Mike Smella explains how a dividend-paying whole-life insurance policy lets you become your own bank by playing all four roles: depositor, borrower, banker, and owner. The policy's cash value grows as collateral for loans you make to yourself, while the death benefit drives growth until cash value equals it by age 121.
Chapters
There are 4 characters in the financial play: the depositor, the borrower, the banker, and the bank owner. By implementing this process, Infinite Banking, all 4 characters would become you. The money in your aquarium just keeps growing and never leaves your control. The choice is obvious, folks. Once we understand the problem of where we're at now and the system we're involved in now, all of a sudden then the solution can matter.
Hey, welcome back to Wealth on Main Street. Richard Canfield here. I'm excited to introduce Mike Smella, who's going to be walking through some incredible takeaways, incredible observations, as he goes through chapter by chapter with a great review of his observations from Cash Follows the Leader. We love this book. It's a really great book. It's a short read. It's got some fun little images in there, and you're going to hear all about it from the perspective of Mike with his experience both in life and with the infinite banking concept. So with that in mind, let's take it away.
Yeah, hi, uh, this is Mike. Day number 3 of Cash Follows the Leader study book, um, again written by Jason Lowe and Richard Canfield, can be purchased through Amazon or through ascendantfinancial.com. We're going to be starting today on page number 22 where Nelson Nash taught us there are 4 characters in the financial play. the depositor, the borrower, the banker, and the bank owner. Presently, you are the depositor and the borrower. Someone and some organizations are playing the role of the banker and the bank owner in your life right now. By implementing this process, Infinite Banking, all four characters would become you. Think about that. How cool would that be? When you implement the process of becoming your own, your own banker, you become the depositor who is earning money and putting deposits into your own system, which is basically you're putting in premium payments into your life insurance contract. You become the borrower who needs to access money to buy the things you need in life, like that $30,000 car from yesterday. You now become the banker who calls the shots for repaying loans, including the payment amount, frequency, total interest, and time frame. You then also become the fourth character, the bank owner, the one who makes the most amount of money, and understandably so. This is also the character who earns a share of the profits each year from the banking business performed by all the customers of the bank. The same applies to the life insurance company that you co-own. Let that sink in. You will share in profits from all the customers of the life insurance company. If you're like us, you also want your friends and family members to do as much of their business within your family banking system so that everyone prospers. Let all that really sink in, folks. It happens. I know it does. It's happening for me and my family, and it can happen for you and yours when you follow the process defined in Nelson Nash's book, Becoming Your Own Banker. The money in your aquarium just keeps growing and never leaves your control. Contrast that with continuing to do what you're doing now financially. When you request a loan from a financial institution such as your bank, every payment— think about this— every payment is a permanent transfer of money away from you and every generation that comes after you. Your kids, your grandkids, your great grandkids— that money forever loses from them and goes to make someone else wealthy. For example, if you pay directly from your savings account, assuming you have the cash available, the money goes out and your cash balance decreases. You're here, you pay cash for something because you don't want to pay interest. Now it goes down. Essentially, you lose the opportunity to earn interest on that money permanently. Someone else is getting wealthy on the use and control of your money. Otherwise, the banking business wouldn't exist. Think of this very closely. Your payments are someone else's passive income. I'm going to read that again. Your payments or your money— if you pay cash for things and you don't pay interest— but your payments or your money becomes someone else's passive income.
How exactly does cash follow the leader? Well, you can find out by getting a copy at CashFollows.com. Hopefully you're enjoying this video as we're walking through the book chapter by chapter, but make sure you have a copy in your hands as we go through it. That's CashFollows.com.
The choice is obvious, folks. We know, and you should know, that you can and should become your own banker. Now that we've covered these basics, let's go to the core of what this book is all about. What do we mean when we say cash Follows the Leader. As we stated previously, a dividend-paying participating whole life policy has two linked components: total cash value and the total death benefit. Both grow over time on a foundation of contractual guarantees. How they grow and how that growth benefits you during your lifetime is the focus in this book. By contract, the total cash value— how much grows in your, in your system— must equal the total death benefit by age 121 in the United States. From day one of the, of the policy, the total death benefit is much larger than the total cash value. Based on contractual guarantee, that total cash value must begin accumulating daily so that it eventually leads and equals the total death benefit. Hence the term cash follows the leader. The leader is the total death benefit. The more you grow it, the more cash value you control. Best of all, you don't have to die to win. So let me try and explain this pretty simply. The death benefit is the amount of your initial insurance. The cash value becomes your equity portion. Okay, so you've got your, your cash value and you've got your, your death benefit. At age 121, because of the way that we designed this And because of your ability to contribute capital into the, into the system, you start with, let's say, $100,000 of life insurance. And over the course of time, that continues to increase— $150,000, $200,000, $250,000, $300,000. The cash value has to continually grow so that at age 121, If you started with $100,000 of insurance and it grew to $1 million of insurance at age 121, if you're still alive, the cash value has to, by contract, equal the death benefit. Now, are we planning to live to age 121? Hey, I am, but I want to see it cash out. You may not. We don't know. But we do know this: by contract and by design, the faster and the greater that you can increase the amount of your insurance policy, your banking policy, the faster and the more your cash value has to grow, which means you have access to more and more capital. And when you borrow the money, you don't borrow it from the from the actual cash value. You borrow it from the general fund of the insurance company, and they leverage your contract as the collateral. Kind of like on a home loan, they use your house as collateral, or a car loan, it's your car as collateral. In this case, the policy is collateral, which means your cash value continues to grow as if it never left. How cool is that? You borrow their money. Do you pay them back interest? Yes. Do you want to? Of course you do. Why? Because when you pay them back interest, it makes the insurance company more profitable. And what happens when they become profitable? They declare a dividend that— oh, who's the co-owner? You are. Oh my God, it becomes like Nelson says this is so simple. Once we understand the problem of where we're at now and the system we're involved in now, all of a sudden then the solution can matter. If we focus all on the life insurance or the vehicle without knowing what the problem is, the solution won't matter. So we'll pick this up again tomorrow. Have a great day and we'll talk to you tomorrow.
There's always more to learn. So if you like what you heard from Mike, make sure you check out the next video so you can keep your energy going and learn all about the next chapter in this book.
