Base Premium Secrets: Building an IBC System That Won't Fail

The fundamental financial problem confronting the average North American is a lack of control over what Nelson called the banking function. They become dependent on the institutions that rush to meet the need that he's conditioned to outsource. We have never been properly educated. We give up the opportunity for our money to continue to grow and for everything to be recaptured back into our own systems. This is not about life insurance. This is about controlling the banking function in our lives.

Hey, it's Richard Canfield here. We've got a great new series that we're launching on wealth on Main Street. I'm excited for this. One of our incredible advisors, Mike Smella, is going to be walking through our book, Cash follows the leader. He's going to be going chapter by chapter sharing all of his notes, his incredible observations and the critical takeaways, the things that really stood out for him along the way. Now he brings a breadth of experience and life experience on running different business businesses, of course, and embracing this concept of becoming your own banker in his own life, plus how he is now teaching that concept to other people. So you're gonna get a lot of practical real world breakdowns from this book. You're gonna get a lot out of it. So let's jump right in.

Today we're gonna start a book study series on a book that I really, really enjoy and hopefully you'll get some real value out of called Cash follows the leader by two of my very good friends and colleagues and mentors, Jason Lowe and Richard Canfield. This is a follow up book to Nelson Nash's becoming your own banker, the infinite banking concept. So anyone that is hopefully watching this and listening to this is interested in this and the entire concept. So I'm just gonna, you know, we're gonna do is just kind of go into this. There's going to be several days of this for this book study. But where I want to start with this is really just kind of go through the. The forward was written by a gentleman by the name of Ryan Griggs and Ryan is the CEO of Griggs Capital Strategies. And basically I'm just going to kind of read through this. You'll see that I have many notes just in the forward itself, which is only three pages. So there's a lot in here. And so I want to do is just kind of read through and kind of walk through my, my take on everything. So since the early 2010s, a deluge of marketing has flooded the Internet, first on YouTube and then on TikTok, particularly emphasizing the role of creatively Designed whole life insurance in financial strategy. The inspiration for virtually every instance of this strain of Internet era marketing can be traced to the teachings of the late great R. Nelson Nash, mentor to myself, the authors of the book, and to me as well. Nelson Nash coined the term infinite banking concept or IBC for short, to encompass his financial philosophy. One of his core insights is that the fundamental financial problem confronting the average North American is a lack of control over what Nelson called the banking function. The dominant contemporary financial paradigm teaches us to outsource our need for capital for credit to Wall street for Americans and Bay street for Canadians. The consequences of this arrangement is at least twofold. The average North American loses the interest in dividends and he otherwise would have accumulated had they been in one's control of the capital required for his financing needs. And they become dependent on the institutions that rush to meet the need that he's conditioned to outsource. In the book Becoming youg Own Banker, Nelson demonstrates that by implementing ibc, by progressively reclaiming more and more of the banking function and through substantial premium payment to properly designed dividend paying whole life insurance from a mutual company that one co owns, one could opt out of this unpleasant paradigm, reverse these dynamics and trigger a systematic capital accumulation process all under the individual's own private contractual control. By in doing so, Nelson used spreadsheet type examples to illustrate the practical benefit of the philosophy. This IBC method of financing the ordinary purchases in one's life results in a substantial accumulation of cash value or equity in whole life insurance. Nelson showed how this cash value could be used ultimately to provide for a substantial ongoing cash flow later in life well in excess of the amounts paid into the policies, all in a tax deferred, non market correlated environment. So again, this is not about life insurance. This is about controlling the banking function in our lives, how we finance things. And what he talks about and what we're going to continue talking about in the book is that we have never been educated, properly educated, that there's any way other than to utilize banks and lenders and third parties to number one, warehouse our money and number two, leverage them as the only way to finance things. And what we do when that happens is we give up the opportunity for our money to continue to grow and for everything to be recaptured back into our own systems. So next page goes on said spending any meaningful length of time on the Internet one will find countless iterations of numerical depictions of the life insurance policy values, something in the form of a partial formal life insurance illustration documents sadly what's missing from most of these marketing materials is any mention of Nelson Nash whatsoever. The result is like a rudderless ship, an edifice of financial education built on a foundation of sand. The marketing material bears some superficial relation to Nelson Nash and ibc, but lacks the spirit of it. The essence of this philosophy and that counter intuitive emphasis on this unusual idea of controlling the banking function.

Hey, if you're enjoying this book, walkthrough of Cash Follows a Leader led by Mike Smella. That's fantastic. If you don't already have a copy, make sure you get one. Go to Cash follows dot com, that's cash follows dot com. Get a copy right to your inbox. Go ahead and do that right now.

In the spiritual, spiritually dry desert of Internet marketing, things get transactional very quickly. The focus turns abruptly, if not only to the product, the dividend paying whole life insurance and away from the process of reclaiming the control over the banking functions. As we were talking about, this is all about the banking function, the process. The vehicle becomes the vehicle and there's a best way to utilize that vehicle. But we need to focus on the problem which is the process, how we control and why we need to control the banking functions in our lives. Let's see. Practically speaking, the result of the proliferation of creatively designed whole life policies at their core will not serve the individual in the manner expected. Perhaps the most common thread linking these creatively designed policies is the idea that there should be as little base premium as possible in these ostensibly banking style whole life policies. Now listen to this. No banker ever started a bank with the expectation of only contributing to and accumulating capital for as little time as possible. When we're talking about infinite banking, we're talking about creating, literally creating our own business, our own private banking business. We want the ability to put capital in so that as this grows, as it becomes more efficient, as we'll see later on in the book, we have the ability to control that and we have the ability to creatively utilize it. However, we see best back to the book. And yet that's exactly what is happening and what will happen with these anti base premium policies to conform to US tax law, to tax law in the US and Canada, to preserve the property preferable tax treatment of traditional whole life insurance policy. Owners of anti base premium policies will find themselves sooner rather than later in the unhappy position of dramatically throttling down their premium payments or premium contributions into their allegedly banking style policies. This short book is a rare gentle exception to to these seemingly ubiquitous approaches. Its core theme is A much needed reorientation to the fundamental infrastructure of a whole life insurance policy. What in the states we call the base policy, the base premium and the initial death benefit associated with it. Using a housing metaphor, you'll encounter what will illustrate how these base policies, and therefore the base premium, is the prerequisite foundation of a properly designed IBC style whole life policy. Without it, or with as little of it as possible, one only handicaps their long term potential for capital accumulation. Again, back to our thought process of developing a business. You develop a business, you want it to be profitable. You want to be able to put in as much capital as you can so that it will grow as fast and as as well as it possibly can. That's what we're looking at doing when we create our policies is we want the ability to put dollars in now and in the future as it becomes more efficient. Yes, minimum base premium payment and maximum pua, what are called paid up addition premium payment in the first policy year does create more cash value early on in the life of these policies. But at what cost? And isn't that the prevailing current in contemporary culture? The quick fix with little or no concern with future viability, the anti base premium approach to whole life insurance design is an attempt to commodify the infinite banking concept, to turn whole life into what it is not a clever alternative investment. The essence of the approach is the implicit belief that premium is a bad thing and that we should aim for as much cash value for as little premium in as little time as the life insurance company will allow. This is the opposite of what Nelson Nash taught us. Solving for the banking function means pursuing and acquiring a system of policies or a system of bank branches that will permit substantial premium payment for as long as we might want the contractual right, but not the obligation to pay. We have the ability to pay. We can put it in. It is going to be up to us as to how much we can and decide to put into our policies or to capitalize our systems. Premium payments, viewed in this light, are a good thing. And that goes for the paid up additions and base premium. In fact, the former, the paid up additions, is only payable because of the latter, which is the base premium. As the base premium grows, so grows the paid up additions. Two of Nelson's rules for practicing IBC or one Think long range and don't be afraid to capitalize. This book does the important and uncommon work of advocating for adherence to these vital guidelines when implementing Nelson's teachings. I hope at the very least you'll take these ideas to heart and grant them your honest and full consideration. You may just find, as I have, Ryan Griggs and and me personally, a personal monetary system. I'm sorry, you may just as I find that accepting them and acting on them will produce what Nelson called a personal monetary system that will accept substantial premiums for as long as you're willing and able to pay for them, so that, God willing, you may take back authority over the banking function in your life. And again, this forward was by Ryan Griggs from Griggs Capital Strategies. So he sets the tone for what the rest of the book is going to be about. And we will get into that on our next video. All right.

I hope you enjoyed the incredible experience of going through this chapter, this section, this inside of the book, cash Falls Leader with Mike Smella. Make sure you tune into the next section.