Reacting To The Money Guy Show | The #1 Mistake Financial "Experts" Make

We get so many questions asking us about it. Guys, what about infinite Banking? Is this what the elite wealthy do? Is this what the top rung of society is doing? Is this the secret financial thing that I need to know about in order to truly be a financial mutant? So on today's show we want to unpack that.

Go ahead and unpack that rich.

Well, that's not a secret, number one. And you don't need to be rich to get into the banking business. Number two, as Nelson clearly identified his book and provided case study examples of what these guys are identifying is the trend of sensationalism that is taking place. In the spirit of marketing infinite banking as some kind of a secret black box strategy. And like maybe it's convenient because the book cover is black that people say, ah, it's a black box strategy to your financial success and oh my God, I'm going to help you unpack this gift wrap box that's got the secrets to the ultra wealthy in it. Like, no man, it's habitual behaviors that you need to change in your life. And oh yeah, if you hitch it properly to a well designed insurance contract and then you implement those behaviors properly, you have a pretty awesome lifestyle machine that you create so that you can go about investing your money in anything that these money guys, which I'm sure they're great guys that probably have a great program, are probably heavily suggesting that you do, could be wrong. Don't know. I don't want to make rash judgments, but as our friend Ryan says, I'm going to assume angelic intentions.

Here's the thing that gets me is insurance is a very necessary part of the wealth building process. What I don't love is somehow in this modern world we live in, you cannot help but turn on social media and people will tell you 401ks are a scam. Yep. And it's typically followed by because where you need to be putting your money is in life insurance, whole life insurance, and even bank on yourself through infinite banking. I just glad that we finally have been able to find an insider.

This is another sharp example of confusing what you're buying versus what you're implementing. And I can see that and would agree. On social media, there's a lot of sensationalizing around comparing infinite banking to 401 mutual funds, the stock market, insert whatever product here. And so I can see his perspective where he's saying, gosh, you know, you really can't go too far on social media without people saying that a 401k is a scam and you should put your money in life insurance. That has absolutely nothing to do with the process of becoming your own banker. The infinite banking concept and dividend paying whole life insurance never has been and never will be an investment. And so for somebody to say you should not put your Money in a 401k, you should put your money into a dividend paying whole life insurance policy policy really needs to examine the logic behind what they're communicating there because I agree with him. I don't think that that makes any sense for somebody to say that because it's not an either or the life insurance policy. It's a unilateral binding contract. It's not an investment. It's designed and has really, really strong financing characteristics. But it also has a death benefit associated with it. It is a life insurance contract. A 401k does not possess any of the attributes of a life insurance contract. And so you're comparing an apple to a, a bowling ball. There's no reason to be co mingling that in the same conversation to say you should put your money in one place versus another. So I agree with him on that point.

I know for the sake of time we don't want to spend a lot of. But I have to. I'm sorry, Jay. This guy started with saying, well of course insurance is necessary in a financial plan. That was his first statement. And he says, what about all this? About 401ks are a scam? Well, 401ks and RRSPs aren't scams. They're financial tools and products created by government agencies that are then bolted onto by the banking sector for investment purposes of the general public that provide some potential tax breaks depending on your students. So they're not, they're clearly real. So they're not a scam. So it doesn't make sense they would even say that that means whoever's promoting that is also incorrect. And then he says, you know, put. And then people are putting your money instead put your money into, he says whole life insurance. Put your money into the ideas of bank or put your money into infinite banking. You don't put your money into those things. You pay a premium if you have insurance. If you're doing infinite banking, you're not putting your money into anything. You're practicing a process. So this is them reacting to the information that they are seeing out into the marketplace. So I'm not, I'm not, I'm not, you know, smashing. These guys are probably doing a great job. But what they're identifying is what they're hearing well publicized in the marketplace for people doing, doing their best to market, to get people to come to their business. Marketing important. Everyone should do that. Not suggesting you shouldn't. But this is the type of language that is misleading these folks and the general public and probably the individuals that are even saying that language are misled. And they don't even realize that they're saying things in pretty inaccurately. And it's causing these kind of problems to exist.

Share the details with us so we could do this content. So stick around to watch all the details on Infinite Banking.

Yeah, that's a great setup, Brian. What we've done is we actually have a listener out there to say, actually I do this. This is a strategy I perpetrate. And every time you guys talk about this, you're not actually using policies that are designed for this specific purpose. So we asked this friend of the show, hey, why don't you send us some policy design so we can actually do a side by side case study to see if this is merited. But before we get into that, for those of you who don't know, for those of you who aren't familiar, Infinite banking, or bank on yourself is a way in which you use whole life insurance to build up savings and leverage cash values for self self financing. It may be pitched as an alternative to putting your money in a bank or putting your money in the stock market. You instead get to be the bank. So that's the pitch. You no longer need a brick and mortar, you no longer need a financial institution. You yourself can become the bank.

That is entirely untrue. And so Nelson encouraged people to become their own banker, not to become a bank. You're not becoming a bank, you're not being the bank. You're not becoming a brick and mortar institution. You still need to rely upon the banking system, these conventional banks, for the convenience of debit or the movement of money that will never stop. And so his.

Description of what the infinite banking concept is is not only inaccurate, but it's grossly incomplete. The essence of the process of becoming your own banker is to recapture the interest that you're presently paying to credit card companies, banks and finance companies for all those things that you need to finance throughout your lifetime. This is all about controlling how you finance those things that you need throughout your lifetime, which can certainly include investments. But Nelson referenced in the book some of the more common things that people will finance throughout their lifetime. But this description is. I can believe what I was hearing.

But it's also a Description that they've pieced together right from their own, you know, using the magic of Google, right, to put together what they can perceive. And here's the thing that really gets me. At the very beginning of a statement, he says, y', all, we're going to really get into this and we're going to tell you everything that you need to know. I'm looking at the clock here. This is a 31 minute video. We're already two minutes into it. So in the next 29 minutes this guy's going to unpack infinite banging for everybody.

Not a chance.

The very first paragraph of Nelson's book says, this is the workbook for a 10 hour seminar. In 29 minutes these guys who don't practice it are going to show us how it's all about. I don't think so.

Now look, I want to play the part of helping you kind of walk everybody through this. And sometimes when I see definitions, it doesn't really tell the full picture. Bo suit. How about a visual? Do you have a flowchart or a visual that can help people who maybe are the learners who go beyond the words?

That's exactly right. So here's what you do. You as a policyholder, you're going to pay premiums or sin cash into a whole life insurance policy. It's going to be a life insurance policy offered by an insurance company that you're going to pay a premium into every month. Well, with that premium, one of two things is going to happen. Part of it is going to go by a death benefit. If you were to die, a death benefit would be paid out to your beneficiaries and the other half is going to go to build up cash value.

That is absolutely wrong. The cash value is the net present value of the future payment of a death benefit. Cash value is not cash. It is really concerning to hear CPAs, CFAs, financial professionals who are saying portion of it buys the death benefit and a portion of it builds up in cash value. This is not a universal life insurance policy where you essentially have term insurance with a slot machine attached to it. This is a dividend paying whole life insurance contract. The premium is paying for the death benefit benefit. That's it.

And you have the ability to add additional premium, which is optional, which purchases more death benefit. A premium is a premium is a premium, right? And it buys death benefit. And it's actuarially designed to produce certain outcomes. One of those outcomes is the contractual foundation, which is that cash value, net present value of a future death benefit will Accumulate for the purposes of paying that eventual death benefit. So those things eventually match. So the cash and the death benefit. The marketing of the world wants to separate those two things. Yes, they have a different definition of different label, but fundamentally they are the same thing just represented in two different points in time of the life insured individual. And so this oversimplification of what's taking place is part of the problem in the descriptions in the marketing taking place.

Online about Nelson's concept and the title of this visual. This is not how infinite banking works. This is the construct of a dividend paying whole life insurance policy in the.

Image is showing cash value and loans. Again, oversimplification. But loans aren't coming from your cash value. Your cash value is collateral for the loans, but the loan is actually coming. To make this more accurate, he should also have the general fund of the insurance company instituted in there somewhere.

As that cash value then builds, you as the policyholder can then borrow against it. So if you need to be able to have money to spend, rather than going to the bank and pulling money out of a bank account, you can instead use your life insurance policy as the bank to pull money out of.

Now I already noticed again, words have meaning. You're not using your life insurance policy as the bank. What you're doing is you're becoming all four characters in the financial play. The depositor, the borrower, the banker and the bank owner. Nelson in his book titled becoming your own banker, which is not mentioned by these two gentlemen at any point in the process, perhaps they would be very well served reading that book so they can develop a deeper understanding of what this process actually is. Straight from the pioneer, the developer. But again, words have meaning. You're not becoming a bank or the bank. We just want to make sure that we really communicate that part of our reaction so that people can hopefully be inspired to stop using that language because that's not what's happening.

I will give him credit though. He did say specifically borrowing against contract, which many people in a similar scenario or other videos we've seen, they don't do that. They do get that point quite wrong, which is part of the misleading components going on in the marketplace. So I appreciate that they've identified that correctly here. Yeah, very good point.

Now I already noticed something that's a little concerning to me, bo, is that when I talk about life insurance, very familiar with buying term life insurance, which is primarily you are buying the insurance. If something happens to you, you get paid, but it doesn't build up cash value. Meaning that there's not an element of investing or making the premium level in a permanent way. But I also noticed the thing.

So again, you heard what he said, there's not an element of investing. He's referring to a universal life insurance policy construct. When you have a dividend paying whole life insurance policy, the life insurance company itself controls 100% of the investment function of the participating account. The policy owner is not required to make any investment decisions. Thankfully, the cash value shouldn't be looked.

At as an investment because it is a, is a representation of the death benefit as we've already indicated. So it's, there's no investment component anywhere. Now does the insurance company invest? The answer is yes. They have to do that to fulfill their obligations. Yeah, but it's very different. Like it's not connected to the description that he identified which for how long the insurance industry has been around and for how long whole life insurance has been around. The fact that there's this much misunderstanding in the marketplace about what these different products are, I find still quite stunning. It's 2024 and people still haven't figured this out. Like it's not complicated. It's actually dirt simple.

To me this says whole life insurance. Why don't you tell us what variables or factors are needed to, to really set this up? Because that's already a unique thing to be whole life insurance.

That's right. In order. And this is what we were buy our insurance insider. Hey, you got to make sure that you're buying the right type of policy. And so let's talk about the elements that make up this infinite banking policy.

The very first, there's no such thing as an infinite banking policy.

They don't exist.

I like how this one, the one guy said, oh, it's, it seems really, really, really strange that you're, you're talking about this unique thing called a whole life policy. Yeah, I mean that, that policy has been around for 200 plus years in the United States. Totally unique. No one's heard of that before.

Infinite banking is a process, it's not a product. And there's a difference between what you're buying, which is a dividend paying whole life insurance policy, or ideally a system of policies compared to what you're implementing, which is a process so important to. Again, just articulate that distinction.

Jason. When I go to the grocery store and I go buy groceries with my family, I have to go around the grocery store and buy all the things on the honeydew list that my wife gives me. And then I go to the till and I there's a transaction that takes place and then I leave and then I asked left to go put them in my fridge. So that's the process of shopping for groceries. The groceries are what I bought. The process of grocery shopping is the process.

That's right.

Just to give everyone some insight as to like what the difference and distinction between those two things are thing that you need.

The what you have to buy is high dividend paying whole life insurance. Now you immediately alluded to something Brian.

What we've all had the same like huh, what? How do you get the dividends to be paid higher than what the insurance? You don't get control with the freaking dividend pay. By the way, I think this guy means well. Okay, so kudos to you for meaning well but you're not getting high dividend paying all, you're getting dividend paying whole life insurance as a product. But before you do that maybe you should read a book and get some education to determine if the process makes sense for you and if you want to become your own banker and get clear on what problem that solves. And then if you do that then you might work to go get set up with a dividend paying whole life insurance contract. Which high dividends or low dividends isn't the component that you're looking for here. It's how your behavior by implementing the process can actually impact positively or negatively the dividends that you might receive. Yeah. Which if you have good behavior you could actually artificially create higher dividends long term based on your own intersection process wise with the policy that you own. Most people don't understand that again starting.

With a product, the very first thing you need to do is buy a product. No it isn't. And the bottom of this visual, this.

Sentence here, insurance companies are lying to you. If I'm an insurance company watching this video, I would probably be a little.

Upset about be a little bit concerned about that immediately.

Our spidey sense goes off when we hear you have to go buy whole life insurance. Because we know all the time that we talk about term insurance versus whole life insurance. There's a very tangible reason why we like term insurance more.

Well first of all, life insurance I think is a period certain need like you're hopefully the goal is you're saving and investing, you're building up your army of dollar bills. So hopefully at some point you become self insured because you're financially independent. You don't need to replace your income anymore because your assets will talk for you or protect you and your loved ones.

Yeah. So while you're holding your head in your hands here, that is the promoted methodology of the concept of like the buy term, invest the difference model. Right, Right. So if, if that actually works for anyone and there is a percentage of people where that works for, and if it does work for them, then that what they have by the time that their mortality comes, mortality being with their expectation of when they're going to die, they have no more insurance because they got rid of it and they've got all these assets and they're all in taxable accounts. So they went from guaranteeing their family to get tax free money to grieve properly instantaneously, not having the risk of selling it at an unknown market condition which might be high or low, that they don't get to control because it could take them a while in the probate process, going through the will, etc. To actually get control over the accounts to sell them at an appropriate time. And if they don't know anything about it, they don't know how to do that correctly. And then there's a final tax bill on everything in the account. So then all that's in the account gets eroded by those costs which could have been eliminated if they actually had insurance in place. So nothing inherently wrong with the idea of buy terminative as a difference. It's just a matter of did you do it? Did your behavior allow you to do it? Did the markets actually produce the assets that you wanted? Did you plan for the tax consequence? Does your family know what to do? Who's going to end up dealing with that problem? And is anyone teaching them about that process? Because that's a process.

What does buy term and invest the difference have to do with the infinite banking concept? Nothing. And so yes, buy term and invest the difference knock your socks off. That's an investment philosophy. It's an approach. Hey, it just is has its own set of characteristics.

Yeah.

It's not about it being good or bad, but again, comparing it or trying to commingle it with the infinite banking concept as somehow one is better than the other, or that one form of insurance is better than the other. As a broad stroke statement, I just fail to see the logic. And when you put yourself in a position as a financial professional where you're selling against something else, then you're either A not all that confident in the solution that you have, or B you're not seeing just really how ridiculous that is. Buy term and Invest the difference is a strategy that I'm sure is applicable to many people.

Great.

But to say term is better than whole life or vice versa, it just has no substance. There's just no rationale for making a statement like that.

Hey, Jason, when Steve Jobs made the decision to build the ipod and then the iPhone, was it because they had a bunch of big meetings and they said, what's the next best technology we should make? No, because there was a problem that he identified and he thought we could build something better than that. And they had to go through a huge amount of R and D and a lot of effort to actually create the end result and product and all the money and all the expenses went into the thing that they were going to build that hadn't existed in the world yet. Yeah. Had to create it from scratch.

That's not what, what I'm seeing here. Because when we talk about whole life, the premiums are substantially higher. And I know we even have some research on that.

Yeah.

If you look at how much insurance coverage costs, and this is for a female in excellent health, for a $500,000 policy, if you were going to go buy term insurance, it would cost her $188 at the age of 30.

Like again, what does any of this crap have to do with the infinite banking concept? Absolutely nothing.

And term insurance for what? For 10 years? For 20 years? For 30 years guaranteed. That's for 10 years. 188. So you got a 30 year old is going to protect themselves for 10 years or you're going to get coverage that's going to protect that 30 year old for 70 years. Do you think one's going to cost more than the other one? Actuarially speaking, it has to, because one of them is going to pay a death claim and the other one's not.

Right.

Like, give your head a shake. I know.

It's comparing.

My God. You know what, Jason? I had a really good apple and then I noticed that when I had a steak later that day, you know, they tasted completely different.

Thanks Captain Obvious.

To different freaking things.

Right.

Geez.

That same level of coverage for a 30 year old would cost $4,000 a year. So 4 versus 188.

He's not describing at all that if the policy in this case was even engineered remotely properly, that the death benefit in the whole life contract would be increasing, the premium would not be increasing. So again, conveniently leaving a lot of things out or perhaps leading to another point that he's trying to make.

I don't know.

But let's find Out.

Well, the statement on the image of the PowerPoint says whole life is expensive. Compared to what? Whole life insurance, if you compare it to an isolated 10 year term model at various ages might be expensive, but you're not looking at a full picture. So you don't, you can't compare it to anything. It's not expensive because you get what you pay for, you actually get value. You know what, Mac computers are more expensive than Chromebooks. You know, they're built a lot differently.

Fast forward to a 50 year old female in excellent health. If that lady wanted to buy a $500,000 policy, she's going to spend about $644 a month for that term coverage. If instead she wanted that same amount of coverage in whole life insurance, it's going to cost over $9,400 a year. So these are very different when it comes to cost of getting that insurance coverage in place.

I also think he made a mistake there. He said 644 per month, which he probably meant per year. So he's comparing a monthly payment to an annual payment in a statement. Pretty sure that was a mistake you made. But either way it's completely irrelevant because we've already beat it like a dead horse.

I think at this point printed insurance for a reason. This is meaning you're planning on buying this policy and holding this policy until you pass away. Whereas term, as the title kind of alludes, is only for a period certain of time. So I'm a little confused on that, but I'll let you keep us on this journey.

So specifically this, you want to make sure that you're buying high dividend paying whole life insurance because.

No, you don't.

Show me where to go buy that.

Yeah, you tell me where to find it. I'll. I'd like to learn about that high dividend and life insurance that you learn all about.

But dividend paying, or also known as participating policies are the ones that work best. And there's a few reasons why they work best. Number one, the premiums don't go up as with other policies. So you can actually lock in a fixed premium for the life of the loan.

That's with all whole life policies for.

The life of the loan. I think he meant for the life of the policy.

Yeah, the other big way that these policies are sold is that the cash values are guaranteed to go up. If you look at other types of cash value whole life policies, they have a guaranteed rate that says no matter what, we're going to make sure that this goes up. Not all cash value policies work that way. Some of them can actually decrease in cash value.

That's accurate.

If. Sure, but, but prior to that last statement, he said not all whole life policy. So. And then he, at the end he said cash value policy. So he's still trying to link whole life to all cash value insurance. And I, which is doing that intentionally. I just think he lacks clarity on that. So give, give the guy a break or whatever. He's doing his best. Yeah. And, and the result of that is, is that he's, he's, he's connecting all cash values together, which is not the case because if it's a universal life contract or variations of universal life, they have completely different set of characteristics. That is not anywhere near the same as basic whole life, non participating or participating, because participating versus non participating are also two very different animals.

But if you buy a guaranteed whole life policy, you can assure that you're going to have some minimum rate of return that you receive. Now here's the problem though. When it comes to buying whole life insurance, there are often a lot of very expensive commissions, very expensive fees that go into this. So consumer what?

Hey, Jason, when you buy your groceries, do those groceries show up in the back of the grocery store from a truck? Yeah. And the truck got it from some farm or some farming, some distribution center which then delivered it from a farm. Yeah. And the truck's got to pay for fuel in the business and the truck driver and all that stuff. And then the, the grocery store gets it and the grocery store has to have a guy go to the back and bring it out and put it on a shelf. And that guy, guys got to get paid. And then from there it has to go to the till and the person still has to be paid. And then it's got to be bagged and everything before you leave the store. And then the grocery store has to pay taxes on whatever's going on there. That's called distribution. Every business has a function of distribution. They have to get their products to the end user. I'm in the life insurance business. I'm the distribution.

Yeah.

Would you be surprised that I can't feed my family if I don't get compensated? Well, the premium of all insurance, every type of insurance, including, you know, travel insurance, including insurance for your luggage, has a premium because it's insurance. That's how insurance is designed. And it factors in all the costs associated, which includes the cost of distribution. You know, what you go on to one of the flight networks and you buy your flight and Then you pay for insurance for travel. You don't realize that they get a commission for that, right? Well, it's priced in. The consumer pays for in a premium for term insurance and a premium for critical illness and for disability. An insurance guy's got to get paid because they're the one that distributes that product to the individual who needs the coverage. Yep, you want it, you need it, you get it. And the guy who helps you do that gets paid. That's how it works. But guess what, you don't pay them a dime because the insurance company has already calculated all of their compensation in. So the insurance advisor doesn't choose their commission, the consumer chooses what they make, not the other way around. That is a highly misleading aspect of the industry and that pisses me off.

Course came out and said, hey, we look at all the different cash value whole life policies out there, the average rate of return and this is including the dividend payments but with the guaranteed cash value built in is only about one and a half percent.

I have no earthly idea where this guy is getting his data from or what he's looking at.

Jay, he's got a PowerPoint we talking about. The data is right. He's got a nice looking graph, it's got colors on it, he's got all the data.

Wow, that is just.

Yeah, I love how matter of fact he is about everything he's stating. And again like I think he believes everything he's stating, which is fine. I don't think he's intentionally trying to mislead people. I just don't think he understands. He just doesn't know. He hasn't actually done any research.

There's, there's, there are, we're seven minutes.

In and we haven't learned anything about infinite banking yet. He's only got another, you know, 20 minutes to fill us in on the gaps here.

There are many different types of whole life contracts. You can design whole life policies in such a way where, you know, the way that the premium is allocated to the policy, the cash value accumulation will be very long and drawn out and very slow, especially in the early stages, which is not how we would put a policy together. But mind you, those do exist. And so this report that he's looking at maybe sort of co mingling all of those into a data set. But if he actually understood the type of contracts that are available, that percentage that he's communicated is not even remotely close to the truth. And again, assuming angelic intentions, you may just not be aware.

So if you look at the average of all the policies out there issued, the average is one and a half percent. Now we're going to talk more in a moment about how we're going to try to use a policy that's custom built to satisfy Infinite Banking. But right there on the start, even though there's a guarantee, a guarantee at one and a half or around one and a half does not get me super, super excited.

That doesn't completely shock me because whenever I hear the word guarantee when you're talking about financial products, that's a heavy burden. That's a word like I know when you're doing securities training they tell you never ever, ever use the word guarantee because that.

What? Why do you think they say never use the word guarantee and securities training? Because they should guarantee anything.

They should never use the word securities in securities training because there's no security.

So you know what provides a lot of security and a back built on a backbone of guarantees? Whole life insurance.

That's right.

Isn't that funny? Because it's not a security. I like how he's making the point for us and doesn't even realize he's making the point. By the way they're talking about percentages. Nowhere in here did they mention that the percentage of term insurance that actually pays a tax free death benefit is less than 3% globally less than 2. That seems like a pretty good statistic when you're talking about percentages to maybe mention in there. Whereas any. A whole life insurance policy that's in force that's going to pay.

That's right.

I mean if you are taking on risk, you that, that by its sheer nature is not. It's. You are getting risk, you're taking a risk to reach a premium in return.

You'Re not taking on any risk. That's why it's a, you're offsetting risk. That's why it's a unilateral binding contract. The insurance company itself retains all of the risk. The policy owner's sole obligation is to pay the minimum required premium. That's it.

He's so wrapped around the idea that securities have risk and all the risk he's learned about having a securities license obviously at some point in time in his past. The insurance is the exact opposite of that. It's the management of risk and the reduction of risk through pooling of capital like that is what insurance does.

The policy owner himself or herself is not assuming any of the risk. Whether the insurance company has an upper or downer. The insurance company is contractually obligated to ensure that the total cash value matches the total death benefit in Canada by age 100 and in the United States by age 121. That is a contractual guarantee. Guarantee, guarantee.

Guarantee. And it's a very secure guarantee. Policy owners have a lot of security knowing that their total cash value is increasing every day. It cannot go backward. It can't be repossessed. And so, again, it's just a function of awareness where these gentlemen, they would be really well served. Getting a little bit more education on the anatomy of this contract.

Ask the consumer what they think and what they feel about the word security versus asking a financial professional what they feel. One of them is going to tell you how it makes them feel. The other one's going to tell you what products are under that list. That should give you an indication about how words are utilized in the industry versus at the you and me level. Nelson built things around the you and me level.

There's a risk reward from that. A guarantee has to be at a lower price point, and that's why there's fees. There's lots of other things that I completely.

What fees are you talking about? Policy owners pay. Last I checked, it was like a policy fee once a year. It's like 50 bucks or something. And I think even that's been eliminated, at least with the carrier that one of the primary carers that we work with.

Let me ask you this. You go buy furniture, and you want to guarantee that you can bring the furniture back if it gets damaged or gets a bunch of stuff spilled on it. What do you do? You buy a warranty. Yeah. To create a guarantee that if your dog wrecks the couch or whatever, you can bring it back.

Yeah.

Is that less expensive to do that? Isn't that add more on to create the peace of mind for the guarantee that you want in that particular scenario. So everything that came out of this guy's mouth in the last, like, I don't know, whatever, minute and a half or two minutes. I'm just like. I'm completely. I'm honestly baffled. I don't understand what he's got going on. I don't. He's reading off a teleprompter like, I have no idea. But he has a very rudimentary understanding of what insurance is, in my opinion. Or at least he's playing the part of someone who does get why I.

Guarantee is going to be a much lower rate of return.

So the first thing we're thinking about the elements that you have to have is you have to Have a high dividend paying whole life policy. The second thing that you have to have is a lot of cash. So this is a little bit counterintuitive.

And that is not true. My God, it's going to take us 12 days to react to this. You do not need to have a lot of cash to do this. And that's where this whole notion of somehow the infinite banking concept is only the ultra wealth for the ultra wealthy. And that if you want to be, you know, a financial genius, that this is what you should be implementing and that you need truckloads of cash to do it. That is absolutely wrong. We have clients that put in a hundred dollars a month on juvenile policies. We have clients that put in six figures a month. It's not about the requirement of here's how much cash you need to have to get started.

My first policy was less than 4, $300 a year. Jay and I was able to get started. Remember those black boxes we were talking about? I'm pretty sure when the guy who doesn't does the recycling, you know, shows up at the high net worth neighborhood, there's not like all the flattened recycled boxes that are just all black. They're not all black boxes that they're getting rid of in the high net worth neighborhood. Like they're not keeping that stuff in their house and stockpiling it. It doesn't exist. There is no such thing. You know what the black box holds? The black box is your brain and it's your openness to new ideas and implementing new ideas and being coachable. That's what the black box is. It's not all these styles and products that are out there that that's not what it is. It's your own ability to understand what's going on and rethink your thinking.

In order to be able to execute an infinite banking or a bank on yourself strategy, you have to already be.

Someone who can dump to execute infinite banking or a bank on yourself strategy. Where on earth do you think they got that from?

You can't bank on yourself, but you can become your own banker. And there is a difference. One, it assumes that you that yourself are the brick and mortar bank in your world. Which is not the case. No one who utilizes even that method is banking on their self. What they're doing is they're trying their best to practice becoming their own banker and using or language in the process. Because you're not borrowing from yourself ever. You are borrowing from an insurance company. If you have a good design, well designed insurance contract in place. And you need the right behaviors to make sure that you're abiding by the principles that you put money back in, you can access more capital. You're funding premiums correctly if you don't have the behaviors correct and you're not actually implementing them. So thought leads action. If you're not in that sequence, you're going to be up for a rude awakening one day.

Tons of cash into these policies. So right there off the bat, that's fairly limiting.

Right.

Because not everyone has a ton of excess discretionary cash flow that they can throw at this kind of policy. And so the question we ask is, all right, well, why do I need that? What do I want to be happening with this tons of cash? Well, what you essentially want to have happen is part of the cash you're putting into the policy is going to pay for the premium. The other part, and the premium being what the insurance actually costs, the other part is going to go to building up the cash value. What you want to do by dumping as much cash into this policy as you can is you're buying paid up additions. And what paid up additions are, are entirely paid for life insurance additions that both increase the death benefit, increase the cash value, and thus increase the dividends that are paid out.

So who's actually. That's probably the most accurate thing that he said. Yeah. First nine minutes that we've got here.

That's very true.

Yeah. How he led into it, not so much, but the actual final clarity find statement there was, was on point thinking.

This paid up addition is primarily used to increase the cash value as much as possible. So the dividends that pay in that cash value are as high as possible. No different than if you had a bank account. You want to put as much money into that bank account as possible so that the interest or the dividends you earn in that is as high as possible.

Now wait a minute. When I watch the brochure commercials, everybody always says you put all this money in, but here's the benefit over investing. You get access to your money completely tax free.

How in the world you're not accessing your money? Your money was already paid in premium. It's not your money anymore. You paid the insurance company a premium. The cash value is not money. And so again, hopefully this is helpful to these guys if they come across this so that they can get some clarity.

Well, more importantly, I just hope it's helpful for people who are, who are exploring the concept and they are just trying to navigate the sea of what's out there.

True.

And they want clarification on the language, which also means you need to be willing to spend more than 31 minutes to figure it out. If you're exploring this concept and you're not willing to commit a chunk of time to your education about it and to really get understanding. And if you haven't read Nelson's book, man, oh man, like, everything should begin with Nelson's book. And if you haven't done that, you shouldn't be watching any videos. Every video that doesn't tell you to watch Nelson's book, that video is missing an opportunity.

You're making this thing sound like you're just paying for a lot of life insurance. Where is, how am I going to get access to my money tax free, as I've often hear people talk about.

So when we think about the cash value increase and you're dumping this money in and we look at the average dividend rate, the 10 year average dividend rate on cash value policies is somewhere around 5 to 6%. Some companies a bit lower, some companies a bit higher. But the thing that makes this exciting or gets people excited about is exactly what you said. You actually have the ability to take loans from the policy. So if you need money, if you want to access the capital, you can take a loan from the cash value. That is.

So he said it right earlier in the video and I committed him on it and now he's backtracking and he's confusing people from an earlier statement. So he, I don't think he knowingly understands that he's being hypocritical in his own statements. And we're 10 minutes into the video right now.

Yeah, you're not borrowing from your cash value. You're not borrowing from the policy. Nothing is coming from the policy. So important to clarify that is quote.

Unquote, tax free, where you can then use that money to go consume goods or to go buy products or go do fill in the blank. You are borrowing money from those copious amounts of cash that you've paid into the policy to build up that cash value.

Now wait a minute, because I'm already my, my spidey senses are starting to tingle a little bit here. And the fact that leverage is not something that income bill taking on encumbrances don't tie into financial independence because those two words, independence, encumbrance, those just don't work. How are you going to make this work where I'm taking loans? Because aren't I paying interest rates on this stuff, Bo? I mean what's. There has to be a catch here.

That's exactly right. So a lot of these loans do indeed have interest rates that you're paying. Now before we go into the interest rates that you pay, there are two different types of loans you ought to know about. There are what are called direct recognition loans, which means when you pull the money out, you don't earn any money. You don't earn any dividends on the money that you've pulled out. Well then there are non direct recognition loans where you do keep earning dividends on all the cash value, even what you take out as loan. So again I'm trying to think about this in terms of banking on direct recognition. If I put money in my savings account and then I go to pull the money out of my savings account, I no longer earn interest on that money that was in there. With non direct recognition it's like I can pull the money out but I'm still getting that.

No, it's not, it's not a good analogy, not a good analogy at all.

Because you're not pulling any money out of your policy. There's no money in there.

Also in Canada this is a non issue, but in the States, again I'm not American but I've been around a lot of them. We've talked about this quite a bit and I talked to Nelson about this and Nelson, he personally had a lot of his policies in the early years and he worked for a company that was a direct recognition company and he didn't care one iota. But Nelson felt this was mostly a non issue. Personally. That's what he indicated to me in private conversation. That's my thoughts on that.

However, you've already alluded to this, these loans do bear interest. Well, if you now have an interest rate you're paying on the loan that's greater than the dividend that you're receiving in the policy, it does not work. It falls apart.

So just that is hard, Jay.

That is absolute horseshoe like the two are completely distinct from one another. When you borrow from the life insurance company, simple interest accrues on that loan balance. Any repayment back to the life insurance company is a direct contribution to the net earnings of that life insurance company. The dividend scale interest rate has no business being commingled with the simple interest rate on policy loans and somehow indicating that it all falls apart. Dividends purchase paid up additions at no additional cost which are contractually guaranteed to accumulate their equivalent in cash value. Completely separate and distinct from a policy loan provision. And how loans are treated as an investable asset on the balance sheet of the life insurance company. If you ever have occasion to watch this, read Nelson Nash's book titled Becoming youg Own Banker and get additional clarity and education on the anatomy of these dividend paying whole life insurance contracts. Because clearly there's some gaps that need to be filled in.

We have a podcast episode, Jay, where we talk about the dividend scale interest rate and we expand and we discuss it when we explain what goes into it to a great deal. So I'm not going to do that here, but at a high level, it's really important for our listeners to understand and for the industry to understand. People will use the insurance company's own marketing material and get lazy and say, oh, it says a percentage rate and therefore that must mean blank. And the brain jumps to conclusions. Nelson would say, when I do the.

Seminars all over the United States and.

Canada, I usually started off dividend scale.

Interest rate is not a rate of return. It is not something that you show up and calculate in the cash value of a policy or on the death benefit. It is not how much you're going to get back in a dividend. It is none of those things. It is a measuring stick around one portion of the total pool of items that goes into the calculation of a dividend you receive. There's also policy lapses. There is mortality costs, which means how many death claims expected versus paid happened, how they are above or below the taxes, Were they above or below the compensation they had to pay all their employees and, you know, keeping the business running? All of these other factors have a role in determining what the dividend is. And then most insurance companies, I can't speak for all, but most insurance companies, certainly in Canada, operate with what's called a contribution principle. How did that policy materially contribute on the books of the business this year relative to what we assumed on the day we created it? So when the product was sold, it had assumptions. Are we on track with those assumptions or not? If we're above and we have more money than what we assume to have, you get a better dividend than what we thought you should have got. If we're below, hey, you're not going to get as good of a dividend as what we thought you should have gotten. It's all based on those assumptions. And if you're above or below the line, that's actually on a simple basis, fundamentally how it works. Taking an interest rate that means absolutely nothing and never shows up anywhere on any illustration or is calculated in any format on an illustration that I've ever seen or anyone has shown me is completely useless and meaningless and highly misleading and a waste of everyone's time.

What are called WASH loans, where you can go take a loan out of the policy and you can guarantee that the rate you pay in the policy matches the dividend rate so that it doesn't flip upside down.

He's talking about a universal life insurance contract. WASH loans, dividend paying whole life insurance policies, they do not function the way that he's describing here. And so again, he's commingling universal life with dividend paying whole life.

His entire premise is based off the idea of a rate. What he's not attributing or recognizing is the relevance of volume. So as an example, you have money that's accumulated and built up in a policy and there's $100,000 of cash value in there. I take a policy loan for $20,000 to go and take my family on an amazing family vacation. Forget about the rates for a second. We have a higher volume of money that is earning and growing at a, at a regular contributing daily basis because of the contractual elements it has. And I have total and complete and utter control over this loan structure on when and how I put the money back in. And so as long as I set up a commitment of doing that and I make, you know, I could, I could say I want to take three years to repay that 20,000. I could say I want to take 10 years to do it. I don't think that would be a smart idea. But I get to choose that time frame. So as long as I am completing that process, that loan balance is going down and the cash value continues to rise. But we're talking about a bigger number versus a smaller number. So even if hypothetically the interest rate on the loan was 10% and my cash was only accumulating at 3%, I have a bigger volume happening here versus a much smaller volume and as I'm paying it down. So, so I'm not suggesting those are rates to consider, but the, the mindset and the recognition here, there's much more going on than just comparing rate A and rate B.

But as you can imagine, if you're trying to get one of these policies that has non direct recognition loans and those loans even operate as WASH loans, what's likely going to happen is either the costs and fees of the policy are going to be greater or the rate of return they're willing to give you through the dividend rate is going to be lower. There's going to be a.

He's talking about universal life and participating dividend paying whole life in the same breath. Like what is this guy thinking?

I like how at the beginning he said, remember he said he was going to, they were going to show us everything they needed, we needed to know about and keep it simple about infinite banking. And 13 minutes in I haven't read anything about infinite banking yet.

I've watched a lot of social media. I've never heard a lot of people talking about direct recognition, non direct recognition wash loans. Awfully complicated this stuff. I mean my head's spinning a little bit on this. So so is ours because this is not anywhere that I'm seeing on social media. Maybe we ought to take a few steps back and at least why don't you bring this back to what are the benefits that are Elise telling me I'm gonna get out of this because right now the details are making me feel, feel like I'm swimming upstream on this. So Elise, let's, let's break it back in a little elementary, a little more elementary. Tell me what the brochure says the benefits are.

So let's look at the brochure. Very first thing, we already said this. They tell you, hey, the dividend rate will be 5 to 6% or more each year. And if you look at the team dividend, so you think about that kind of like interest rate on your savings account, dividend rate on your cash value somewhere around 5 to 6% returns.

He's inferring that if the dividend rate is 6% that's going to be the return on your cash value. What on earth is this guy talking about? The total cash value is contractually guaranteed to grow to match the total death benefit by age 100 in Canada and by age 121 in the United States. We've already mentioned this but I had to stop it here again because he keeps inferring that somehow the policyholder is going to get 6% growth on their cash value as a result of the dividend scale interest rate what in the policy are guaranteed.

So that's not like investing in the stock market. In the stock market the market can lose money. It can go down. If you have a cash value whole life high dividend paying policy, there's likely going to be some guaranteed rate in there so your money can't go down in value. So a lot of people like the security around that. So that's another brochure.

There's gotta be a catch to that. I know you're Gonna cover the catches in a minute. But there's gotta be a catch to tell me I can make 5 to 6% guaranteed because we have it in all caps for a reason. There's gotta be something more to it.

Let's keep going the brochure though. Because the other thing to say is hey, not only do you build this cash flow, not only do you have this capital that you can use. Life insurance also offers protection for your loved ones in case something were to happen to you and it's there forever. It doesn't go away at some point in time. So not only do you have this bank that you're building where you can get the money out, but your beneficiaries, your loved ones are taken care of if something were to happen to you. And I think this is the biggest benefit that people really, really dive into this. Your money will be accessible when you need it. Unlike a 401k plan where you have to wait till retirement, you can't access it until you're old and decrepit. So this is what they say, healthy dividend rates. Who's they guaranteed rate of return, life insurance protection. And you can get to the point when you need.

We've done this all wrong because you spent the first 10 minutes going through all these definitions complications. You should have started here on the brochure. This is good. I mean I can get behind this. This sounds really good. 5 to 6% guaranteed. I get life insurance for my family and I can actually get access to the money. What could go wrong? This sounds perfect. I can see why this is what I'm finding on social media.

But now let's talk about the react reality. In reality, only the cash value is growing at the dividend rate. So we're going to show you a.

This guy doesn't have any idea what he's talking about.

Cash value in reality. Oh my God. That is wrong. That is wrong.

That is absolutely false and wrong.

And they're associating returns with the guarantees. There is no guaranteed return. There is guarantees and you could perceive a return, but those two things are not linked together. It's a contract. The contract has contract document and clauses. And one of those is that the cash value will grow to equal the death benefit, the face value and any accumulated paid up additional death benefit that is created by either the utilization of dividends which you may receive most likely, and your own efforts as a policy owner. So those two factors which work in tandem with one another based on your behavior and how you interact with the policy can actually augment your outcome, but the outcome is 100% derivative of what the contractual element is. Cash must equal the death benefit by age 100 in Canada, 121 in the United States. Boom. Plain and simple. There is no need for any of this gobbledygook that we see on here. His reality could be summed up in.

My statement case study in a moment where all that money that you're throwing into this whole life policy, not all of it's going to cash value. And so not all of it is getting the dividend rate applied to it. Even in the early years, you're not really building up very much cash value at all.

So maybe it's that is also wrong. Boy, this, this guy needs help.

Everything is assuming that the 100% of everything that we've watched is about how a rate that's published on the insurance company's marketing material is somehow directly connected to cash value. That is the false premise. It is just inaccurate. A policy will receive dividends based on how that policy materially contributes to the net earnings, the overall net earnings in the dividend surplus and the divisible surplus that is going to be shared by the board of directors, which they don't have to do, but they are pretty good at doing. That contribution is based 100% on the assumptions made at the time the policy was designed and sold. So the assumptions are how many lapses are we going to get, how many death claims are we going to have over which year, when are we paying these things out, blah blah, blah. That is how dividends are attributed to a given policy. Plain and simple.

Great. As just a savings account right now, paying five to six. There's one piece. The second piece is if you want some of these bells and whistles like non direct recognition loans where you can take a loan and still earn dividends, or if you want WASH loans where you can make sure you never have a disparity between the rate you're paying and the rate you're receiving, it's going to cost more. They're going to lower the dividend rate that you receive on that.

These are all the things that have.

Asterisk that's also wrong. So when you borrow, if you're dealing with a, let's just call it a non direct recognition company policy loans are an invested asset on the balance sheet of the life insurance company. So when you're borrowing, you're contributing directly to the net earnings of the insurance company. That's why it shows up on the balance sheet as an asset and so what is this guy talking about? If you're, if you're borrowing, they're going to lower your dividend rate? That, that's wrong. It's not making any sense.

By the way, that one statement that you just made has an impact on the direct versus non direct companies, right? Because although you might not get crediting for the dividend or however they do the math on that, if you have an outstanding loan in a direct recognition, they do directly recognize the contributions of interest that you make to the pool a little bit more effectively. So there is some balancing that does take place there. At least that's was indicated to me by Nelson, rest his soul, before he passed away.

Tricks on.

These are all the asterisks.

Okay, keep going.

How about this one? Fees and expenses can eat into your return. Nothing we've talked about right now actually.

Again, he's talking about universal life.

There's no fees and expenses. A premium is a premium is a premium. It's actuarially designed and calculated. Everything is built into the premium from day one. There is nothing additional to add, period.

Now Actually covers the mortality expense fees or the commissions that are paid on these types of policies. That's a whole separate subject that we're not even broaching here. And then this one is a big one. Surrender.

There you go. Yep.

Universal life. And at least be clear with your viewers that you're talking about something other than dividend paying whole life insurance.

Totally.

You can surrender, you can forfeit the policy at any time and you are not paying a surrender fee when you have a dividend paying whole life policy. The only reason why you're paying a surrender fee on the universal life insurance contract is because of all the commissions. The advisor was paid in advance and that needs to be recaptured, that needs to be recovered. And so that does not occur in a dividend paying whole life insurance contract. And so again, this guy's just not being clear with the viewer on what he's talking about.

He's telling them in throughout the parts of the video that this is all about dividend paying whole life. And then he's using 100 contradictory and incorrect information to tell you what the, the makeup of that product is. He's blending different products that don't connect to one another at all. Additional to the surrender fees. You're right about the commissions paid to the agent on that part, Jay, but it's, it's, this is the key takeaway for the consumer. A whole life insurance contract the way it is designed by the insurance company is they take on all the risk and they're going to take care of everything and they're going to guarantee you everything and they're going to take on everything. All you need to do is make sure a premium is paid in a universal life contract. The insurance company says, hey, you could do a better job than we can. Here you go, here's all the components. Here's the buffet menu of components that we take on and deal with at the high management level. If you think you could do a better job than us, go ahead, knock your socks off. But we're going to offload all of the risk back onto your shoulders if you want to do that. Yeah. And that's what people in the consumer doesn't understand. That is one of the key differentiators between those two types of contracts.

Render fees typically don't go away. And so you've had the policy for at least 10 to 15 years. So what happens is you're signing this insurance contract saying, yes, I'm going to perpetrate this strategy, but if I change my mind and I decide I want to move away from this, if I want to get out of this at some point in the future, I'm going to be penalized from doing that. Well, all of a sudden that makes it sound like, well, maybe this isn't my money. You know, at the bank, if I don't like my bank, I can pull my money out. I can go choose a different bank with the insurance policy. If I decide to pull my money out, I get penalized for not carrying in my part of the. My part of the agreement.

I want to go back to something we covered a little earlier. If the Consumer Reports found the average rate of return is one and a half percent, that has to mean that people aren't getting the 5 to 6%. Because we even pulled back. When Consumer Reports came out with the article, some of the dividend rates were actually up as high as 7%. So it's not like this is a different interest rate environment or things have changed a lot in that aspect. What I think is interesting, when I started doing a little deeper dive on this, if you need your money in the first three years, that surrender fee is going to eat you alive. Because a lot of the initial premiums, universal life insurance premiums, is going towards commissions and other things. So there's going to be a steep surrender fee. So that's controlling your ability to vote with your feet on the front end. And then if you live to be a ripe old age and the Back end is going to get really crushed because the cash value is actually going to be paying the much higher cost of insurance.

Again, honestly, did I miss. When they said, hey, we're going to switch gears now and talk about universal life insurance, did I miss that?

No, it just, it just happened with a couple of the bullets and the one guy saying, dividend, paying a life insurance, identifying characteristics of universal life insurance. And now this guy's just piggybacked on that and completely forgot about. We're at 7, we're at 17 minutes here. And they completely forgot about the first 12 minutes of the video where they were talking about something totally different. Completely and altogether doing a great job of that. But at least they were in the. They were in the right space of discussion, even though they were incorrect. Now they've just completely gone a different direction. And if you're a consumer watching this and you were baffled and confused, I understand why.

Still nothing about the infinite banking concept.

Not one iota.

Not one iota.

Am I reading this right? Yeah, that's right. So you don't really. This banking on yourself actually has a lot of asterisks and catches is what I'm hearing. And by the way, if I can, for all the people who say putting your Money in a 401k is putting your money in prison because you can't touch it, this is a better way. How do you get past the surrender fee?

You call this Alcatraz? If putting your money in a 401k is putting it in prison, putting in this feels like you're putting in Alcatraz something.

This doesn't, this doesn't tie to what I'm saying.

Most of those are prisons. I'm not sure how one prison is. I don't. Yeah, like island, like is. Is. Is the reference point there that kind of like out of Alcatraz than another prison that exists today? I don't the hell the reference point is. What the hell are you saying? Four minutes ago, this guy was like pumping up all the benefits and they're all excited. Now he's like, oh, my God, it's Alcatraz. It's like, holy crap, man. Make a decision about what you're trying to do here to people. Like, are you trying to inform them or you Are you just trying to bamboozle them with smoke and mirrors? Like, I don't understand what these guys are trying to do. And again, I think they have good intentions. I don't think they know what they're trying to do because they clearly don't know what they're talking about seeing out there.

And then this is the, and this is what you just alluded to. This money is locked into a complicated insurance product. So all of us can kind of.

Complicated based on what you're talking about. Talking about an insurance product. You're talking about like multiple products somehow mishmash together.

If I have my money and a bank and I have it in a savings account, I need to go get it, I can go get that money and I can get statements on that. I understand what's going on. Well, now we have this alternative to that that has a lot of asterisks, a lot of asterisks, a lot of astros. But maybe, maybe the numbers will be.

You want to see a lot of asterisks? Take a look at the documentation you get with your 401k.

This guy needs to have his head examined. There's no comparison here. Like, why are we even having a comparable discussion? A 401k is not a unilateral binding contract. Immediately there's no comparison. These realities are just plain false. They're accurate if you're describing universal life insurance, but false if you're attempting to describe dividend paying whole life insurance. So this guy needs help.

Maybe when we look at an actual policy that's actually been designed for this strategy, maybe then it's going to click. Maybe then we're going to say aha. So let's look at a money guy case study. We're actually test the numbers using a real policy designed by a real insurance agent.

Designed by a real insurance agent, a real policy. And so what did they do? They asked for an illustration and got no context on what it is or how it works. And they're going to explain to everyone else how the illustration works without having a licensed individual actually understands how it was designed, what it was designed for, based on what things you asked him to design. Did you just send an email to some random guy saying, can you send me an illustration showing a certain amount of death benefit doing blank. I don't know what we're about to see, but there's, it's so disingenuous. Whatever we're about to see, I can already recognize how disingenuous it is. But the premise that they're going by is that, oh, we're going to show you everything that's under the hood. Under what hood? What are you showing? We don't even. Like you're not informing the people that are watching your show what you're actually telling Them, you're, you're, in my opinion, you're deceiving them, albeit I don't believe your intention is to do that. You, but you are doing it unintentionally.

So let's assume that you have infinite banking Isaac, and infinite banking Isaac is going to put $10,000 per year into a whole, a high dividend whole life paying policy in order to carry out infinite banking. That's what Isaac is going to do. And so the dividend rate we're going to assume, which is the dividend rate as of right now in 2023 is 5.2% and the non guaranteed values assume that this rate stays constant for the entire life of the policy. What we're saying is we're going to lock in 5.2% and we're going to assume it does not go down even if interest rates fall. So we're trying to stack the deck in favor of the illustration.

He's talking about how the non guaranteed rate is assuming that this 5.2% is somehow earning at this non guaranteed rate. It doesn't make any sense.

Makes no sense at all.

He's talking himself into a circle, but the circle isn't even looping back to the beginning. It's like, it's like he's going around in a room, wandering around aimlessly with a blindfold on in his description of what's happening here.

All right, we're also going to say that by the time since we're doing paid up additions, since we're buying more insurance at age 65, the non guaranteed cash value, this is from the illustration that an insurance agent actually provided for us, the non guaranteed cash value will have grown to $532,000. The non guaranteed death benefit at that time is $897,000 at age 65. Now this is an important thing to mention. When Isaac first started buying this policy, remember the whole idea is I'm going to dump a bunch of cash in, I'm going to buy paid up additions throughout the life of the policy. When he first took the policy out at the very beginning at 36, 36, it was only a death benefit of $196,000. Okay, so that $196,000 death benefit over the next 30 years.

The agent didn't design this policy for the purpose of implementing a process that amount of premium at that age. Something's not adding up here in, in the sense of what these policy values look like and what he's describing. And where's this agent?

The nameless faceless agent grew to be.

896 but didn't start 896 because I think that is something worth noting. His cash value by perpetrating the strategy went all the way.

He didn't perpetrate any strategy.

There's no strategy yet.

There's no strategy being perpetrated here. He purchased a unilateral binding contract and he paid premium. He's not infinite banking Isaac, he's dividend paying whole life Isaac.

Assuming that they've gone back and they're actually got a dividend paying illustration which very well may be the case but isn't actually clear based on everything that they discussed prior to this video all.

The way up to 532,000. So the question is, what does his investment return look?

He's not investing, so who cares?

He's not investing here look like.

Now, before you give us the aha moment, I want to make sure I put it out there. First of all, thank you, thank you, thank you to the life insurance agent that was willing to come forward and just share it with us. I mean because this is, it's hard to get information on these type of products. So to actually have somebody come and say hey, we, I use these, I think I'd love to get your take on it and share it. We're not doing this just to straight up, just rip it up. We tried to give it the best scenarios we could. I mean let's face it, timing wise, interest rates are at as they've been in the last 30, 40 years. That's probably a great time to lock in guaranteed type return. We, we tried to give it some benefits of the doubt on that and we didn't pull any money out. So with all that and then thanking the insurance agent, what's the rest of the story?

So here's the rest of the story. Over this 30 year time horizon, if you look at the $300,000 that was paid into the policy and the guaranteed.

Cash, he's somehow trying to infer that Isaac is going to get a rate of return on infinite banking. As though infinite banking is a product that you get a rate of return on. If this guy just read Nelson's book, he would understand that the process, the infinite banking concept is not about addressing the yield of an investment. It's all about controlling how you finance the things that you need throughout your lifetime. Which these two dumbbells haven't mentioned once throughout this conversation. But yet they told us they were going to give us the whole enchilada on Infinite Banking and tell us why the insurance companies are lying to us and expose this concept like there's some expose a that needs to happen. I'm going to be dumber after this 31 minutes and I don't appreciate that I am going to be dumber as a result of watching this.

The other thing that they're not identifying here is so first of all they're, they're trying to pinpoint a period of time which is age 65 because that is the so that's the society's this age that we've been beat into our heads with a baseball bat since we were the day we were born about this fiction of our retirement. And what he's not identifying is how the policy is also, even if this was poorly designed, it's getting substantially better by the time we get to that age. And every time that 10 grand goes into it, it's growing vastly greater than that $10,000. And so now it's actually picking up steam and it's getting more and more efficient every single day for the rest of the of Isaac's life. Also not identified here. So we're trying to pinpoint now where someone else would have a 401k or whatever they've got going on. They're going to have whatever amount of money they have based on some other assumption of a rate in a taxable account, which they're probably not going to address. I'm guessing in here, most likely they're not going to bring that up. They're going to now start withdrawing from that account, hoping to beat or outpace the market on an ongoing basis. Whereas this policy, even poorly designed as it is, if it's done effectively, isn't ever going to go down. They'll be able to access capital and they'll have a net differential. Yes. But the policy itself is always going to be growing on a larger balance, regardless of the market condition.

Cash value of 532,000 and the guaranteed death benefit of 896,000. The actual rate of return that was received in this policy, 3.62% over this 30 year period. When you think about the return on capital that was deployed, what was it.

If Isaac died to his family?

I'm getting dumber every second I watch.

This man ployed into this policy. 3.62% does not get me super, super excited. And this assumes you didn't actually use it for the number one benefit that's touted from it, which is borrowing money from the policy through time.

And now I know, earlier you showed it on the assumptions page. This thing was paying over 5%. So for it to have returned.

Show me anywhere on the illustration where that's happening. These guys again, they, they, they would really be much better served getting a little bit more education on this particular contract.

Not to give them credit, but just in general, the life insurance companies themselves are not helping in this scenario. They're the ones putting an interest rate, even though they are putting little bullets and asterisks explanations as to what it is. A dividend scale interest rate. And because the word interest rate and a percentage when they're wrapped together confuse the public's mind, especially if you're a CPA or something, your brain gets locked into this concept of projecting some future attached to this, this number. But if you don't understand how that number is relevant and what it actually does, it's completely meaningless. The insurance companies are regulated. They probably have to put that number on their marketing material. But by the virtue of putting it on there, they're also creating unnecessary market confusion because they people don't know or understand what it really is. And that is fundamentally, I would say to some degree a precursor to how this type of activity is happening out in the marketplace unnecessarily.

Return 3.6. Is that because is back to what you said, you're only earning off the cash value and then there's that's net of fees and all the other things.

Exactly right. There are fees coming through and then.

Not exactly right. That's not exactly, exactly wrong. Actually it's exactly wrong.

Portion of that every single year, every single month is paying for the insurance. It's not like you had all $10,000 working for you or all $10,000 having that 5.2% dividend what you do in a 401k right.

No fees there either.

Right. Applied to it. Now again, these are not numbers that we did. This is from an actual insurance policy. We just calculated the rate of return 3.6% over the 30 year. So then the immediate question we have is might there be a better alternative? Might there be something that looks different? If we were not going to do infinite banking, what would the money guy team?

Well, you haven't done it.

I'm still.

Yeah, still waiting. Still waiting for that part. We're, we got nine minutes left here. Are you guys going to show us when the infinite banking comes in or what?

Let me take a wild guess at where they're going to go from here.

Do you think they're going to compare an Investment.

Jay, let's just see Team do.

How would we approach this? Well, we said, all right, let's look at Manny the Mutant. And you guys have seen man the Mutant a few times on the show before. And let's assume that Manny wants the exact same protection as Isaac, but he's also going to just invest the remainder in the stock market.

Right?

Okay, I'm not even gonna watch that.

Here we go. There it is.

Look at the title of that.

Infinite banking versus investing. I love the statements. Manny would have over twice as much at retirement by choosing term insurance and investing the difference. But do you notice how there's no asterisks there? They put an asterisk on the whole life death benefit, but they didn't put an asterisk on the 8% investing return. They didn't put an asterisk on. Assuming that, that Manny the Mutant actually did what the frick he was supposed to do and put the money away. Assuming that what period of term insurance this is the 30 years does the term insurance expire? Is that identified in here? They're only going to 65. I bet you that term insurance expires at 65. So if Manny lives to 66, he might have a, maybe a bigger account value that's fully taxable and no more insurance. So if he dies the next day after the taxes paid, his family's going to get less money than he would have had at the whole life insurance. I bet that's not no asterisk for that.

Here's really, I guess the key takeaway from this whole painful experience of reacting to this. So R. Nelson Nash, the developer, the pioneer of the process of becoming your own banker, the infinite banking concept, he wrote a book titled becoming your own banker. This book has sold more than 550,000 copies. It's self published. The reason why it has sold so many copies is that the process works. But it's a process, it's not a product. These two guys don't understand the problem, so the solution just won't matter to them. Everything that they led, this purported revelation about infinite banking was all focused on a product.

Not even the correct product. Not even the correct product.

And having this sort of long winded discussion and just leaving us waiting in suspense for them to actually get to any conversation about the infinite banking concept, which I don't even need to watch the rest of the video. I'm just done with these guys. They need to get their hands on a copy of Nelson's book. They need to understand the problems. So that the solution actually matters and it becomes clear to them, go buy term and invest the difference. Knock yourself out. If you, if your objective is to invest money, go and do that. The infinite banking concept is not an either or, it's an as well as. Because you can't ignore the function of banking as it relates to your needs. You simply cannot ignore that somebody must perform that function. Bringing that function down to the you and me level, which Nelson taught us to do. The essence of process, which is to recapture the interest that you paid presently to banks, credit card companies, finance companies, to control how you finance all those things that you'll need throughout your lifetime that has nothing to do with buying term and investing the difference. Go have a conversation with somebody about that. If your focus is to help them with investing and give them some death benefit protection rate, go and do that. But don't put a video out there saying the insurance companies are lying to you and infinite banking exposed. You didn't expose a damn thing about infinite banking in that video.

Here's the couple things to indicate and I really want people to recognize this. Nelson used to say he would tell stories about how well you know, it's pretty common for the insurance advisor. They meet with somebody, a business owner, they're having a great conversation, somebody wants to move forward with someone and then the person that they're talking might say oh yeah, this is great, I'm just going to run it by my cpa. And Nelson would say well might as well run it by your garbage man. He knows more about it. I think we just identified why in this video.

Sharp example.

And because they're designed to think around a tax code and they're designed to think around in general. I like this amazing. CPS don't get wrong but like in general they're designed to think around, you know, the simplistic of this number is bigger than that number. Not looking at the nuances of how your behavior influences your decision making and thereby the results that you achieve in life in many areas and often they're there to help tell you what your bill for the taxes is. They're not there to help you in advance to strategize, only minimize that bill in the future. But how do we actually help you grow your business? Consider where you're getting your advice and your takeaways from next up is one thing that irritates me that we didn't clarify here is at the beginning of this video it was all about how we are going to go and explain all about infinite banking. We're going to give you all the details of everything. These guys had slides prepared. They knew the answers to the slides. They already knew the charts. The entire video is disingenuous. And they started right from the beginning, effectively lying to people about what they were going to teach you. They're talking about how, oh, we're going to give you all the goods and we're going to give you all the benefits and then we're going to talk about the pros and the cons and the this and then that they already had a preconceived idea notion, details on a PowerPoint. They had all the numbers and the information and they're talking through it as though they don't know what those things are for the viewer. To me, that is bold face lying. And I think it's disingenuous. And I personally, I could perceive that as I'm watching the video. I have my own opinions. I'm an opinionated person. I'm happy to have them. Maybe I came in with a little bit of an opinion watching a video that could be the truth, but I think any rational person watching this can clearly indicate these guys are just being phonies. They know exactly what they're going to take you through. They know the answer. So every time they're saying, oh, well, that sounds good. Well, this sounds good, good. They know in their heart of hearts that they don't believe that it's good. So it's disingenuous. I just think that that's really sad. It's very sad for them and it's sad for the viewer who doesn't know any better that.

Yeah, and, and they're these guys, from what I can recollect in, in their names, entitled, like, These guys are CPAs. They didn't mention anywhere. You're paying no tax on the buildup of the daily cash value. You're triggering no taxable event on the dividends. You're accessing capital and triggering no taxable event in, in the United States. You're paying no tax on the death benefit proceeds. Nobody mentioned that anywhere. And these guys are CPAs.

And they didn't mention that you are going to have to pay tax on the 401k when you take money out. Right. And they didn't mention the penalizing aspects of if you take it out early, which Canada in the U.S. is a little bit different about that particular structure. What are the rarer things where actually, I think Canadians are better off in that particular environment. But yeah, you're right, they didn't mention any of that stuff.

A complete waste of time.

Further to this, here's the other thing that comes up for me. You've been doing this for a long time. You've had meetings with people who at one point or in their past, they spent a good chunk of their human existence, their working lives, under the premise that they should do what they should buy. Term end. That's a difference. Yeah. How many of the people that you've met, Jay, that have come into your office, that you've had webinars with that have become clients or even not become clients, but they have followed through on that strategy that was promoted to them? Not one. How many of them have the results that they were told they were going to have to any degree?

Not one.

Not one. Me. Me. Not one. Fifteen years. Not a single one. Most of them have no insurance or the insurance is about to get very expensive and expire. They've never evaluated it because they've gone through that entire experience thinking that they were doing the right thing. They have never received the returns. In fact, most of them have received less or negative or lost most of their money in that environment. Most of them didn't put the money away because they spent the money on the things that life needed, like repairing the transmission on their car and taking care of their kids, dealing with inflationary environments and so on and so forth. I have not yet to this day met a single person, not one that has actually followed that advice and achieve that result. I know they exist. I know people have done it and done it successfully. I just haven't met a single one of them. And thousands of people we've met, doing events, doing live seminars, teaching this process to people. Not a single person has come up and showed me like, hey, here's my statement. I intentionally put this amount away every month that I have my term insurance, my term insurance is about to expire, but I'm self insured, as they like to say, and I did it. Everything came to pass for me. How is it possible that that many people and all the people that I've met and that you've met it, haven't received that success? That's because. Not because the strategy doesn't make sense on a spreadsheet or doesn't maybe look good. It's because the economics of life and human behavior completely destroy all of it. Because the human behavior isn't limited to yours. It's also the behavior of the economics of the marketplace that you also can't freaking control. And it destroys all the. That you're trying to do in the process over your lifetime. So you're putting everything on a hope, wish and dream model. And you're down on your knees praying, praying, dear God, make sure that my strategy works. Because everyone told me, the CPA told me it was going to work. And then you're 65 and all they. All sudden there's a war in another country and there's, there's global strife. And it's not like we don't have that now, because we do. All of your money that you were banking on is gone. And then you're so stressed out, you die early, but you don't have insurance left. I mean, come on, let's be real about it. I challenge someone to actually come and show me where they've actually made it work. Just if one person isn't, I mean, isn't enough, like, let's get some people who've actually done it successfully made it work. That's what I'd like to see. Here's the deal, man.

Guys like these two guys, which I'm sure, hey, personally, they're probably wonderful guys, totally awesome. Good for you guys.

Yeah, go have a beer with them. It's probably.

But what we see far too often is people get really focused on. Well, and they referenced it a number of times. If I have a savings account at a bank and I'm earning 5% interest on that savings account, these guys have no clue that the effectiveness of a savings account has absolutely nothing to do with interest rate. It's all about the systematic deposits into that account and leaving money there. And the human condition is not to do that. Most people have very little, if anything saved. So when you go on and you're frothing at the gums about interest rates and comparing rates, zoom in a little bit on the human condition. Because one of many things that we teach is that the policy owner's behavior is far more critical than the behavior of the life insurance company. The 401k account holder's behavior is absolutely going to be far more critical than the behavior of a temperamental stock market. Now they're getting dinged both ways. It's not about, again, trying to put yourself out there in front of an audience and say, watch me sell against something thing. Watch me sell against it. Look at how effective I am at selling against this dividend paying whole life, which they've masked with a universal life insurance definition. Like, come on, it's just so superficial. It's so shallow. It's so amateur night at the Arena.

Everyone wants to compare the rates in a spreadsheet over time, which most of which you can't control. No one, there's no comparison on behavior. There's no comparison on the person that did A, B and C versus the person that A, B and C. They're only comparing the, the product choice and the fiction of a future marketplace that's outside of your control. They're not cohering the impact of your decision making process between one person or another. That's like you have two cars that roll off the assembly line. They're identical cars. They're the same color, same engine, same size, made the same day, one after another. I get into one and you get into one. I can guarantee you, Jay, yours is going to be a much better condition 20 years later than minus because you know how I drive. I don't take care of stuff the way that you would take care of it. You're gonna have very different vehicles. Mine will have dings on it. Mine will have more speeding tickets. Aware that it's received. I've probably ran the brakes a little harder. I've probably had to replace them more frequently than you. There's going to be a whole host of differences. Just the maintenance bill alone will be more on mine than yours. Right. That's a function of the user. Now. I'm aware of that, but I'm still not going to change my behavior in that. That like I'm not. Yeah, I'm going to speed. I'm not.

And it's the same product.

Same product. But I'm, I'm not going to change my innate behavior a lot around that. Maybe modify it here and there a little bit. But I can guarantee you, other than like an accident that might take place outside of our control, which is the market getting in the way, those cars are going to be fundamentally very different and yours will be worth more than mine 20 years from now. If we can make that last that car 20 years, I'm quite confident yours might have more miles, but it'll be in far better condition because you really take care of things like that. Yeah, that's not in my zone of genius. I just want to get in. It's a tool to do things and I want to do things quick and fast and go. If it gets a scraper dent, I'm on to the next thing. The next thing is more important to me than the scraper, the dent in the car to our viewers.

I mean, if you liked this reaction video, watch the next one where we react to Ramit Sethi. And one of his videos, boy, we had a blast with that one. So make sure that you watch it. Continue your journey of learning, and continue exposing yourself to the truth. And make sure that you develop a deep understanding of the problem so that the solution actually matters to you. So thanks for watching.