Webinar on "Premium Financing: Infinity Banking Strategy of using OPM"

Welcome everyone. Welcome to Think Outside the Stocks. I'm your host. Most of you know me. My name is Madhavi Nadet Jain. So thank you so much for joining. We have with us today my, my mentor, my partner, my coach, John Stewart from Paradigm Life. Hey, John.

Hey, Madhvi. Thanks for having me. I'm looking forward to this afternoon.

Me too. Me too. Welcome. All right, so today we are actually talking about my favorite topic which is the Infinity banking system on steroids, as John says. And this is the strategy for Ultra Rich. Now some part of this strategy is for the ultra rich and some part is, you know, everybody can really implement the Infinity Banking system, right? So that's why John is here today. John is the expert in Paradigm Life about Infinity banking with premium financing. And that's what is the topic of today's webinar. Infinity banking is very foundational for me when I have investors coming up to think outside the stocks. That's the very foundational strategy I talk about. And Infinity Banking with premium financing is even favorite for me and much more favorite for John here today. So before we go ahead, I'm just going to jump in and put that disclaimer out there. This is information and education purpose only. We try our best to educate passive investors with information that's possibly very helpful for you guys. So please, if you want to implement something, if you want to get advice, please consult your CPA or lawyer or any of those your advisors. And please also note that the examples, the numbers that we tend to use, and I use a lot of numbers because I'm a very numbers person but the numbers used at point in time, each and everybody's scenario could be different. So please keep that in mind. Having said that, let's go ahead. Most of you know about me. I am Madhvi Nare Jain. I'm president and wealth strategist at Think Outside the Stocks and Think Outside the Stocks is a commercial real estate investment focused company. Plus the Infinity Banking implementation which I love to educate and implement for my clients. I live in Austin with my two kids and husband and in my past life I would say before I left the corporate world I was with top five consulting companies almost 16, 17 years total 17 years in IT industry. And I started my real estate journey five years back. Alternate investment real estate, have portfolio of single family homes, Airbnb multifamily and I'm active in multifamily as well now. So my true fashion, if you call me, it's really the education bringing this strategy which are game changing to light which I think happened just you know, hiding with wealthy of the America and just bringing them to the. To. To everybody really and make them aware of it, educate and implement, help them implement it. So it's all about today's guest though, not about me. John is the wealth strategies at Paradigm Life. And like I said that he is the expert. He has hundreds of new clients every year that he help but he has helped hundreds of clients to implement this premium financing concept which is, which is to be implemented by really high net worth individuals like 5 million-plus or something like that. And I was talking to John some time back and he was mentioning that he typically helps clients and he works with their lawyers, CPAs and bunch of them because that's a really strong asset, that's a really strong strategy for them. So a little bit about John that John actually he started his first business at the age of 15. That's very interesting by the way. John and he has actually in 25 years in financial and management arena, he has multi million dollar, he has built multi million dollar businesses from ground up and he has you know, with over 170 employees and subcontractor subcontractors doing business in 37 years. So he has that really strong business background. He's active both professionally and personally in active lending, real estate and business funding all using the cash value life insurance system. And this is that infinity banking concept, Infinite Banking. Infinity banking people call it different names but John's true passion is really creating that financial freedom for others and educating them about the fundamentals of this liquidity, control, safety and thereby writing their own financial outcomes. So we have that thing in common. Again. Welcome John. Welcome to think outside the stocks.

Thank you Mavi. Yes, one thing to add there is I was where most people listening here 20, it was 2003 when I first learned about infinity banking and I was looking for that to buy more real estate to expand my business. And it completely changed my life. And so not only teaching people about real estate, I started teaching about this very similar to your story. So very big passion.

So thanks for adding that John. So before we go ahead, I just want to just by show of hands because today we want to really focus on the premium financing part of it. But if you don't understand the infinity banking concept, I would still like to talk a little bit about that. So just by show of hand, could you just mention if you have heard about the infinity banking system and you know at least a little bit about it. So we have about maybe about 20, 30% people who know about it and the rest haven't heard about it yet. So John, that kind of gives us a little bit idea about the audience today so we can jump a little bit into the infinity banking concept itself and then talk about premium financing. Would that work?

Yeah, I think that would be a great foundation so they understand the vehicle we're talking about. And you brought up, I say it's the infinity banking on steroids. So it'd be helpful for everybody to know what that is we're talking about.

Absolutely. I love that. So before we go ahead, I'm just going to a little bit talk about think outside the stocks and its approach. My approach when I interact with investors is a wealth maximization approach is based on a perspective. I say that perspective is everything. When we are focused on laterally safe and investing money, I think that bird's eye view is really important. And the bird's eye view is what gives us that perspective about not just saving and investing, but growing our money, preserving it, protecting it and then passing it to next generation. So that perspective is really important and we think outside the stocks. I help you guys with passive investors to create that better saving system first of all, which is foundational. It guaranteed growth and protection with infinity banking system and then putting that money to double use at two different places by using it in the investments which is real estate, syndicated investments. These are risk managed and as well as providing that passive investor education in both of these areas. So that's really what think outside the stocks talk about. So today we're going to talk about that infinity banking system. How you can grow and invest your money to different places. And then we'll jump and talk about the ultra high net worth individuals who can fund their infinity banking system using somebody else's money. OPM is other people money with the premium financing. And then we'll also talk about that how you can leverage it for your solving your problems like estate taxes or last business asset or sell or even income for example like that. Let's talk about a little bit about what is the problem today. So if you think about the lifetime wealth that we're going to get, it's kind of in a pipeline format. So we have kind of this big tank here where we have a small pipe with the annual income flowing in. The first kind of a filter that applies is the taxes. We have supported some with the lifestyle for rest of it. And from time to time we push up this to shoot in two different tanks. There's a safety tank and there is the at Risk tank, which is the investments tank. Right. The safety tank is our sleep well money which stays in the bank accounts. Not doing anything for us stays in the bank account. But we feel safe, safe that we can anytime withdraw from it. We can anytime when we want. We have business issues or job issues, we can take that money out anytime we need. And that needs to have that tight lid never to evaporate, never to lose that money. So that's kind of interesting when we talk about never to lose that money. On the right hand side, bucket and on the left hand side from time to time we do take that risk. There is some taxes that get also tagged on that investment. But what's interesting is the right hand side is the focus here. Typically we keep it in traditional bank which provides really low interest. It's less than 1% now. It has heavy taxing implication, 2 to 3% inflation. It is losing value year after year. So even if we think that it's not losing value, it's really losing that value year after year. Right. So really the focus is the infinity banking system which has multiple, multiple advantages. John, you want to talk about the advantages of this system?

Well, yeah, it's hard to put all the advantages on one side, especially as a business owner and a real estate investor. But I think you've got it on here. For me one of the big things is the multiple uses of the money. And I think that's one of the hardest things for most people to grasp. But as I collect my rent, as I have my, my reserves for my business, for my personal, for my real estate, it never loses money. I can continue to contribute every single year. And I don't have the IRS limiting me on, on that amount or some, some account with, with limitations or, or taxes. It grows and I can use it tax free. And when I want to use it, it's very similar to having a HELOC on a home. I can use that money and kind of borrow against it so I have better rates in the banks talked about the liquidity. There's no restrictions on my age or what I'm going to borrow it out for. So very simply I just say, hey, here's this money. I can put it into real estate, I can put it in a business equipment, use it for vacation, no implication to taxes. It's just a really amazing account to really hold my money until I have a better place for it. And that's what really caught my attention as a business owner and investor. And it's where the majority of my funds go until I find a better place for them.

Yeah. And what I love about is like John mentioned that this is the money that comes out of that tax radar. Right. So it grows inside tax free. You can distribute from it tax free. You're going to pass this as a death benefit, which is going to be tax free. Right. So that is my favorite part of it, that this will never see the light of taxes, as I say it.

And to add to that, one that should be on that list is it's a contract. So the rules can never change on you down the road.

Yep, absolutely.

And taxes have changed on life insurance policies in the past, but they're for the new contracts moving forward, never going backwards. So we kind of get grandfathered in with the contract we have, which is.

Just incredible, which is the 4% as the minimum. Right. So when we talk about Paradigm at Paradigm Life, we talk about the wealth structure, we talk about this pyramid in particular. And the foundation of it is that infinity banking system. Right. So John, can you mention why that foundation is necessary?

That's boy from you look at any business, any successful real estate investor and they have to have reserves. If you don't have reserves for your company, first little roadblock, road bump and you're in trouble. If you don't have the liquidity coming in, you can have all kinds of receivables. And if you can't make payroll, if you have an opportunity that comes up, have a repair at one of your properties, etc. Every company has to have reserves. And you know, I saw in 2008, I started investing in real estate in 2003 and by 2008 had acquired 43 single family homes. I had a street of fourplexes, had multiple streams of income and I did not understand the full power of liquidity. And that's one thing as we go through what we're going to show you today, one of my biggest kickback was why would I put my money over here in this policy you're showing me if I can make 10, 15, 20% in my real estate or business. But a successful Investor never has 100% of their money 100% of the time in those investments. So we have to have some place to hold that. And that's really this bottom part of the triangle here, the foundation of where we want to hold that money for opportunities for the chaos hedge as she has it here, and then we can deploy that into the investments for the tier 2, tier 3, which is typically where I'm assuming most people in this video are watching in the real estate investments, the syndications, etc.

Yeah, I mean the hedge that you need for stocks as well as real estate, I think that's really essential. So to implement this infinity banking system, I love to go back to my previous visual here where we have this big pipeline coming in so everything stays the same. What we're trying to replace here now is that hedge that you have for your businesses, for yourself, for your family and you're replacing it. You're completely taking out the use of banks in Europe in your systems. So instead of the bank now, you will push all your reserves into this infinity banking system which is nothing but a high cash value life insurance policy. And I cannot stress enough that this is not your regular life insurance. This has to be structured in a particular way when we are creating it. It's almost like an architecture plan. If you have a three bedroom architecture plan, you cannot put five bedrooms in it. Something similar happens with the life insurance policy. It is not your ordinary life insurance policy. We create this structure at the beginning to start with so we can overfund the cash portion of it so that your cash that's sitting in the bank account moves and now sits into the high cash value life insurance policy. And when the insurance companies pays that guaranteed, which is the 4% John was mentioning before, plus added dividend. And one of my favorite companies, and I think John's favorite company also is Penn Mutual. They did through the Corona as well. 5.75% was their dividend total, including the 4% which is the mandatory as well. So that's what you're going to get, that kind of growth that you're going to get on that money that's just sitting aside. So that's essentially what we' trying to do here. And on top of it, the death benefit just sits on, on, on that cash value insurance. Because the death benefit is the governing factor. Right. So the death benefit is what that solution for your, the estate tax planning problem is because the death benefit always is going to be tax free. And on top of it, like John said that that guaranteed contract, it never goes back. And that's why that tight lid there, it's something that protects it and preserves that money that you have in there. So you're never going to kind of, if you have 100k in there, you're never going to drop that money back. It's just going to keep on growing from there. So that's essentially what that savings replacement in terms of what we are trying to do here. And not only that, it grows almost 300% plus better than banks. But it has all these advantages that, you know, that we talked about that John mentioned.

Let me add real quick to that, Madhavi. With the types of policies we're setting up, most people when they think of life insurance, they're really buying death insurance and they're trying to buy the most amount of death insurance for the least amount of money. We are truly setting up with a high cash value policy. It's life insurance focused on the living benefits. And that's very, very important with how we look at this for both the infinity banking and as we start leveraging it with the bank's money. Those two are very, very important to understand.

Absolutely. And then I think this will be a good five minute slide, right, John?

Absolutely. So this goes into how that's set up like we were just talking about.

Sorry about that.

I lost control. There we go.

I think you should have it.

Okay. So yes. So as we look at life insurance and really talking about how it's set up, the majority of the time, if you were to just go down to a local insurance agent and you know, we're talking about if, especially for estate tax planning or maybe income, an attorney says you need 10 million of life insurance, there are several ways that we can go about it. So if we go look at the 10 million of just life insurance, who just determines that premium is now it's not moving forward is the insurance company. And there are several types of insurance we can get. My clicker's not working. Here we go. So when you look at the minimum premium, most people look at term insurance. So if you were to look at, in this example, we did $10 million of a term insurance would be about 7,000 per year. But there's also a maximum amount of premium that you could pay in and the IRS is who determines that premium. And the most you could put in a $10 million policy and remain tax free would be $364,000. So a big, big difference. And most people are just thinking of this as death insurance. They're paying that minimum premium. But who would write that check for 364,000 and why? And this would really be the people that understand the power of that contract and over funding. And you know, there's a tax free death benefit, tax free accumulations and use tax free distributions. There's no 59.5% penalty to use ahead of time. You can use this as collateral, the money as a creditor protection. It's a competitive rate of return, especially as you're looking at a savings account and a place to hold your cash. And it's self completing or it would be self funding in the event of a disability. And really unlimited contributions. The only thing that's going to limit your contributions is the amount of insurance you can get. There's no limit from the irs.

Yeah. And then what I hear mostly people that I have not heard about this. I mean, is this something new? It is not something new. This has been used by people like Rockefellers. I mean they're six, seven generation families still using it. About 150 plus hairs are using it. Walt Disney actually used the cash from his life insurance policy as a collateral to start Disney World because nobody really believed on his vision and he couldn't get the loans. There are people who have been using it for hundreds of years. It's about time that this strategy is known to the common people in America. The advantage like we talked about this system, that it not only provides you that efficient savings but it also provides you that protection of for your life which protects the risk of your life from your bucket and pushes out to the insurance company. And while doing that, when we are doing kind of these two birds in the same stone, we have all the advantages of being safe, having a high liquidity, great rate of return and zero taxes because this is growing completely tax free. Right. So that's what the traditional, even life insurance was providing just the protection only the wealth maximization strategy with Infinity Banking is providing life insurance with that savings and protection. So that's basically the life insurance was being planned for a death benefit. The money that you would never see. But this is the way that you can actually live your life insurance. You can use it for the multiple purposes that you have. You know, we were just talking about all this, you know, example, for example, all these advantages that we talked about in terms of utilizing and living your life insurance. So yeah, the next thing we are going to talk about and I think this is favorite, favorite thing for most of the people on the call are real estate investors and they're like, okay, if we put it into my money, it's not going to grow. I would rather take it and put it into real estate. This is what you can do. You don't have to get away with that. You can still put it into real estate. That money can still work for you. Just going back to the previous example, now we talked about this, replacing that same systems in this tank and when you have that opportunity, dollars typically in your bank, for example, and you're trying to Buy investment property. You take maybe 75% loan from the bank and about 25% down payment. Typically what you would do is take that 25% from your bank, push it to the property as a down payment, emptying out your bank account. What is stopping is the future growth of that money that you're emptying it out. But in this case in the infinity banking system, you actually are going to borrow the funds from somebody else. You're going to take a loan showing that, hey, I have this money sitting in my life insurance policy as a collateral. So how about I just use that instead of me using that money, you give me that money almost like a home equity loan and then you put that as a down payment and your money in the policy has never moved. So it is going to compound, it's going to do that tax free growth year after year. And plus you have invested that money into your real estate investment or your syndication. If you're LP or GP or whatever you want to do with it, you have invested in there and it's growing in your investment as well. And then whatever the cash flow that you're getting, maybe small amount, you can pay that interest only loan wherever you have borrowed it from. And that's how this is really the optimizing of this system. Borrow, not withdraw is the key. Have your money do the two different jobs at the same time. Anything else you would like to add, John here?

Yeah, I think that was again my money doing two things at the same time is for most people a really hard concept. And for me it's just like if I have a house with a lot of equity or completely paid off, I don't have to sell it to use the same money. I can get a loan or a HELOC against it. And now with a policy, with the infinity policy here we have an asset that's growing, that is a cash representation that we can now get a HELOC or loan again. So we're able to use, you know, still have an appreciating asset and use the equity we have in there. And it's just incredible. There's no other financial asset I know like that.

Absolutely. And a lot of people come to me and say that, hey, I have a lot of assets, I don't need life insurance. You know, I have enough money that I'm going to pass to my next generation, so I don't need to have more money. Well, life insurance, like John is saying, is that asset. It's like you saying that, no, I don't need a Home because you know, I have enough money. Life insurance is an asset. If you're not utilizing it, you're leaving money on the table. That's an asset class that you need to harness. You need to, you know, put your money start. It's almost like a hundred year loan, right? Where you're slowly chipping in money in there and you're going to get. Because it's a whole life policy. No matter when your death is, it's not like a term life which you know after 20 years or 30 years it's going to go away. Even if you die at the age of 95, that's the contract between you and the insurance company, you're going to get paid that contract. So if you're not utilizing it, you're literally leaving money on the table. So moving on. So people a lot of time ask why should I borrow using my policy? Why should I not use my own money since it's already sitting in there? So I'm just going to take an example here. Suppose you have a million dollar with a 4% and you borrow it from somebody, right? So in 30 years you pay about 700,000 interest on this borrowed money. Now that's a lot of money. But if you look at the same 4%, if you get inside the policy at the same interest rate and you're compounding that money, your principal is going up, you're going to get $2.2 million in inside the policy. So that's the power of this interest that you're getting and you're compounding. And that's the reason that you would not borrow from your own policy. Because when you borrow from your own policy, you will take it out. If you want to take out, you can take that cash out. But that's always advisable that you borrow from somebody else. Let your policy grow compounded. It's almost snowballing for you inside the policy. And breakeven, if you look at it, it's really 2%. So even if you don't get the exact 4%, you get like even 1% less inside the policy policy, you're going to still come out way, way positive on the other side, right? So just in the interest of time, I did had like an example of an infinity banking system. But we're going to just jump through it and jump to the concept of premium financing itself, which I would love John to provide his expertise on. But to just wrap it up, what infinity banking system is when you create this infinity banking account and the typical way of spending Money, right. When you have car payment or education, you do that by taking the policy loan. You kind of keep on bringing this up, building this net worth inside the policy. Bring that cash value up if you want to invest from it, real estate or stock or anything. Again you take a policy loan and make sure that this funding inside the cash value is growing inside for you continuously compounded interest and you're going to grow basically till the day you die. And when you die, this is the system is going to get passed on tax free death benefit to your heirs. And when you are alive, you're using it for any purposes here that you want to, you want to use it for. Any additional thoughts on this, John?

No, I love that visual. It's, you know, just like what we normally do inside of a checking savings account. Same process of, you know, we take it out, pay ourselves back, but it's just in a lot more efficient vehicle that does multiple things at the same time. So great visual.

Yeah, I love this visual. It's like it's. I love the moment on it. But now there's that long awaited wait for talking about premium financing itself. Right. So this is like we said that the part till here, anybody can implement it, right. But now for the high net worth individuals, it gets a notch up and it's about using opm, which we all know these other people's money to fund your policy. So you don't have to liquidate your investments or drag it money from your investments, but you can utilize the money from somebody else, pay that little bit interest only portion of it. And John, please take away from here, please take us through the infinity banking with a premium financing concept.

Absolutely. I am going to go back just a couple pages. I want to bring something up when we look at premium financing and why would we use it? When we look at the asset itself, there's a lot of people that will use this just for a safe place to grow their income, to leverage as an income vehicle. So if you get a W2 earner and they're just trying to make the money they have and leverage that to grow faster and grow for a nice safe income. Some people want a larger asset that is safe but diversify from the real estate or the business. So when we're just looking from a rate of return standpoint, there are some people that want to use this arbitrage. They don't understand real estate, they don't really have their own business, but they're high income earners and they just want that guaranteed high income in retirement. There are also people as we get into estate taxes that now, if I get this to go forward again, the estate tax is kind of a moving target. It constantly. There we go. Thank you. You know, in 2001, you could pass on 675,000 and anything above that you had to pay 55% estate taxes. On 2006, it moved up to 2 million. In 2011, it was at 5 million. And at the end of 2011, it was set to expire and drop all the way back down to a million. And that's where during the Obama administration, they bumped that back up and they did a 5 million with an increasing rate. Then during the Trump administration raised that to 10 million with an increasing rate. And that's set to expire in 2026. But the new Biden administration, the proposal is to move that down to 3.5 million, but increase the taxable amount. Now, some people are familiar with this, some aren't, but essentially this is after you've paid all the income tax, after you've paid, you know, your W2 income, your long term, short term capital gains. This is money that's already had the income tax paid and it's what would be passed on to your heirs. Now, the way a lot of people will do this if they're in an estate tax issue is they will set up like an irrevocable trust to hold their life insurance policy at the time they pass the death benefit goes inside the policy. And that trust will buy the assets from the family, the corporation, whoever's setting this in place. So it's a way to fund for estate taxes. It's a way to fund for a key man or a buy sell agreement in a business. And when you look at most people in these, higher net worth should have these, but they don't want to take money out of their business, their high producing real estate or stocks to buy the amount of insurance that they really need. And that is a key place to where the premium financing comes in. So just like when we go out and if we were paying cash for all of our real estate, it's not quite as efficient as getting a loan. And we could never expand at the rate most of us do without that leverage. And that leads us into premium fight.

Before you go ahead to the next slide, John. So just to go back, so this limit that we have, right? So most of the real estate investors that, you know, I have on call or people know how to do the zero taxes. So when they pay the zero taxes throughout their lifetime and when they Say they are at the end of their life and they are passing it on. Say they are $20 million. Right. So with the new proposal, the 3.5 million individuals, so that's about 7 million that's going to be tax free, but the rest of it is not a 0% tax rate. That's going to be that proposed 45% or the 40% tax rate, right?

That's correct. So they are two completely separate. So after you've settled the typical income tax that most of us talk about, then this is, we can only pass so much on or they take between, you know, 35. Currently it's 40 proposed to go 45% of that. And it doesn't matter if that is money sitting in a bank equipment. I had two brothers in Tennessee that they build a business of 160 million, but more than three fourths that money was equipment building. Pat. You know, they had all this net worth, but they're looking at the time they pass away, each one of them worth $80 million. They can take 20 million. So they've each got $60 million of their net worth. They spend already paid taxes on that. They're now going to have to give up 40%. So each one of them have a 24 million tax bill if they passed away today. And that's money they've already paid income tax on.

So it's a double income tax. Right.

We won't go there. It's even worse than that.

Right, right.

But for them to pay that bill, that means they have to sell properties, they have to sell equipment. Right. So they, they are. One of my clients has a premium finance policies because it, it fits perfectly for that. The other thing that a lot of people, you know, if you, if you're paying a 0% tax bracket in real estate, it's either because you're using 1031, you're depreciating a property, but what a lot of people see is that gets kicked down the road and they end up that, that has to be paid somewhere. Right. And even if you keep all your property and you never sell one, you only 1035 or whatever, then now you can do the step up in basis and pass it to your heirs. But now they've got to pay estate taxes on those. So.

Yeah, that's interesting. So more, more. A lot of your clients are actually using the premium financing to create that way to pay that tax bill because you have to write that big check to IRS and somebody has to write it. Right. Your kids have to write that check. So they're using this as a, as a way to write off that check, right?

Yeah. So the great thing is we can use it for the infinity banking. So we can use the capital that appreciates inside of there all the way along. We can use some for income. Now, any we use for income or anything is kind of like pre spending of the death benefit. Right. But we can still use it during our life. But then ultimately, if, if any of us that are successful and we're looking at, okay, well, that may be me, you know, in five, ten years. You know, I can only imagine what it's going to be in 35 years, 40 years for me. Right. So those numbers get very, very large if we're making a decent, even a 10% return on our assets today.

Yep, absolutely. And this is, guys, this is that bird's eye perspective that I'm talking about. We are, you know, you, we are too busy saving our money, investing, growing real estate or whatnot, all the ways. But we really have to take a step back, take a bird's eye view and look at it that what is the future problem after 10 steps that we are gonna face or our next generation is gonna face and start solving that right now. Right, John?

Yeah. And it's, you know, I look at it, I love Tom Wilwright when he talks about, I don't know, I assume everybody here knows Tom Wheelwright, the rich dad advisor and you know, he has tax free wealth and looking at taxes should be a big part of what everybody is doing as they're building this. And so many people are so focused on the short term gain and not paying any tax today, which means they're probably going to be paying a lot more later because they're just kicking the can down the road. And typically, especially if I have someone who's high net worth paying zero taxes and their accountant's like, oh, move this money here and you'll pay zero tax this year. I'm like, great, what's it going to cost them in 10 years? 15 years, right?

Yep.

So love that. All right, see if we can get this. I think there's a little drag in my clicker here, Madhvi.

Yeah, I could click it.

There we go. All right, so this is, you know, if you come in and if someone says, just like we showed that that policy of a $10 million death benefit, if that that was a policy someone needed or wanted and they could choose for $7,000 to do a term insurance or 364,000 to get a whole life permanent policy that's overfunded with cash and they can use for infinity banking. You can come in and say, okay, what if a bank pays the 364,000 so they fund the policy using their money and I'm simply going to pay interest only. So that frees up all of our capital to invest and buy real estate, invest in our business, buy other high appreciating assets. And as we build the policy out, we can either pay that bank loan off with capital that built inside the policy or we can pay it off. If we sell a building, we sell a business, we can pay the loan off from there. So this really allows us to get the asset that we need, make sure it's built right, not just going to expire in a few years, but have someone else's money fund that asset for us. And here is really, you know, as you use other people's money to do this, you've got lifetime coverage, you finance the premiums, you've got liquid cash and you can create lifetime income. So, so depending on what an individual is doing this for, and the nice thing is we may say, hey, we're going to do this for estate taxes because it just got lowered. Well, maybe the time, you know, we pass, maybe that's higher like it was, you know, like it is currently. Right. Maybe it's even lower than it's, you know, being proposed. This is very flexible and we have to have the ability to expand or contract based on the laws and the changes around that we can't control. And quite simply the way that works. Whoops. We went, yeah.

And guys, I just want to remind, if you have any questions, please put it into Q and A. We are going to take the questions at the end. So please, I encourage you highly to put your questions in the Q and A box. Thank you, John.

And we're going to get into a numbers just on a case for, I believe it's a 49 year old that we recently did. But really how that works is the bank is going to loan the money so they pay the entire premium on the policy. Now what they do is they put a lien on the policy just like a lender would on a piece of property you buy. Right. We may need to have some collateral just depending on the policy and different things on how we set it up. And then we pay the interest to the lender on the loan every year. So it is an interest only loan. And there are many different loan types, different rates depending on the type of borrower. Just like when you go out and buy A home or get a commercial loan, you know, you as an individual are going to change those terms.

So a question here, John. So if I am putting in that premium of about $1 million into the policy, so do they need to have collateral of $1 million? And a part B of that question is what do they need for the collateral? Could you explain that a little bit?

Perfect, perfect. So you'll see this on the next slide, but I'll answer before we get there because what I found is as soon as we bring up a spreadsheet with numbers, everybody's immediately trying to interpret what those numbers mean. And I will go through all those with you quickly and leave time for questions. When the bank borrows us money, we are getting very, very good terms. So right now we're getting Libor with a floor of 1% plus a 1.75 spread. So we've, we've. And, and that's kind of the best rate. Now. It goes up from there. You know, you could be up to two and a half as a spread depending on your credit worthiness and size of the policy, et cetera, et cetera. When we do that, that means we're all in at a 2.75. The loan I'm showing you here, this individual was a little over 3%. So we have to come up with the interest. But the bank says, okay, if we're going to give you money at this rate, we have to be 100% collateralized in what's called a cash or cash equivalent. So in a million dollar policy, you're going to have 700 something that will be collateralized with, with the policy. And we will need an outside collateral account. We don't have to, we don't have to write the check. We just need to put a lien on it just like we would a property. And that could be a checking account, a savings account, could be another life insurance policy, could be a brokerage account. It cannot be a qualified plan. It cannot be a piece of real estate directly. Now we can, we can get creative. We can use our real estate as the collateral. But the commercial lenders giving us this money will not take the real estate at the rates and spreads they are giving us there. So great question, Michelle. All right, so this is just a comparable example. Now you can see this is a 49 year old if you start at the far left and I'll kind of go through the column so everybody understands what they are, the insurance premium. So in this example, we would be paying a million dollars in premium for 10 years. So it'd be a 10 pay policy. That in turn, if we go over to column 12 there, if you'll just highlight that, that gives about a $23 million death benefit. So you can see for this 49 year old now in the column to the right of the premiums is the amount going in that the bank is paying. And then the column that shows six, the cumulative loan, you can see that increases by a million per year. So we are going to be putting in a total of $10 million over 10 years. And in this example, we've waited until year 18 to pay it off, and we have paid it off from inside the policy. So you can see Madhavi has right there kind of circled that, that year 18. And you have the 10 million coming out. Now, if you follow all the way down on column eight, she has it a square around it. This individual would have paid 4.4 million out of pocket over an 18 year period. And at that point in time, this individual wanted the death benefit protection while he was in his younger working years. And then he wanted income. So the green column there that she's highlighted, this individual could take $533,000 per year. And we've done from age 66 to 90, completely tax free, does not affect any of his other investments, does not affect Social Security, Medicaid, Medicare. So he'd be able to pull out the 533,000 per year, tax free. And if we just follow that all the way down for the sake of time, the bank put in 10 million, was paid out their 10 million at year 18, we put in a total of 4.4 million, pulled out 12.2 million of income and a life expectancy there of 85, still left a $9.7 million death benefit. So 4 million in combination between death benefit and income, a little over $21 million, all of that completely tax free. And we go back one slide. Mahavi?

Yeah, hold on a second.

One important part is this column 11 there we say, see policy, cash value, net of loan. This is what Michelle, the question she asked. So the numbers in red would be the amount of collateral we would need to have in a side account along with the policy to make sure everything was 100% collateralized. Once the numbers turn to a blue number there, a positive number, that is the liquidity that we would have to invest in real estate. So even if you go to the bottom of year 10, we've paid out of pocket 1.9 million. And we have the square that Madhvi just Did there, we'd have 2.5 million of tax free capital that we would be able to spend, invest whatever and also a $23 million death benefit if we passed away. Michelle asked, is the interest expense tax deductible at all? Because the interest on this is for a cash account, we are not able to write off the interest expense. Great question. So this is, you know, we did just a quick example to the right of a comparable tax investment, taxable investment, earning 10% per year and then paying taxes. Taxes.

Sorry about that.

Let's get into any, any other questions. I can keep going here, but I want to make sure there's questions answered before we wrap up here.

So can we talk about the eligibility for using the premium, you know, premium financing? Who is eligible for this?

Who's eligible for the premium financing? So the eligibility really becomes from the insurance companies. Funny enough, banks want to lend money on this. It takes about twice as long to get the insurance company to give us the policy than it does the bank for it. So the insurance companies, because they know it's a little bit of a complex vehicle, they want to make sure these are higher net worths somewhere in the neighborhood of 5 to 7 million. As a foundation, they will let us use our business. They're pretty liberal when we start looking at assets, et cetera, on these. Also on the interest rate, someone's asking about a cap on them. Most people get a leveraged loan because. Or an adjustable loan because as interest rates rise, so will the earnings inside the policy. Now, there's two types of loans. You can get a fixed one and you typically pay more for that. But right now, Libor. So these loans have a floor of 1%. Libor right now is 0.3. Actually, I think it went to 0.28 today. So even if Libor increased 10 times and went from 0.3 to 3%, our rate would still be 4.75, which is less than what the policies are.

And I have allowed Badri you to talk. I saw your raised hand and I see a couple of more folks raising hands. So I'll allow them after Badri.

Hey, so I had a couple of questions. You said the fixed rate is an option. So what is the fixed rate as an example? Obviously I realize that changes regularly. But if I really don't feel comfortable with a Libor and a variable rate, what is the current fixed rate option?

That is 100% up to the quality of the borrower and the loan and what, I mean, what assets are being posted? What is the Size, So there are different price points. So the best price point we're showing you a million dollar loan, a million dollar policy. If we can borrow at least a million dollars of up front, we get some of the best rates. So if someone comes in says, hey, I want to do a $300,000 policy or 500, they're going to pay slightly more on both the variable and the fixed. Okay. So one of the last fix I did, I actually got him fixed and we were 2.5%. He was actually doing a million and a half a year for 10 years. So it's a $15 million loan fixed at 2.5%. Typically for someone to get that good of rates, they're going to need to be a 20 million or higher net worth and a decent sized policy. So size of the loan assets, strength of the borrower, just like every other loan you get is going to be a determination.

Yeah, I mean, but a specific example, I'd say a million dollar policy would be good if you could get into it or I can discuss this offline. So let's say you're just taking a million dollar loan and let's say you have a credit score of about 820 or whatever. What assets would you consider as the perfect collateral? Would you say a stock brokerage account is the best collateral? Or I mean, obviously no million dollars in cash. I mean that doesn't make sense.

Well, a lot of people, the brokerage account would be a good one because you can still trade it. The only thing you can do is withdraw from the brokerage if it's being held as collateral. Now the collateral goes up in year two and then it goes down in year three and year four. So you know, you could, in this guy's situation, he could have, you know, 350,000 in his brokerage account and year, year four, he could withdraw down and eventually take it out if he wanted to. But a lot of people, brokerage account, if they have it, that that's a good one to use because that money's going to be there, their advisor can still keep trading it. I have people, you know, if they've got just cash sitting in their business that they need to show liquidity on their books, they'll use that account for really depends on the individual. We can use letters of credit.

Sorry to interrupt, but my question was assuming what you would consider perfect collateral and extremely good credit, what fixed rate could you get? Now I'm not asking for a guarantee just to. Because Libor makes me very uncomfortable. The variable rate, frankly.

Yeah, and that's definitely something we can go into and show you. And, you know, I can tell you rates I've got, but without knowing anything about you, I mean, I'm shooting from the hip and obviously can't guarantee it, but the fixed rates, if all things are equal, you're typically going to be anywhere from a quarter to 75 basis points higher than the variable. Variable rates.

I see. Thank you.

So if we're two and a half, 275, we're going to be mid threes to four to fix for fixed.

Yeah. And I would like to iterate that for that $1 million loan, this mark, the number marked in red, that's the only collateral needed. It's not a $1 million collateral, but that, you know, the delta that we have between the cash value and, you know, the loan that we have acquired.

Yeah, no, I got that. I got that. So let me ask one other question, too. So would the lien then impact your ability to get other loans? If you want to get loans outside this system, as long as you're not using, let's say, the brokerage account for as collateral for the other loans? I mean, will it impact your ability to get loans outside the system?

The premium finance loan is a commercial loan, and it does not show up on your credit report now.

Oh, it does not.

Okay.

Yeah. You can take this loan personally. Your trust can take the loan. It can be done in a corporation. But being a commercial loan, it does not show up on your credit report. So that part, the only way someone would know about is if you told them about it. Now, as far as the brokerage account, if you posted that as collateral, if you, you know, if you try to use this collateral again somewhere else, they would see that there's already a lien against it.

Yeah, of course, I get that. So thank you. I may have a couple more questions, but I'll give somebody else a chance. And then, time permitting, I'll come back.

Thank you so much. Badri. Great question. So, Tenny, you're up next. You had a raised hand. Could you please unmute yourself and ask your question?

Hey, Bobby, somebody else can go.

I think I got my question answered.

Okay, perfect.

Thank you. There's a couple other questions someone asked a little bit earlier. Is the 4% guaranteed? Yes, the 4% is guaranteed. That's part of the contract. And every year you get a 4% guarantee through the year on the policy. And this is the same whether it's just a regular infinity banking policy or a premium finance 4% guarantee and then they declare a dividend at the end of each year, each policy year.

So there are some questions in the chat and I think that's where you're picking up from, right, John? Yes, yes, more questions. What is the arbitrage between loan interest and the dividend credit?

So right now, again, if someone did a loan today, they're going to be right around 2.75 to 3% is kind of the interest rate they're going to get. And that's, you know, most, most of the people are going to qualify for the policy, are going to have pretty good financials and credit. So we're paying, you know, 2.75 to 3% that we're paying a simple interest only. And that, that's really cool because we were just paying the interest per year. So our loan only goes up by the principal amount where inside the policy we're making that 4% guarantee plus dividend. So like Mavi said earlier, you know, 5.75 with Penn. That would be a compounding rate inside there.

As you're not paying taxes. It's really, that compound is snowballing. So if you look at, you know, if you create your own custom scenario and you we take a look at it, like we can show you how that compounding is really working now that that snowballing is really working. So we have more question from Naresh. The interest paid on the contribution is earned on the contribution or is it based on the stock index? So is it based on the interest earned or is it based on the stock market index?

So when you get into permanent life insurance, a lot of people say, hey, this is a whole life policy and it's what you'd call a permanent life policy. Now, whole life policy has a floor of 4% plus dividends. So it's going to be a conservative, more guaranteed contract. Another permanent policy is a universal life. And now those are fairly new products, have been around since the late 80s. You've got the universal life, then you've got the variable universal life, which was for most people a total mess. And then they did an indexed universal life, which is what I assume you're talking about, about an index. Universal life is where they take most of the money and they put it just like a whole life and then they take a small amount and buy options to try and get you a higher rate of return. Not a big fan of the index universal life, especially doing premium financing. That's probably what's shown the most. But now you're taking risk of market and you're taking interest rates, rate risk, you have a potential to have a lot more money. You also have the potential of something that collapses due to two outside forces you can't control.

Yeah, many aspect of the IUL pertaining to it's a convertible term every year. So the cost of life insurance kind of expanding year after year and multiple other things. We can talk about it in detail if you have that question. I have another question from Philip. Can you repeat the collateral? I think we did repeat that. If you still have questions, please ping me again and we will go over that all over again. You also ask a question, repeat please. The life contract is an asset, isn't it?

Yeah, there's several ways. Kind of interesting because there's a couple ways you can use this policy actually in Canada if you take a distribution or you take not a distribution, if you take a loan against the policy. Just like Madvi's been showing us to do infinity banking, that is a taxable then in Canada. So what they've done in Canada is they take this asset into the bank just like you would a home or anything else and get a heloc. They get a line of credit against their policy policy because of that. And banks will give you typically a 100% of the policy cash value because it's such a safe, secure asset guaranteed to grow every year.

And he has a follow up question. I'm trying to see if I can just allow him to talk. Do you have the mic? Philip, do you want to just ask your question?

Yes, Hi, can you hear me?

Yes.

Yes.

Okay, first of all, thank you both, great presentation. John. Regarding the premium finance, the life insurance contract is an asset and therefore it can show up on the balance sheet or personal financial statement. On the asset side, you know of the statements. When you add the premium finance component, you know where there's an obligation, if you will, or implied debt, is it still looked at by lenders as an asset? Where I'm referring to is the previous gentleman's question in terms of how this affects or could affect, affect the investor insured from applying for other loans as mentioned, maybe to buy real estate, et cetera, et cetera.

So one of the beauties of a life insurance policy is it's a private contract with a private company. It shows up nowhere. The loan you take shows up nowhere. So the only way people know about this is, is if you tell them about it. Okay. Now in the early years, you may not want to put it anywhere because your cash value and the loan are offset. Now in the later years, you may want to bolster your balance sheet and show that. But being that it doesn't show anywhere, the disclosure is up to you. If you showed the value without the loan, it's kind of misleading. So you would need to show both. So this is one of those things that unless that number starts getting big and it's a change in getting the loan. I don't like telling people about my policies. I bought my first one in 2003, and I'm starting my 15th one here today. But I don't tell people where they are, who they're with the value. And there's ways around it that I can show them the value without giving them all the details.

But, yeah, I'm gonna jump in here and just gonna add a quick example in my personal case. So my daughter is a senior, and she's, you know, I created this policy to fund her education. Now, I did not do a 5 the education through the policy. So when I'm putting the assets in, announcing them to the college, this life insurance is not getting announced in there. So, you know, that's not an asset, typically. But if I'm a real estate investor, so for my accreditation, if I need to announce it there, that, okay, this is my asset, I get to announce there. So it's really what how John said, it's like, you know, you disclose it where you want to disclose it or you don't want to disclose it. You can choose. Sorry. So I hope that helps.

It does help. You know, when lenders pull credit or they're doing their due diligence, they're running their due diligence to find out what debts are recorded or what is outstanding, and loans, mortgages, et cetera, and also doing that to verify the information that the borrower investor, it gives them. So wouldn't. Wouldn't the loan that's financing the premium show up on that, on that type of a report or due diligence?

No.

I'm having hard trouble, you know, saying, okay, because, you know, the bank is making a loan that, you know, that it's collateralized, obviously, otherwise it wouldn't make it between outside assets as well as the face value of the policy. I'm just finding it hard to believe that that wouldn't turn up in somebody's debt review.

So it's just like, it's very similar to if you have a business and the business has a loan, that loan does not show up on your personal report. Okay. If you have a personal loan, it doesn't show up on Your business report, this is a commercial loan. So one of the reasons with how we're borrowing and you know their minimum, they don't even like doing them, but the minimum they'll borrow is 100,000. Their preference is your, you know, there's some creative ways we can get into. If someone wants to do a three or four hundred thousand or a half million, we can get in, we can borrow two to three years premium up front and hit that million dollar mark. These commercial lenders want to borrow a million or more. And every bank will lend on these, right? Well, not credit unions, probably some of the smaller ones. But Wells Fargo has an entire division that does nothing. But these US bank, every major lender out there does these. But they're the commercial department. If you walk in the branch, go to talk to the manager, they are not going to have a clue what you're talking about. You have to go to the commercial department for these. And I've, for 11 years now, I've never seen one that shows up on a credit report or any kind of a debt summary.

So that, so again, let me ask the question, let me from a different perspective, it doesn't show up on a personal credit report or a personal draw on credit. Does it show up on the borrower's commercial account? Commercial credit, business credit, then it's a commercial loan.

It's not reported anywhere. They are 100% cash on cash collateralized. A lot of times lenders will need to post something on credit report. They'll, they'll, you know, as a way to kind of protect themselves and damage your credit if you don't pay. These guys have 100% cash on cash with a contract guaranteed to grow by a minimum of 4% and they don't even report it anywhere.

In your examples here, what was the margin between the interest being charged by the lender and, and the, if you will, the amount that was being credited to the policy so that the cash accumulation, the cash value was going to grow and at some point in time exceed the debt that was due.

So the policy gets a guaranteed 4% plus dividend. The example we use was 10 Mutual Penn Mutual. Their dividend for the previous 12 years is there. There has been 6.34% all in. Now that is what you're being credited on the cash value. As you saw, you've also got to take out cost of insurance. So when we look at the guaranteed return, we look at the dividend, but then minus out cost of insurance, that's where we're sitting. Closer to the 5%, five and a quarter that Madhvi was talking about. The interest rate on the example I pulled up, there was three, I think it was 3.23%. So you've got a spread just, it was 3.49. So you've got a spread in rates of a little over 1.5%. Now that's your spread. But if you look at if I'm making three and a half and I'm earning five, that's about a 70% markup on banks money.

Is there most of the times, you know, with these illustrations, you know, they're their illustrations. So they're not, you know, there's quote, no crystal ball, which we all know so doesn't, you know, even if you're doing it conservatively where the margin is, you're doing it as a very conservative dividend strategy that's below the historical average or whatnot. But there's still a margin, if you will, for error. Nothing's 100% guaranteed. Right John? So, right.

Well, you've got two parts of the contract that are guaranteed and then you got two moving parts. Right.

So here's my question that, I'm sorry, it's a long way. Is the bank concerned about that 2 or 3 or 4% that's still exposed? In other words, if you have designed this to where it's 95 or 96 or 97%, you know, without a doubt going to meet its actuarial prognosis. So does the bank question the risk that's exposed on the remaining, you know, small percentage or. And if they do, how is that managed?

So what you've got, you have a lot of people. So premium financing, the reason the insurance companies. So, so you can go to some, what's a nice way to say this, you can go to some of the smaller insurance companies and they really don't care about the limits. If you want to do a high policy with them, they will do it. Those companies, the banks, you know, there are some banks, I've got lenders and they will only approve certain insurance companies because they know the stability of them. So like with Penn Mutual, I can go to any bank and get a loan. They're the second oldest insurance company in the US they've been around for 174 years. They've never missed a dividend. The current dividend is the lowest they've ever paid. So is there a risk? Absolutely. In a zero in 174 years, it's never been zero. Right. But going to, are they Worried about that risk. They're not. Because as long as you pay the interest only portion, that money's getting credited account and growing by even the 4%, the guarantee, it's still outpacing the loan balance. The only time you'd get in trouble and what some kind of unscrupulous agents did in the past is they would show these index policies. They'd say, hey, look, you're going to get a loan of 4 or 5% and we're going to show you this really great policy that's going to grow to 8 to 12% and it's so good you never even have to make interest payments, et cetera. We all know what happened there. It was just like the negative amortizations mortgage loans. Right. If an agent were to show something like that. Absolutely. 100%, the banks would have a problem with it. You show a plan where the individual plans on paying the interest. Therefore the loan is only growing by the principal, which is going directly into the policy and the cash value. They could care less what the dividends are because they know even at a guaranteed, it's going to outpace it.

Okay, thank you.

Round of questions. Philip, thank you so much.

Those are great questions.

So.

And that's really every individual, their level of guarantees versus, you know, the risk they want to take is different. And so every single plan is slightly different. We customize it to where you're at.

Thank you very much.

Thank you. Thank you so much for. Great question. So Nadesh, you have a question? Thanks. Do you have. Do you do it or recommend a subject matter expert for this outside of helping to set up the policy? Yes, absolutely. I help a lot of individuals to set up the infinity banking policy. And John here is the expert in the premium financing concept. He helps hundreds of clients every year and hundreds of clients he has already helped which are ultra rich and with this premium financing concept. And he I think has seen it all and you know, all different type of problems and issues and you know, the selling of the businesses, you know, generating a tax event there. So he has seen a ton of problems as problems and helped a lot of individuals. John, do you want to say something to that extent?

Yeah. I'd say that probably the biggest people that need this, but don't think they do, are real estate investors making a high rate of return. They're able to defer a lot of taxes. They're able to kind of keep putting them in 1031, kick that problem down the road. And they think that what they're doing is Going to outpace what the combination can do. And Madhvi and I were just working on an example the other day of an individual said he was making 30% return on his syndications. And we just did policy and the syndications and syndications alone. And the policy with the syndication, including the death benefit, estate taxes, all those things was 150, 160% better than on its own. So some very powerful tools to build wealth, keep your money and save on taxes.

So Badri, I'm gonna let you go next for the question. And Naresh, you are right after Badri. Badri, if you have couple of questions, please ask one question, let Naresh answer his and we will come back to you.

Okay, so. Well, I don't know which question to start with. I'll go ahead and ask both questions. If you can combine it quickly, let me know. Otherwise. So you can ask answer 1 and come back to the other.

Of the call. That's the links out there. If you want to reach us, SMS on that number there on the screen. Bitly at Infinity call to schedule a call with us and we will take it from there. Sorry, Patrick, go ahead please.

Yeah, so two quick questions. One, yes. 150 years, 120 years the company's been in business. If the company goes completely bankrupt, is this in a separate trust which is not touched by the company? And question number two, there is always a certain level of discomfort starting. So instead of a million dollars, let's say you start with a half a million. What's the difference in interest rate?

Well, this slide, John, if you want to use this, I get a lot of question about that insurance safety. So please go ahead.

You've actually, and just for the sake of time, there's multiple levels of of protection. So let's say that company were to go out of business. Number one, these assets, let's say they went completely out of business and into receivership. When you look at the value inside of a life insurance company, it's not like dollar bills stacked on a shelf at a bank or anything like that or in a safe. It's outside investment. So if they were taken into receivership, 100% of their assets would be taken into receivership. Now there is what's called reinsurance. On top of it there is the state guarantee fund. There's actually four levels of protection on your money. It's one of the most protected contracts and assets that you have. And you know, if you've read, you know, Tom Wheelwright's book, the Tax Free wealth and he Talks about why would you know, the IRS allow certain things to be tax deductible. A policy is the same. What the US Government has figured out is if you take a primary income earner and they pass away, the likelihood that that family is going to be on government assistance is in the high 80%. So when you actually have a life insurance policy, you're protected from creditors. The company has to have. They cannot go out and buy derivatives and go out and leverage. They are 100% dollar for dollar on their assets and in cash flow producing assets, they have to have reserves and then they've got again. Every state has their own state guarantee fund which is kind of like a federal FDIC except for a state level and they're fully funded. So it's actually kind of mind blowing when you look at the difference of the protection of a policy versus checking, savings or another kind of of asset.

Thank you. And so the second question I guess is if you do a half a million, I mean just as an example, how much would the interest rate go up by? I like your idea of multiple life insurance policies rather than one. Until you get comfortable, you stagger it out. Maybe one in my wife's name. One. One in my name. I don't know. I mean I realize this may be a private company, but others may be interested.

Yeah. So I get pretty creative. I've done many different loan setups. So I would say as long as we're, you know, the premiums were above a quarter million, I'm going to get you almost the same rate.

Okay.

The way I get around that is I borrow multiple years up front. I kind of pre fund the policy. I get pretty creative. Now the interest in year one or two, you're going to be paying interest on a full million instead of 250 or 300. But your long term rate is going to be better. So you're going to be almost the same rate. Slightly more interest in the first couple of years than if it was spread out, but far better long term. So very close to the same rate.

Yeah. And if you have extra money that you're going to use next year, there is a premium fund account with like Penn Mutual which gives 2% interest rate and it will, you know, take out your money next year and fund your policy from that account. So if you borrowed 2.75% and you're getting, you're not using that money for the first year or first couple of years, you're getting at least 2% there so that you know that cost that you know, about 75% cost point. 75% cost is just about. For a couple of years.

So you're saying that even if I'm just doing a half a million loan, you really have to take a million dollar loan? Is that what you're saying, John?

No, you don't have to, but you would want to.

Because of the rate. Okay, well.

And the banks are going to be more excited about borrowing you a million dollars than they are 500. So no, you can do 500. You're going to pay 500. You're probably going to pay 25 basis points more then borrow a million, but now you're 25 basis points for the life of the loan.

Yeah, it's a level of comfort thing, Right. It's a new concept I'm familiar with large range of investments, but not this. So it's just a level of comfort thing. Okay.

Yeah. So what we would do is we would lower the size of the policy. So each year you're only going up by a half a million, 350,000, whatever it is. All we would do is we're going to borrow a million right up front to pay multiple years of premium. And that's just one idea. There's, you know, everybody's different and we customize it based on their needs, their finances, et cetera.

Yeah. And this is a long conversation, Badri. So if you want, and you know, we can just keep on looking at it, what your questions, what your concerns are and we can try to address and.

Yeah, yeah, this is a private thing. I'll let other people ask questions so we can do it offline. Thank you.

Question. So we can, you know, keep on tweaking that, this product till it fits your, your kind of scenario. Right. So that's, that's certainly something that we can, we can take it up after the call, go and ask your question.

Sure. Thanks, Madhvi. John, great presentation. In fact, just last week I had a similar presentation from another individual. So this was good to see the visuals. So one question is the trust that needs to be set up to do this, right? Is that what you're calling the Infinity Banking product or. That's different.

So you do not have to have a trust set up, but if someone is looking at way to pay estate taxes in the future, then you would want a trust set up to hold the policy from the start. Okay.

Is this to avoid the probate taxes that you would pay to an attorney if you do not have a trust? Basically.

So that would be to avoid estate taxes, right? Yes. So the way that would be is you would set up an area of work trust, and there's a lot of different ones out there. The irrevocable of old is very rigid. The new irrevocable trusts are very flexible. There's a lot of things you can do with them. And what you would do is the irrevocable trust would actually own the policy. One reason why for estate planning, that they love the premium financing. Let's go back to that example Maud V had up. If someone needed a $10 million policy, how do you fund that? If you know you've got the liability and you're funding with a term policy that's more than likely going to expire before you die, you're kind of setting yourself up for failure. Or very, very expensive premiums. If you do whole life now, you've got to gift that trust all those full premium amounts to get that death benefit. When you do premium financing inside of the irrevocable trust. Now the bank is borrowing the trust, the full premiums, and you only have to gift the trust the interest. So it gets, you know, as you're looking for those really higher net worth and those estate tax problems, it's. The premium financing is just, I mean, it's, there's nothing even close to it as far as efficiency and getting money in and taxes that it's really, really awesome to see the changes that adding that leveraged account will do.

And this would give me a vehicle to avoid that 40, 50% estate taxes, even though I've kind of paid all the income tax and this money that I'm putting in. Right. As part of the trust.

Yes, that would be. So the way that works is right now, let's say you have, let's say you have a $10 million apartment complex. And for you to put that inside of a trust, you're going to have to, you're going to pay gift taxes on that full 10 million. Instead, you have a life insurance policy with a $10 million death benefit. @ the time you pass that death benefit comes out and buys that asset from your family. So now the apartment building goes inside. The trust will never pay taxes. It'll still have to pay income taxes inside of a trust. It'll never pay the other taxes again. Your family can keep it forever. And now the family has the 10 million of liquidity to pay those taxes.

Got it. And you, if we get your help to set up the premium financing, setting up the trust is part of that or that's like an additional SME that you would recommend who would help us do that?

Yeah, that. That is. And again, I mean, it can be from a very simple trust to I've got very, very, very complex trusts. So depending on that, you will absolutely want to bring a tax and legal advisor into it to make sure, you know, look at your whole situation. And, you know, just like I said at the first, the call I was on a two hour call with had a cpa, a trust attorney, a tax attorney, and a family, family office going over their policies, what we needed to move in and out. So that's something I work with constantly, those professionals to make sure they're being done right.

Thank you.

Sorry, it's kind of related to that. Sorry to jump in, but. So are you talking about justice irrevocable trust, which I was planning to do anyway, or you're talking about some other different type of trust, John?

Well, there. There's a lot of parameters inside an irrevocable trust.

Oh, sorry, not irrevocable. I meant revocable. Sorry. I was planning to create a revocable trust anyway. So does the kind of thing you're talking about require some special type of trust, the life insurance thing, which nourish. And you just talked about.

So a revocable trust does nothing for estate taxes. Oh, I see. Okay. If you want. If you're doing an estate tax planning, you're looking at a net worth that's going to be worth. You know, right now we need to do estate tax planning. If we believe by the time we pass we're going to be worth over 23 million, that's going to change. I think it's going to go down to, you know, closer to the 10 million range, you know, 5 million per person. Biden right now wants it to be three and a half million a person or seven million. So if your net worth is, you know, really above 7 million, right now we're at 21 or 23. Then you need to be doing some kind of irrevocable trust. A lot of the trusts in Nevada, there's a hisit trust, there's some asset protection. Irrevocable trusts, or not asset protection, spousal protection. So there's irrevocable trusts you can set up and still have some access to it. But it would have to be irrevocable to deal with the state taxes.

Got it, Got it. Sorry, I have to run. So I will go ahead and talk to Madhvi and connect up with you later. Thank you so much. Very helpful. I appreciate it.

We have Some discussions going on. And I will send that recording out, Madri, so you can catch up later too.

Okay, thanks.

Thank you. That actually comes to a point of a very interesting discussion. Discussion, John, I had with you a few days back. What if this tax event is not at the end of the life but in between, right? Suppose there is a doctor who's selling the practice or, you know, maybe a technology startup selling the business and there is that big, huge chunk of, you know, tax bill. Is there any creative way that we can use this whole premium financing, life insurance to create a situation, handle the situation?

So you did disclaimers, but now we're going to need to do additional disclaimers. I'm not an attorney or a tax specialist. I deal with people a lot on this and I know this. But every individual person is going to be, they're going to have their circumstance, right? And that's why we bring in experts in each of these fields. But short answer to that, Mavi. Absolutely. There are so many things that we can do to, you know, instead of paying the policy off inside the policy, we can sell a practice, we can sell a building and pay the loan off outside the policy and keep all that money, all that cash inside, protected, growing, tax free, tons of, you know, I think this just creates even more ways to be flexible and more options and, you know, we can plan for today but have enough flexibility to move with, you know, whatever changes in the future.

Thank you. Thank you so much, John. I'm just going to check more questions and I really appreciate there was still a lot of people almost, you know, more than 50% stayed 30 minutes over. And John, I appreciate you also staying that, that long with us. So looks like there is no more questions in chat and there is no more questions in the Q and A. So we finally did reach to the end of the this, this presentation and this webinar. Anybody has any questions, this is the last call before we take a day off from here. All right? So thank you so much, everyone and thank you so much, John. Tremendous, tremendous amount of information. So if you want to implement this, if you are interested in just finding out about this, please get in touch. We will have, you know, a call schedule with, with John, you and me, and we will look at your personal situation and customize this whole infinity banking system with premium financing for your own specific, your own specific example. John, anything else to add? And I really appreciate your time.

Again, no, I think at this point, if it seems like a fit, we sit down and instead of just looking at hypotheticals, we see how it actually fits, can be used in their life. So look forward to talking, too.

Sounds good. Thank you so much again, everyone, for joining. Thank you so much. John, great session today.

Thank you. Good night.

Good night.