What is the Canadian Infinite Banking Concept?

When there's a pandemic, your money can only go up when there's a recession. Your money can only go up when there's a crash in the financial markets. Your money can only go up when interest rates increase. Your money can only go up when interest rates decrease. Your money can only go up when you become the banker. You are the borrower, you are the depositor, you are the bank owner.

Have you ever noticed that when it comes to making money or putting your money into investments, you're placing a lot of attention to it because you want to know exactly the terms like the rate of return and when you can expect the timelines for that rate of return. If that's you, it's completely okay. And I understand you've worked extremely hard for your money. And this money could have come from your sacrifices, working some very long hours. And this could be at the cost of you spending time with your loved ones just to get that money. The last thing you want to have happen to your money is to lose it. And as important as it is figuring out where to deploy your money for that rate of return on those investments, you're spending a lot of time and your attention looking at that. Well, have you ever thought about how your money flows in and out of your life as well as where you store and warehouse your money? Could it be in a better place? Well, if you're like most Canadians, you probably don't even bat an eye. As soon as you receive your money, you leave it in someone else's bank, like one of Canada's largest banks, or any bank for that matter. You've gotten so used to just handing your money to someone else. Have you thought about what a bank does with your money once you leave it with them? It shouldn't come as a surprise to you. They don't just leave it sitting there. They lend it out. I mean, a bank ultimately is in the business of lending money to people like you by using the money of other Canadians that they deposited that money with for the banks and their role of being that intermediary for you to store money with them. They're the one who makes all of the profit. Let's get something straight here. You're the one doing all the work collecting and earning the money. You're the one who takes the risk of losing your money when you deploy it to investments. But when you store your money with someone else in their bank, they're the one profiting from using your money that you gave them. Now, there's nothing wrong with the banking business and making the profits that they do. I mean, there are laws in place that allow them to do that. If there's anything that needs to change. What I would look to change would definitely be that because it's your money that you earned, you should be the one getting the financial benefits. I mean, shouldn't you? It's your money, but when you leave it in someone else's bank, they're the one who benefits from it financially and they don't even share the profits that they benefited from using your money. I'm Henry Wong, a chartered accountant and authorized infinite banking practitioner in Canada. Instead of just investing in a bank and earning a return, why not be in the banking business yourself? Become your own banker so that you can benefit from using your own money and profit for being in the business instead of giving the benefits to someone else for being the bank with your money. If you want to start, make sure you visit watchibc.com to get access to a free 90 minute training on the process of becoming your own banker. The infinite banking concept. When it comes to the business of banking, what a better way to look at how banking works by looking at the other Canadian banks. Well, when you flow your money to those banks, you get to see how much money they make from your money. I mean they release annual financial reports that show that to you and it's public for you to see. And you know, when it comes to the business of banking, you probably wonder how much profits they make. Well, I'll give you a huge hint. It's huge. Back in 2020, using one of the Canadian banks, TD, who took first place, let's look at their annual report. So when it comes to an annual report, I'm just, I'm just randomly choosing TD as the annual report to look at. And these annual reports are published every single year in their fiscal year end. And these reports aren't made to be easy to understand. They're actually quite complex and sophisticated and if you don't understand them, that's okay. I'm here to help interpret it for you. So let's take a look at some very important things related to it. And the first place I'm actually going to jump to is the cash flow statement. Because we want to know, what we're looking to understand is how much this business of banking is. So if we go to the cash flow statement, we'll see a couple of things. You'll see there's three columns, there's 2020, 2019 and 2018. Then the important thing to also recognize is it's in millions of dollars. So the numbers that you see, you've got to add six more zeros behind it. So in 2020, during the pandemic when, when businesses were having challenges, let's look at how solid the banking business was for TD. While this business actually earned 13 billion.

A slight decrease compared to 2019 of $14 billion. So that was their net income. Now one thing that you may not know in terms of interpreting cash flows is let's look at how much the business came, what created good cash flows as operating or running the business, how did the business make its money or how did it get its cash flows. So when we look at the operating cash flow section, we'll see in 2020, their cash flows that they received was $231 billion. The year prior to that, their cash flows from their business was 271from operating their business and then the year before was 5.6 or $5.7 billion. And if we look at this large comparison from 2019 to 2020, a huge component of where that money has come from was a large increase in deposit, so money being deposited into the bank on the cash flow statement. It also gives us some very good information which if we look at what's called the supplementary disclosure of cash flows related to the operating activities, we can also see how much money that they've paid in interest in those years. So in 2020 they've paid 10,287,000,000 in interest. So this is money that they paid to those deposit holders most of the in general. And then in the years prior they paid 17,958. And then if we look at the interest received, so this is from once you've deposited money into the bank, they've taken that money out to put it to work. And for them they've received an interest of 34 billion compared to how much they paid a of 10, 10.2 billion. So if you look at that, that's almost more. That's more than three to one. They've made three times in lending money compared to how much interest that they've paid. That's an amazing business to be in. The second thing you'll probably think about as well when you look at the interest that they have received from being in the business of banking and then how much they've paid for deposits, how much of that money, if you bank with td, did you actually get? Unless you were a investor with td? So if you were an investor with td, you would have purchased shares on the TSX as an example on the publicly traded markets. And you would have some of those investments. And now if you have investments and shares in td, let's look at very quickly that their stock performance prior to that, you know, their stock was hovering around $55. I'll just say it's $55. Then the pandemic happened and that's when the markets came crashing down. And after it came crashing down, it started to kind of go back up. And if we look at their year end which is October 28, 31st, 2020, we can see actually from they don't release the financial reports until a couple of weeks after. But we look at it from that standpoint from October 26th again, just four days prior to their year end, you can actually see that they, their, their, the business of banking has, their share price has extremely increased from that plummet of the $40 now up to the $72 or before, before, before the whole pandemic that has happened that has moved from the $55 and it started to profit move up above that, above that time. But so you know, during that time if you were invested in TD at $55 and we compare it all the way until only the October your, your share value would have lost from $55.

Came down as low to let's just kind of say $40.

And this is the, this is the year end and from the year end you can see it increase. But from that standpoint, let's just use here as the, the measure here. And that measure is, let's just call it $45. So and if you held the investment all the way to where it is today, again this is looking in hindsight you sight, you wouldn't know. So on this day one, one whole fiscal year later, $72, your, your shares increased from 55 to 72 51. So the increase here, 7251 minus 55 is 1751 as a gain, you would have went as low as 40 to around 45. So depending on the amount of shares that you own, if you were a shareholder, you own some stock in this company, you would have gotten a 30, 31.8% increase in your share value. Again, this is if you own shares. Now if you own shares, not only would you have gotten a gain in terms of the price of the shares, the other part that you might want you would be thinking about is well, how much dividends did I actually receive? In terms of the dividends, here's how much dividends was paid $5 billion. So despite a global pandemic. They were still able to flourish very, very well and at the same time still pay a very large dividend. Again, if you are banking with td, when it comes to not owning shares, you probably didn't get anything for that. But if you were invested in them, you probably got a very comfortable return for that. What I want to say is that what a great business to be in when it comes to the business of banking. Now my colleagues Richard and Sardlo did a wonderful job laying out the facts on the massive profit side the big Canadian banks made back in 2020 during the time when you had to endure government lockdowns, mandates, loss of employment because of this pandemic. Let's look at understanding what becoming your own banker is and the tool that we use to build the platform to become your own banker so that you can understand the mechanics of having your own banking system and it doesn't involve the same complexities of setting one up just like td. If you really want to know more about building your own banking system, make sure you visit watchibc.com get yourself a copy of the book Becoming youg Own Banker from R. Nelson Nash. So let's go through the meat and potatoes of it. Let's break down the tool used to build your own banking system. When it comes to becoming your own banker, the first thing we're going to talk about is the platform that we use to build this banking system. And we use what's called a PAR whole life contract. This sets the foundation and the platform where we build this banking system. So when it comes to the policy contract, it's actually private between you and the insurance company. Life insurance, as Nelson would say, is a bunch of people coming together to solve an economic problem using a free contract and free people contracting together. The policy contract describes very clearly who the policy owner is, who the life insured is and who the beneficiary is. The policy contract is also very clear in terms of describing the role of the premium and the death benefit. So this sets a very solid foundation for you, which brings a lot of good clarity. It's a unilaterally binding contract and what this means is the contract is a one sided and legally binding one where one party agrees to pay for a specified act. In this case that act is specifically your death. We all know that you are one day going to leave this planet. So that is 100% the question or the uncertainty is actually when. Let's talk about just the nature of the contract. When you talk about becoming your own banker. Why would you not set up your banking system in a company you co own and you get to participate in the profits? Well, that's why the contract that is entered into is a participating whole life contract with a mutual insurance company. That means that by virtue of you owning the policy, you are a co owner of the insurance company who also participates in the profits generated by the participating account. Let's kind of dive into one of those components, which is premiums. When we look at the business of banking, someone needs to deposit money into the bank. You are already depositing your money into someone else's bank, someone else's system. When it comes to becoming your own banker, the first step is actually changing the process of who's getting the money. So instead of directing the flow of your deposits, your money to someone else's bank, you are directing the flow and the money to deposit into your own bank. The platform your bank is, is the participating whole life contract. When it comes to your bank, that deposit is in the form of annual premiums. In this participating whole life contract, one of the contractual guarantees built into the contract is that your premiums will never rise no matter what the circumstances are. Even as you get older, the premiums are never going to go up. So an advantage for your bank using the participating whole life contract is that your premiums will never go up with that contractual guarantee. The disadvantage of your bank using the participating whole life contract is that since your premiums can't go up, you actually can't put more into the current banking system that you start with. And if you need to start putting more in, you would need to expand your system. When the contract is properly designed, there is flexibility already designed right from the beginning of the premium deposits. A portion of the premium is a required premium and another portion of the premium is an optional premium, meaning it's not required. The optional portion funds the growth of your banking system. So together, the required and the optional portion form the maximum premium. Like any contract, you must fund at least the required premiums to keep the benefits of the contract intact. So the required premiums will produce a set of benefits, while the optional premiums will also produce a set of benefits. When you fund the maximum premiums, which means you fund the required and the optional portion of the premiums, you will produce both sets of the benefits. So when we want to do this process right, we want to fund the maximum premiums. Not just once or twice, we want, we want to be able to fund the maximum premiums consistently year over year. So the next component we're going to talk about. After all, we are talking about life insurance. And this is a participating whole life insurance product that we're using. While it's a unilaterally binding contract between you and the insurance company, the insurance company is going to pay you for the specified act. And in this case, that specified act is death. And in case you didn't know, I'll break it to you now, that's going to happen 100%. And that's actually a good thing. The contract specifies that upon death, a death benefit will be paid tax free to your beneficiary. Unlike many things that you own, the CRA will want you to pay taxes on what you've left behind. Right off the bat, when you've deposited money into your policy as premiums, you've already secured a death benefit that far exceeds the amount that you put in. Is it not okay that you shifted the risk of the amount of money that you put in to the insurance company? Well, in comparison to when you put that same amount of money into someone else's bank, all you would get is the account value, which is equal or close to what you've put in. So let's use an example for this male, age 35, non smoker. The premiums he would pay or put into his policy would be $10,000 a year. His death benefit is $234,752. If $10,000 is the amount he can save every year and we divide that by the death benefit, excluding any compounding, he just got further ahead by 23 and a half years. When these contracts are designed properly, the death benefit actually also increases every year. So using Our same male, 35, if he sticks to his plan for 10 years, he would have put in $100,000 into his policy and his death benefit would be 438,961. If we exclude any compounding, he would have had to save almost 44 years using that 10,000 to reach the same 438,961. If you want to know how your death benefit is protected in case the insurance company actually goes under, make sure you watch our video on how safe is your money in someone else's bank. When it comes to certainty, nothing speaks more clarity than when it comes to contractual guarantees. When you have a participating whole life insurance policy, you actually have what's called contractual guarantees. So let's go through some of those contractual guarantees. The first one is a properly designed participating whole life insurance policy is designed for lifetime protection. And in Canada, that Lifelong protection is actually designed to perform, to perform to age 100. After 100, the policy will still continue to be in effect. This is one thing that you actually know from when you sign the contract until age 100, you're protected all the way. The next part of the contract is when this contract is signed by you and you fund it. That term that is used is called that. It's in force. So you own the contract and you own the benefits to the contract. You are also the one with, with the ability to impact the performance of the contract, not the insurance company. The insurance company is going to fulfill their part of the contract. And when it comes to becoming your own banker, a very big part of why you are watching this is that you want to be the one in control, not someone else. This is what that contract will give you. When we talk about the contract, there are performance responsibilities in that contract. And one of those responsibilities that is there is that you fund your premiums while the insurance companies also got responsibilities to fulfill in the contract. And there's a contractual guarantee built on this. And so that contractual guarantee is when you fund your premiums. These premiums get deposited into what's called a participating account. The participating account is a combination of items. Some of that is a reserve to pay for death claims like mortality, and another sum is used to be invested. I'm going to describe a little bit more of the participating account later. But essentially your premiums form a basis for your policy cash values. So as you are putting premiums into the insurance company, the insurance company starts to grow your cash value. The contractual guarantee is that by age 100, your cash values need to grow to match your death benefit. So you're going to have a starting cash value, and you're also going to have a starting death benefit. Every single year. As this policy is in force and you continue following your side of the arrangement, this cash value is going to grow. And every single year as it grows, it's going to grow to match the death benefit. So what you can say is the death benefit will always be more than the cash value and the premiums that you've paid, at least until you reach age 100. At age 100, the cash values will grow to match that death benefit that is contractually guaranteed. It doesn't matter if you start this process when you are 20 years old, 30 years old, 60 years old, or 70 years old, this contractual guarantee is the same. By age 100, your cash values must grow to match your death benefit. So let's kind of walk through some of these examples, what I want to show you is the contractual guarantee. And there's what's called that death benefit again in this design here. This, this is a male.

Age 35, non smoker, and he's putting $10,000.

So immediately as soon as he puts in $10,000, he's going to have, he's already secured one of the benefits, which is that death benefit here, which is 208.

485 death benefit. So that's the line that you see here as the 20845 as a death benefit. Now, if we follow what the contractual guarantee is, by age 100, cash values is going to grow to match the death benefit. Well, let's take a look at that. So using the fall, the same design here, you can now see in the first year this individual lives, so 35 years old. Up until 65 years or age 100, that's his cash value. And as he continues with keeping with his policy of just funding his required portion of the premium, this cash value every year is going to grow, grow, grow, grow, grow, grow, grow to match the 208, 485. This is what the contractual guarantee means. This is what the insurance company is responsible in fulfilling. So is it okay that you fund your 10,000 in exchange for that 10, that death benefit of 208 45. Is it okay that you've shifted the risk to the insurance company instead of taking on the risk yourself? Absolutely. When it comes to life insurance, you already knew about a death benefit. Most likely you would have seen it. But now let's kind of put that connection together with cash values. This is what you want to be able to use when you are alive with your money following the contractual guarantee, the cash values are going to increase every single day. It will never be less than what it is today. The cash value grows every single day because you are aging every single day and you will get closer to age 100. That is how this contract is designed to be performed when the cash values don't go down, except they only go up. That means the cash values aren't impacted by external events that are out of your control. So any pandemic recession or crashes in the financial markets. When you talk about putting money somewhere, like for retirement, how much confidence would you have if you know at least all of your money that you've put into it will be there for you? I mean, when you put your money in someone else's bank, or when you put your money in investments, it's exposed and and it could absolutely be less than what you put in. This is why this contractual guarantee is so important. The cash values will always chase the death benefit. So now let's dive into more specifically about the logic of the cash values always growing to match the death benefit by age 100. If we kind of look at and remember our starting Death benefit is 208, 438 starting.

What if we were able to design a way where your death benefit actually increases every single year? The logic says cash values is always growing to chase death benefit. So if death benefit is increasing every single year, then logic says the cash value is going to chase that same death benefit. So let's take a look at that now. What we've just changed is how this contract is being designed. When you fund your premiums, and if you fund your maximum premiums of $10,000, your death benefit starts growing every single year. In the first year, this blue line represents that death benefit. And you can see there's already an increase in the death benefit. And year over year over year, over year over year, it grows. And that death benefit by age 100 for this particular individual is 291-9740. I mean, I'm not sure about you, but that's a pretty big and wonderful amount to be left behind. How much money did this individual need to put in over 65 years, starting age again age 35, the amount of money that was put in over 10 years would have been $650,000.

The new death benefit is 2919740. So if we were to follow that same logic in terms of cash values must grow to match death benefit, that contractual guarantee, well, let's take a look at what that would look like. And so the green line now represents how much the cash value is. So initially, the cash value starts lower, which is quite normal. And then every single year, that cash value is going to increase. And instead now by year 16.

Cash value has grown to match the original death benefit of 208,438. Now, afterwards, anywhere beyond that, the cash value starts growing, growing, growing and growing again. By age 100, this must match. And that is how the cash value is growing to match the death benefit. Remember that orange line that we had here? That orange line represented the. The initial cash value. And this is if you stuck to the minimum, if you stuck to the minimum, then you are then going to get the contractual guarantee still follows to match the 208,438. But if you fund the growth in your policy, then Your death benefit starts increasing every single year. And as it keeps increasing, so does your cash values. And now you can see that initially stopping at year 16. At year 16, it needed to match the 208,438. Now it's growing much more aggressively to match the new death benefit of 2.9 million. When there's a pandemic, your money can only go up. When there's a recession, your money can only go up. When there's a crash in the financial markets, your money can only go up. When interest rates increase, your money can only go up. When interest rates decrease, your money can only go up. I think you get the point. We all understand compound growth. Do we? Well, the larger the pool of money you have, the larger the compounded growth. Well, if your money pool keeps growing, would you not want to be able to keep adding more money into it rather than segregating it all into smaller buckets and then having that grow? That doesn't make any sense. You want a pool as big of a pool that you can have and put as much money into that pool to make that pool even bigger so it can compound even more aggressively. Now, the beautiful part is that when these policies are properly designed, you're able to continue to add money to your banking system until the end of time. This is not required though, right? This is optional. The longer you keep your policy in place, the more options and choices you afford yourself. And choices, definitely a great thing to have as opposed to some other account features like a RIF, where you aren't allowed to put any more money into it after the age of 71. And if you want to know more about the RIF, please make sure you visit my video on what your RSP does after age 71. And I put the link in the video. When it comes to your money, you probably think of deploying it for one job. And that job is either used for spending it to pay for taxes, spending it to pay for bills, spending it to buy cars, spending it to pay interest, saving it in someone else's bank for savings, investing it in the stock market, where it can go up, it can go down, it can go up, it can go down. Bonds, it can go up, it can go down. Up, it can go down. Real estate, it can go up, it can go down, it can go up, it can go down. Well, when it comes to your money, there are infinite ways you can use it. Well, you've worked hard to collect that money and you convert it to achieve those objectives. That's it. It's done one job well, when you achieve those objectives, well, why is it only doing one job? Because that's the end of the use of your money. When you earn the money and you put it into paying for taxes, bills and buying stuff, that money pool that you've built up, it goes down, it gets sent away to accomplish paying those bills, buying those things, and it served its purpose. It's no longer there. The only way you're going to get more money again to use is if you generally work for it now. Alternatively, if you didn't need to pay for that stuff, you instead of directing that money out, you would have put it somewhere else in another bucket that you have. You would have saved or invested it. Since you couldn't put the money to save or invest honestly. I mean, the other way of looking at that is you gave up the opportunity to use the money to earn you more money, which you know as interest and investment returns. So when it comes to becoming your own banker, when you deposit your premiums into your system, you benefit already from growing cash values every single day. Not only do they not go down, they grow every single day. And here's the beautiful part. You are you're still a able to access the money because your money is not tied up and locked into traditional vehicles like registered accounts like RRSPs and RIFFs, where they impose consequences for you withdrawing and using it. If your policy was properly structured, you'd be able to access the amounts of your cash value without interrupting the compounding of its growth. Why is it uninterrupted? Well, because your money stays growing every single day uninterrupted. Instead of using your money, you are using a lender's money. Your money becomes the security to the lender. And while you have your money growing every single day, you're actually borrowing money from a lender. And they're going to then lend you money. So you also have a good amount of money that you can deploy into another place. And if I had a third arm, I'd show you a third place where you can purchase an asset and invest in it. Now, when you've borrowed money, this is where you've become the second player of the financial play the borrower. So why would you borrow money? My question to you is, why would you not? Instead of sending your money away and losing the opportunity to earn money on your money, you keep your money in a place to earn it. While you're paying to use someone else's money, you are already paying for that. If you can borrow money to make more money, then why not? That's why you're borrowing. Is that not now? Not only could you use the lender's money to make more money, your money, which is the security, still stays every growing every single day, which, by the way, is tax free. And if this is done properly, it's more than the daily interest that you would pay. In case you haven't drawn the connections together, the base in which you are borrowing your money from is your cash values. And if your cash values keep going up, that means the access to your money also keeps going up. So let's use another hypothetical example. Where could the real estate you paid for be less than the loan that you borrowed from? The probability of that isn't likely, or at least you may not have experienced. But absolutely it can happen. If our late, great mentor Nelson Nash, may God bless his soul, were still here, he'd tell you exactly. That was exactly what he faced back in the 1980s. So what about more recently when property values plummeted back in 2008 and 2009? Did you already forget? With your money in popular accounts like RRSPs, TFSAS savings, when you need to access the money, you can only withdraw it. And that's going to interrupt the compounding and growth of that money. So the more you withdraw, the more you lose in terms of its future growth. So let's talk about when you are borrowing money from someone. You've probably been so used to it, but did you notice that they are the one that sets the rules? They set the terms of when you need to pay that loan back. They also set the terms of how much per month you need to pay. You're also forced to make monthly minimum payments. And no matter how challenging things get with you, they are still going to have minimum payments. When it comes to getting the loan, you've got to ask, and they're going to ask from you very sensitive questions about your income, how much debt you have, how much assets you have, pretty much everything, including the kitchen sink. Now, when it comes to when you borrow money, in the process of becoming your own banker, you actually introduce now becoming the third player of the financial play. You become the banker. Now, if your policy is properly structured, you actually get to be the one in control. So instead of the lender dictating the rules, you who is the banker, who is also the lender, you get to dictate the rules. How weird does that sound? I'm borrowing money, but I'm the one making the rules. You set the terms of how much per month you need to pay. You're not forced to make minimum payments. There aren't any sensitive questions ask asked. When you borrow money, you simply make a request and within a few reasonable days you will have your money deposited to you when you finish paying your loan back. Combined with the cash values growing, you eventually can borrow more money without going through more verifications and nosy sensitive questions. So when it comes to the banking business, we've covered the the depositor, we've covered the borrower, we've covered the banker. Now let's talk about being the bank owner. When you own a participating whole life policy contract, you actually become a co owner of the insurance company. Now when you build your banking system with the insurance company that you co own and you are flowing your money into that insurance company in the form of premiums, you are getting to benefit from the flow of that money that you've seen earlier in the form of cash values, you are allowing the insurance company you co own to deploy that money. The money that you flow to the insurance company in the form of premiums goes to this pool of money called the participating account. They take the premiums you receive and it handles the expenses of operations. I mean a business has expenses like underwriting costs, taxes, administrative costs. It also deals with cancellations. Naturally, policies can be canceled every year. And whether the policy is an earlier one versus a later one will either positively or negatively impact the participating accounts fund performance. The other way that the premiums are used is to invest into growing assets which include the interest from the loans you can borrow from the insurance company. And then there's mortality from expected death claims. This is based on the quantity of deaths paid each year. Generally though, Canadians life expectancies have actually improved and and because of this, this allows the money that has been invested in assets to remain invested for a longer period of time. They don't need to sell it for cash to settle those death claims. And last but not least, after it's gone through those expenses or those responsibilities, after all of that has been paid, what's left is called the divisible surplus. This is what's left in the participating count. And from the divisible surplus, the board of directors each year reviews the recommendations and decide whether to declare a dividend. And dividends are distributed using a formula designed to give each policy owner his or her fair share of the total amount available. The formula considers many factors which includes the year the policy was issued, type of coverage and amount of insurance coverage the policy provides. The end result is known as what's called a dividend scale. This is called the dividend scale interest rate, known as dir. The dividend paid is not guaranteed and will increase or decrease depending on the performance of the participating account and the available surplus. Let me demystify what you may think. Let's say you see a dividend scale rate of 6.05%. What you're going to do is to compare that to the amount that you've invested so far. So let's use an example of 10,000 as premiums in the first year. Well, if you've put in 10,000 as premiums with a dividend scale of 6.05%, you're going to expect dividends to be $605. This is false terminology. In this example is very important. It's not dividend rate, it's actually dividend scale rate. And there are many factors that can be different here. The insurance carrier, the policy design, the size of the divisible surplus. But using some examples based on Today, if Your age is 35 with 10,000 as premiums in the first year, your dividend would approximate $620, which actually works out to be 6.2%. If your age is 55 with 10,000 as premiums in THE FIRST YEAR, your dividend would approximate $504, which is 5.04%. Now, if you've watched this video up until this point and this becomes a deal breaker for you and your full attention is focused solely on the dividends and you have unjust feelings that dividends paid to you must be reconciled. You need to know how it's calculated the dividend scale and how it all works. I'm just going to say to you, you should probably move on from this video. This process of becoming your own banker isn't for you. Because understanding the dividend calculation is based on a variety of factors that changes every single year and that the money that you've put into it as premiums has flowed to the various locations and what's left gets put into the divisible surplus. That is the amount that gets redistributed back to you. You are the co owner. Dividends should be treated like it's icing on the cake, not the actual cake of why you're looking into this process. The dividend is not guaranteed to be paid, but if your policy is placed with a proper carrier, some have been paying dividends every single year, including as early as 1848 every single year. Since you are the policy owner with the dividend you actually have a choice in how it's used. The first choice you can use your dividend would be to withdraw it out as cash. The second you can use it with is to pay your premiums with it. And the third option you can use your dividends is to purchase what's called paid up additions, which increase your death benefit and also increases your future dividends. And if you remember back on the discussion on the cash values, if your death benefit is higher than what it used to be, your cash values need to grow much more aggressively to match that death benefit. That cash value is the security you use to access more money, access the money that you have in your policy. Let's look at a visual diagram at how this flow of money works in the insurance company. Now if you remember, premiums is what you are depositing into your policy. These premiums go into your policy, into this participating account. And that's going to get divided into things like asset growth, things like expense operations, things like cancellation, other factors, mortality. And then what's left is this divisible surplus that you see here. This divisible surplus is now going to be looked at. And then they're going to give what's called the dividend scale. And with that dividend, sorry, once that divisible surplus is known, they are then going to review the recommendations and you apply the dividend scale rate to that divisible surplus and that dividend, then they're going to issue dividends. And that dividend scale rate is impacted by these mortality, cancellation expenses, tax, taxes and other everything that I've mentioned earlier. And after that has been all determined, they're going to issue dividends. And if you do this process the way that we recommend that you do it, you're going to take those dividends to go in to help fund and buy you more death benefit and increase your death benefit through paid up additions. And that then is going to help fund more into the participating account. And that's going to create a larger divisible surplus that comes out as a larger dividend scale. And then your future dividends are also going to grow much larger than that. And it keeps going like a cycle, more and more and more and more. So when it comes to becoming your own banker, let's summarize everything you've already gone through. You already are depositing and saving money in someone else's bank. When you deposit money in someone else's bank, you actually become an unsecured creditor for them. They owe you. And in some cases your money isn't as protected for as much as you think. You give the financial benefits of your money to them who did nothing to earn it. They owe you money, they pay you very little interest for it, but they lend your money out to someone else to earn a higher amount of interest. You are already borrowing money. Whether it's because you don't have enough money to buy that thing that you want to buy. You work harder and earn more money to pay extra money in the form of interest. Or when you use the money you saved up to buy something, you've interrupted the compounding of growth on your money and you've given up the opportunity to earn more money on your money. Because your pool gradually shrinks. When you borrow money from someone and you are paying interest, they're the one who actually controls the terms. They control when you pay that money back, they impose penalties and minimum payments. In the current way that you are living with the banking system, you are the borrower, you are the depositor, they are the banker, they are the bank owner. But when you change from banking with someone else to banking with yourself, using a properly designed participating whole life insurance contract, you change who you're depositing your money to. Instead of sending your money to someone else, you send your money to yourself so you can benefit from your own money. When you benefit from your own money, your cash values are growing every single day. And they can only go in one direction, which is up. When you borrow money from yourself, not only are you the borrower, but you are also the banker. And one of Nelson's golden rule was, those who have the gold make the rules. And what that means is you control the terms, you control how much you pay, you control when you pay it. And wealth, your wealth must reside and live somewhere. That somewhere would you prefer to have it reside with a free contract with free persons, which is the life insurance. From this base of financial operation, you can do any, any of the other things in life that you desire. Your own money is growing every single day. No pandemic, no recession, no volatility and manipulation of the financial markets will change that value. The money you're using from the lender, if it's used properly, can also grow and work for you. You just accomplished two jobs with your money instead of one. When you're putting your money in an insurance company which you co own, you also benefit from a distribution of dividends. When you become the banker, you are the borrower, you are the depositor, you are the banker, you are the bank owner. Make sure you like this video if you want to be in the banking business to get started with the this process, make sure you visit watchibc. Com and also don't forget to check out our other wonderful videos in our channel.