my family. Well, who should be the life insured, Vern? Should it be my youngest child? Should it be myself? Should be my wife? It all comes down to what's going to have the best growth, right? The answer is no. It's not just about the growth. And who should be the life insured may surprise you. So my colleague in Rome and I are going to expand on this question. Stick around to the end and you'll know exactly who in your family should be the life insured. Here we go. So, Roman, I started the video by saying, you know, who should be the life insured? Should it be me or my wife or my kids or. Well, my favorite answer to that question is yes, it should be you, your wife and your kids. But we know that what we're doing here is we're building a system of policies, right, Roman? We're not just going to have one and done have one policy because, you know, money grows on branches, right? So when the time is right, we'll expand and grow the system. But how do we start to determine what the starting point is? I have four lives insured in my home, my wife and myself and my two kids. And I know that you have, and I have 11 policies total. So we're building our system. Correct me if I'm wrong, Roman. You had mentioned earlier that you have eight policies in your system, is that right?
That's correct, yes. So I have a policy on myself, I have policies on seven of my children, and I have a nine policy also for my wife. But that policy, for now, it is term, it is not whole life policy, but still she has protection. So I get those questions all the time from my clients, from my prospects asking me, hey, Roman, am I too old to open a policy on myself? Should I open my policy on my wife? Who should be the life insured in our family? Should it be the younger or should be a female versus a male? Should, should it be smoker versus non smoker? Should it be children because they're younger? So all those questions come up every time and I love this sort of questions. And the answer to that really depends on your objectives as a family. Right. So there's a couple different vantage point where we can look at, not only at like financial, like money wise growth in a policy, like who should get the biggest growth in a policy or who is younger or stuff like that, but we also want to look at.
Who has protection in place and who needs protection in place. Would you not agree, Vern, that only the parents need protection? Do you agree with that statement?
Okay, so let me make sure I got this right. You said, do I agree that only the parents need protection? Do I agree with that?
Yeah, that's a provocative question. So do you agree that that a correct statement?
In my mind that is absolutely not correct. But that's just me, right? You know, if I can expand on that a little bit. Roman, what I think I'm hearing from you is, hey, should mom and dad be covered 100% for sure. In my mind, the priority, I don't even think about numbers. What are we trying to do here? We're trying to achieve the objective to make sure that our family never has a bad financial day as long as we're here or after we're gone. Now, each family is going to have some specific objectives that they want to achieve with their system, and we're going to help them do that. But Roman and I are kind of focusing primarily on some of the logic behind just the numbers of how's the policy going to grow and all those kinds of things. In fact, we don't dive a lot into that anyway because we recognize that every single time we spend a dollar, our money's gone forever anyway. So we're growing capital that really wouldn't have grown in the first place. Right. Because that money would have been spent, it would have been gone. So we're building cash in the policy. We're not really talking about so much the process of becoming your own banker here. We're talking about some of the additional benefits that come along with Becoming your own banker, which is protecting your family. And that's one of the primary objectives. Because if I don't take the time to put protection in place for myself and for my family, if something happens to someone, they get sick or they pass away or they get injured, well, that's going to interrupt our plan. And now dollars have to flow elsewhere to solve that problem because it showed up now and it's immediate. But if we do some thinking ahead of time, mom and dad need to get covered, right? Who is the one that's earning the most money? Well, maybe it's me. Let's say I'm earning the most money. You mentioned this earlier, Roman. Well, let's say that my wife actually doesn't. On paper, she doesn't earn a single penny. Does that mean that her life is worth less than mine? I love how you said that. Is her life worth less than mine? Absolutely not.
And no, it's not.
I might not see the value in putting any coverage on my wife because, hey, I'm the one making the money. But let me ask you, Roman, how are you going to record YouTube videos with me? How are you going to take good care of your clients? How are you going to take care of your business and your family? If, God forbid, your wife wasn't with us and she had no coverage on her life, how's that going to go down?
Yeah, I probably need to take time off for at least one or even two years because I have little children. And if she's not around, then who is taking care of them? Who is driving them to school? Who is spending time with them.
And taking care of them? Because it's a, it's a full time job. And my wife is really busy. She's very busy. She's not at home right now because she's taking care of children. She's driving them to music lessons and stuff like that. Right. So who's going to do that if she's not around? I can't even imagine this sort of pressure on my shoulders. And yeah, absolutely. I mean.
No question she has to have protection regardless of what she does and what income she's making.
Absolutely. We have the ability to literally create dollars when they are needed the most. And when do you need dollars more than when somebody dies unexpectedly or even if they're older and there's terminal tax liabilities and all those kinds of things. And that kind of brings me to my next point. I would much rather have my wife, but if I don't have my wife, God forbid I need those dollars to show up so that we can grieve and we can solve the problems that we need to solve. We have the resources so that we can plan our lives to not replace my wife, but at least hopefully replace some of those duties and give us the peace of mind to make sure the kids are looked after. Now, having said that, you said, hey, should. Only earlier you said, should mom and dad be the only ones who are life insured? And the purpose of life insurance, when you look from a life insurance company like the perspective, the reason why the life insurance was created in the first place was to replace a financial loss, right? Anytime there's risk of financial loss. Now, people in, sometimes in the insurance industry or even in general, they think, well, hey, again, a kid is not earning income. Why do we need, why do we have a financial loss if there's a child that passes away? Now, unfortunately, Roman, you've heard some stories, we have had some cases already where a parent has claimed on a death of a child. And the feedback that we've gotten from them is obviously, they would much rather have their child. But the peace of mind that those families were given and knowing that that death benefit was going to show up to take care of business expenses, household expenses, and give the time, the family, the time that they needed to just grieve and to think, Roman, you and I love what we do, right?
Yes.
But God forbid one of your kids became an angel. You don't want to be. You're not going to be showing up here hanging out with me. You're going to be with your family. Is that right?
Yeah. Yeah. I don't want to even think about that. But if I had to have this hard time, then I would definitely stop working for a long time.
100%. Now, we're not trying to be doom and gloom here, folks. The good news is the likelihood is you're going to have a long, healthy life. But the point is that Rome and I are making is that when we build a policy system for our families, we're looking at not just. Just numbers on a paper, because at the end of the day, if something happens, none of that crap matters. It's going to be the last thing that you're thinking about. You're going to be thinking about taking care of your family. So we want to multitask your dollars and sort of kill multiple birds with one stone. For lack of better terms, I may have a certain amount of premium that I'm setting aside to put into a system of policies for myself and my family. And a lot of times people will ask functional or number related questions like, hey, wouldn't it be better to put all that premium into one policy? Yeah, maybe on paper, if you looked at the cash values in year 10, maybe they're slightly better if all that premium went into one policy than in four or five policies for your family. And who cares? None of that actually even matters and none of it is actually real until we get there. There are so many factors that are going to impact the performance of your policy system. And Roman, whose behavior is the number one that's most important in terms of how your policy system is going to perform? Is that my behavior or would that be the life insur. Insurance company's behavior?
It's my behavior, of course. So insurance company will do its job. They are. So as Nelson Nash says in his book, actually this book is just behind me. It's Becoming youg Own Banker Book. If you haven't read this book, please do so. Nelson Nash is expanding in his book that life insurance is just an administrator in your bank. Basically you are the banker and life insurance is administrator, which means life insurance will provide that death benefit when it is needed. It will provide the growth of your cash value. So the administrator in the bank is making sure, he puts the investments at the right place to make sure it is growing with the least risk possible. And yeah, so the life insurance will just do its job. The numbers will be the numbers. But it is absolutely my behavior to make sure that I bring effectiveness, efficiency to my growth, to my cash value and I increase all the numbers. Because if I just do the bare minimum, if I just do whatever it takes me to pay the minimum payment on my policy, I mean, life insurance will do its job. But will the numbers be the best numbers for me? Will it be the best design for me? Will it be the best outcome for me as, as a banker, as a. As a policy owner? Right.
Yeah. Roman, you raise a really good point. Like the life insurance companies have been doing this very long time. The reason why we're using these dividend paying whole life policies, ideally with a mutual insurance company, to implement the process of becoming your own bank or the infinite banking concept in Canada, is because there are some specific contractual guarantees that come along with these contracts to make sure that the cash flows are growing. It's not incumbent upon an investment return. Although investment returns that grow inside the life insurance company, those returns that they receive are just one income stream that helps grow the overall profitability of the insurance company. The insurance company has many, many products that they sell term life insurance, universal life insurance, whole life insurance, segregated funds, group benefits, critical illness, the list goes on. And their job is to collect more premium. Then they pay out in claims, expenses, lapses, taxes and all the rest. Right. Collect more policy, loan repayments and interest, collect more investment returns and grow that pool more than they pay out as an expense. And when they do that, that's achieving a profit. And then they're contractually bound to share those profits with us as the life insurance contract owners, which means we co own the business with the mutual insurance company. Oh, and by the way, before I share my next point, Roman Canada, you may be finding yourself. Well, I want to learn more about this process of becoming your own banker and more about insurance planning for my family. Make sure you go to watchibc.com that's watchibc.com and you'll be given access to a 90 minute webinar where you can start to learn more about the process becoming your own banker, the infinite banking concept. And the key thing about becoming your own banker is life insurance. But it's all about taking advantage of the living benefits that come along with with owning one of these policy contracts. And one of the benefits is implementing the process of becoming our own banker and allowing us to get access to policy values to achieve objectives that we otherwise would have used our own cash for or borrowed from someone else's bank and without interrupting the growth inside of our policy. Now getting back to contractual guarantees, the cash value has to rise so that it matches the total death benefit of the contract by the time the life insured reaches age 100. And we structure the policy so that the death benefit's actually going to grow as we capitalize or make deposits and as we receive dividends every year into the policy. Now the life insurance company is going to make sure that the cash value and the death benefit match by age 100, no matter what, whether you do like what Roman said, if you put the minimum into the contract, think about those words. If you put the minimum in, there's going to be a base or a required premium and there's going to be a maximum premium. If I put the minimum in, well then the policy is going to do the minimum. If I put the maximum in, it's going to perform at the maximum amount. If I decide to take my dividends each year and take them out in cash and spend them, well then the policy is not going to grow at the same rate that it was projected to grow. So that's what we mean by who cares about the numbers in 10 years because so many different factors are going to play into it. Maybe you decide to deposit less into the policy for any reason that shows up. Maybe you decide to expand your system and put more policies on a different family member or those dollars need to go somewhere else, those factors are going to show up. All we can do is focus on what we can control. And our behavior is far more important than anything insurance company is going to do. Because we decide to start the contract, we decide to capitalize it to the minimum or the maximum, what we do with our dividend, how we use the system, all those things are going to play a factor in terms of how the system grows. For us to sit here and look at a policy design illustration and go, wow, Geez, in year 10, there's 47 cents more in this policy design than in that one. Gosh, I better go with this. You're missing the entire point of the process of becoming your own banker and life insurance planning. The whole point is that there's a problem out there that Canadians are facing. And the problem, simply put, is called banking. Somebody else is collecting and accumulating and has use and control over the money that you're working hard to earn. And when every time you spend a dollar, the money's gone forever, you can never get it back, and you can never grow that dollar again. Every single time you borrow money from someone else, you are now on the hook to make a payment, at least a minimum to someone else on their terms. The control and the money is flowing away. How quickly do you want to solve the problem once you realize that all your money is flowing to someone else's bank and they're putting that money to work to grow profit for someone else's family? That's the problem we're solving. Numbers are just numbers and they don't matter when it comes to solving for the process of becoming your own banker or the life insurance equation. So I guess this is just a long winded way to say, Roman, that we need to be focused on what are the actual objectives and what are the potential downsides that may show up as a result of life? Well, one of the major permanent downsides is death. So if I'm the main income earner and I'm the one who's been reading about the process of becoming your own banker, and I've been working with Roman to learn how to build this banking system for my family.
Who on earth should probably be the one with the most amount of premium going into their system and the Most amount of coverage.
Would you say that would be me?
Yeah.
Pretty simple stuff, right? If I'm earning the most and if I'm the one learning about the process, I have a huge need for the amount of. For insurance. So I need to put insurance on mom or dad first and then mom or dad second. Mom and dad need to get covered because if something happens to mom or dad, whoever's doing more of that legwork, taking care of the kids, there's a huge amount of capital that needs to show up to replace mom and dad or dad if something were to happen, right?
Yeah. And if mom and dad have different incomes, for example, mom makes two times more than the father. That doesn't mean that mom needs twice as much insurance in place than the father or the other way around. So how do you approach that type of questions, Vern? When it comes to who should have more insurance, who should have less insurance? And also second question I just wanted to address is.
When, like, what age should I put insurance on my children? Should I wait till they turn, like, 16, or should I wait till they turn 18? Or should I do it as quickly as possible? So let's maybe discuss these two questions.
Yeah, great question, Rowan. The first thing that we're here to solve for the process of becoming our own banker, the infinite banking concept in Canada, that's our primary objective, Ascendant financial. However, we are life insurance licensed, and we have a duty of care to make sure that we help the client understand exactly how much insurance is recommended that they have. And we do that by completing something called a life insurance needs analysis. And so once we determine how much insurance is recommended for mom, how much insurance is recommended for dad, What I say to clients is, hey, you should buy more than what's recommended, right? I have more than what's recommended on my life. I get. I take as much as they can possibly that they'll possibly issue on me. That's my belief. That's my value. That might not be yours, Roman. But what I say to clients, the primary thing is when you're here in your sound of mind and you can look each other in the eyes, you need to be able to know that you can sleep at night knowing, God forbid, something were to happen to you, this is the amount of money that's going to show up tax free to take care of your family. If I recommend that you should get $1,500,000 and you say, you know, I think I need a million, the reason why you're getting a million in my books should not because the cost, it.
Should be because it's cheaper.
It's not the cost. It's not because it's cheaper. It's because for your reasons you were able to look your wife or your husband in the eye and say, look, here's what would happen, God forbid. And you have actually checked some boxes and had a conscious conversation about why on earth you're putting this insurance in place. Now, it's good to trust your advisor, it's good to take those recommendations, but it shouldn't just be all because my advisor said so. What if it's not enough? What if it's grossly too much or whatever. That's an extreme example, but you need to actually have a conversation and educate yourself. And you should be working with somebody who can facilitate the conversation to give you some things that you're not actually thinking about today. That's the whole point of having an advisor. Nobody has all of the answers. But you should be able to have a conversation and come up with your own reasons why on earth you would do something and then take into consideration the advice that's being given so that you can make the most informed decision for your, for your family. That's what I want. As long as you can sleep at night knowing how much coverage you have in place, that's my primary objective. Does that make sense?
Yeah, absolutely. Vernon, that's great. You nailed it. And the other one I wanted to address is, hey, how quickly what age should I insure my children at? Should it be like 5 years, 16 years, 17 years, 18 years and stuff like that? So another question we want to address is, hey, what age should I insure my child at? Should I wait till he's turning 16 or 18 or should I do it as soon as possible? And the answer you need to ask yourself to answer this question is, can your child possibly become uninsurable? You know, unfortunately yes. Any child at any age can become uninsurable. For example, one of my children got a surgery when he was five days old. I know it is not the time to create an insurance policy because insurance policy can be created after 15 days of age. But still, I mean, had it happened like in his second or third year of his life, of his life, then he could not be, you know, insurable anymore. But luckily I actually just talking about this child, luckily I got insurance on him. Even though he had some, you know, pre existing, you know, surgery and his condition is not good, he's well. But at the same time, I want to make sure that moving forward, if anything happens to him, if he develops anything like diabetes, cancer, God forbid, anything, then he has protection in place. I don't want to wait till he turns 16 or 18, right, to make sure that his policy is growing faster than it can be growing today. I don't care. His policy is a, policy is a death. Protection and cash values are cash values. I mean, if it's growing slower than it could be growing when he's older, I don't care because he, I need protection more than growth of his cash values in the policy.
Well, you raise a couple of really good points, Roman, because we're talking about sort of insurance and we're blending in the process of becoming our own banker at the same time. Now there are situations, not that we're going to get into all this, but there are situations where a child can be, or even an adult can be pretty much perfectly healthy. But there are certain things that they didn't check a certain box, they didn't quite 100% line up for what the insurance company is looking for. So you might be perfectly healthy. So we don't want to scare you, but still possibly be uninsurable for a minor reason. And sometimes I can be uninsurable today and I do XYZ thing and I'm insurable next year. So we don't want to scare anyone or discourage anybody. But that can be one of the primary reasons. I even hear that from 30 year olds and they go, well, I'm 30 Vern, and you know, I don't have a mortgage yet, I don't have a wife. I don't really see like I need insurance. Well, I think that you need it more now than ever if you can qualify today. You need it more now than ever because it'll never be less expensive and you'll never be healthier likely than you are today if you're healthy today. But I want to bring it around to a bit of more of a process of becoming your own banker reason as well. Roman. We know that we need two things to grow capital and that is, well, money or energy capital. We need to deposit and we also need time. So if I were able to, and I'm just picking a number, if I were able to put $10,000 per year into a policy today for my child and the child was 15 days old or age 10 or whatever, that child or you me, I'll never be this age again. I'll never be this young. So I have more time now than I ever will have to accumulate value within my system. So if the Younger, I start on the child. To Roman's point, the way these policies work is so that the cash value and death benefit have to match by age 100. So if you're age 0 and grandma is age 50, well, I might put $10,000 a year into a policy on grandma, and I might put $10,000 a year into a policy on age zero. Well, guess what? Age zero's starting death benefit is going to be much higher than grandma. But what's interesting about it is the amount of capital, the way that we design these policies, how much you can access out of that policy right away to start banking is going to be very similar. Okay, one for two. So we can access almost the same amount of cash out of each policy. Putting using 10,000 as an example. And maybe Roman and I can do a bit of a case study on this to add a bit more visual to the numbers so you can actually see what's happening. 10,000 on age 0, 10,000 on age 50, and we could look at, watch what happens. But the point that I'm making is even if I have a lot less death benefit on the 50 year old than the age 0, well, who's closer to age 100? The 50 year old is far closer to age 100 than the age 0. So what Roman's saying is my death benefit for age 0 is going to grow and it's going to expand hugely year over year over year. Because every time we put in premium, every time we receive dividends, it's going to buy a lot more paid up, what's called paid up additional death benefit on the younger person than it will the older person. However, the cash values are still going to accumulate slower in the early years. Why? Well, because the life insurance company recognizes they have such a time horizon to make sure that the cash value and death benefit matches on the age 0 person. So on the back end, a hundred years. Yeah. Twenty, thirty, forty years into that policy, I'm still putting in my same 10, but my values are going up by 50 or 60,000 because so much death benefit has now accumulated and they're getting closer to age 100. So the policy is going to accelerate. I don't care how quickly or how slowly the policy grows, Roman, because I understand the problem and I think long range. I follow Nelson Nash's golden rules, and I recognize that if I'm not putting that $10,000 a year into a policy on my son today, and if I never do, regardless of how slow it grows, where does that put me in 30 years from now, aren't I still going to be having to put that $10,000 in some bank? It must get deposited before I can use it. Right. So of course, the earlier I start, the better it is. I'm going to have the need for the use of money for the rest of my days and my son's going to have the need for the use of money for the rest of his days. So when he's ready for me to turn that policy system over, has his premium increased at all, Roman, or does it stay level or potentially it can go down if we want it to?
No, it goes up.
Well, no, the premium will stay level, right?
The premium will stay level.
The deposit I'm making is going to stay level. I know where you were going. The premium making is going to stay level. Or I could drop it off and reduce it or eventually I could decide to put no premium in at all. That policy is going to still keep growing. So once I hand it over to my son, $10,000 is going to buy whatever $10,000 buys. In 40 years from now, we know it's likely going to be a heck of a lot less than what it's buying today. So how important is it for us to get our capital working today in putting it into a system that will allow us to get a lot more out than what we put in? If I put 10,000 in in 30 years and it grows by three, four, five times that amount, that means that I've increased my purchasing power just by making a deposit that I otherwise would have gave to somebody else. So make sure that you check out the playlist here. Find Henry's video. Our teammate Henry on hyperinflation. Can that happen? Is that happening? And also again, go to the link in the post description below and go to watchibc.com so that you can get access to a 90 minute webinar to learn more about the process of becoming your own banker. The infinite banking concept in Canada. Now, Roman, I just want to get some thoughts and feedback from you because we're kind of all over here, all over the place, a little bit with the process of becoming your own banker who should be the life insured. But all of these things play a factor in the conversation in terms of how we design the policy system. It's not just the numbers, right? That's a common misconception. What are your thoughts so far on what we're sharing about?
Yeah, absolutely. So, yeah, so in conclusion, we just wanted to say that, you know, you need to talk to your advisor in order to get his best advice on who should be the life insured. But my belief, and I can say that Vern's the same thought process is that everyone in the family should be the life insured. And the sooner you put insurance on every family member, the better. But how you allocate that may vary based on your objectives, based on your, you know, amount of premium you want to put in. But make sure everyone is protected in terms of protection, in terms of death benefit and make sure that, hey, you can practice infinite banking using all policies, not just your policies, not just your wife's policies, but your children's. I borrowed from my children's policies the very first week. Who cares about the growth? I mean, I don't. I'd rather have protection rather than, you know, better growth in my policies versus my children's policies.
So Roman, thanks so much for that recap. Right. It's going to depend on every single family's objectives. Make sure that you're working with a good coach, somebody who obviously has the process of becoming their own banker in their own life. They're practicing the concept, they have the appropriate amount of insurance, they can properly walk you through a life insurance needs analysis. That goes without saying. Of course we always say you don't have to do business with our team, but we do hold ourselves out as the absolute best in Canada that do this. But a couple of things that you can do right now to start to learn more about insurance but also the process of becoming your own banker. As we had mentioned, there is a great playlist here beside me with a ton of resources from my teammates who have recorded videos. Our past webinars are there. Also in the post description below you're going to see a link to purchase a copy of R. Nelson Nash's book Becoming your own Banker, the Infinite Banking or Unlocking the Infinite Banking Concept, as well as a link to watch IBC.com or you can just put in your URL watchIBC.com and you'll be given instant access to a 90 minute webinar so that you can learn more about the process of becoming your own banker. And one bonus is of course, action that you can take. Leave a comment, leave a question, don't be afraid to reach out. No one's ever been injured by participating, so if you have a question, you can just leave a comment below and myself or one of my teammates would be more than happy to respond once we get that question.
