Episode Description

Unlike your typical investing, whole life insurance must be looked at in a different light.

Life insurance is not an investment and it never has been. The good news is that, while life insurance is not an investment, what it actually is makes all of your investments perform even better.

Tune in to this one and get a better understanding of how life insurance can play an important part in your overall financial life.

LINK TO THE EPISODE

Episode Highlights

0:00 - Introduction

0:15 - Episode overview

0:44 - “IBC is not an investment”

7:54 - Creating a financial system to replace the one you already have

13:12 - How you think, the “business owner mindset”

16:45 - John Perring’s mindset change, guarantees

20:37 - “Building on bedrock and not sand”

27:16 - The moral case for using life insurance

32:35 - Episode wrap-up

About Your Hosts:

Hosts John Perrings and John Montoya are dedicated to spreading the word about Infinite Banking® so you can discover for yourself how you and your loved ones can benefit with a virtual streamlined process that will take you from IBC novice to sharing the strategy with friends and family... even the skeptics!

John Montoya is the founder of JLM Wealth Strategies, began his career in financial services in 1998 and is both an Authorized IBC® and Bank on Yourself® professional licensed nationwide.

John Perrings started StackedLife Financial Strategies after a 20-year career in the startup world of Silicon Valley where he specialized in data center real estate, finance, and construction. John is an Authorized Infinite Banking® professional and works nationwide.

Resources

TheFifthEdition.com

50% discount to our online course, IBC Mastery

Hello everyone.

This is John Montoya, and

this is John Perrings.

We are infinite banking authorized practitioners and hosts

of The Fifth Edition, episode 62.

IBC is Not an Investment.

Thank you for joining us on today's episode.

We're gonna.

Five main bullet points today.

First it's a contract, not an investment.

Secondly this is a financial system to replace the one that you already know.

We're gonna talk about mindset.

That's our third bullet point.

Number four.

We're gonna talk about building on bedrock, not on sand, and then our

last bullet point that we're gonna cover in today's episode, we're

gonna talk about the moral case.

But John, let's get into this.

IBC is not an investment.

Let's talk about how this is not this.

This is not an investment, right?

It's a contract.

Yeah.

And you can hear this discussion that takes place, like anytime you're really

talking about this, especially with people who are a little newer to the idea of IBC.

Because really everything that we are taught, In the financial world is

really based around investments and rates of return, and what we're doing

here is we're building a contractual, we're building contractual wealth

as opposed to statement wealth.

So like with an investment, you get a statement every.

Quarter or every year, whatever it is, and it has some numbers on a

piece of paper that don't really mean anything until you actually sell and

you get what you get at that point.

Whereas with whole life insurance we call it contractual wealth

because all the numbers and the guaranteed ledger are guaranteed

to happen by the insurance company.

Assuming you pay all the premiums like you're supposed to.

The, when we talk about IBC, you'll hear people slip into that investment mindset.

We're like, how much should I invest in this?

And so we have to reset our thinking a little bit and understand that what we're

doing is we're we're saving, we're not investing, we're creating a store for

our capital, which then is redeployed.

Then invest after we've capitalized.

Yeah, absolutely.

I think this idea of thinking of life insurance and IBC as an investment is

probably one of the bigger hurdles that people need to overcome when trying

to understand how IBC really works.

Yeah.

At the end of the day, we have to go out on the risk spectrum

to stay ahead of inflation.

And so we're constantly on that treadmill to chase rate of return.

And so we tend to conflate everything as an investment.

And to your point I agree with you.

Thi this is.

This is a savings type of vehicle.

We have to have that discipline to, to save money and we really have to separate

that from all other investments and even that mindset of chasing rate of return.

Because one of the things that Nelson really tried to emphasize was the

fact that if we take a look at what's going out the window and compare

that to the rate return that we're trying to obtain on our investments.

You'll actually recognize that there's way more money going out in expenses, interest

expenses than what we're actually earning.

on our money.

And so what we really have to focus in on is establishing, one, the

savings discipline, but also building a foundation of savings that, you

know can be there when you need it.

And for that reason, we're utilizing a contract, the guarantee

that what we want to have.

Will happen.

And because there's a death benefit attached to this very special type

of contract what you want to have happen is guaranteed to happen even

if you're not around to see it.

Now, I know most people who come into IBC they're not really concerned

about the death benefit so much, but the death benefits really crucial.

It's what separates this from really any other place that you can

park money, the death benefit, in.

In some circles, you think of it as a, the, the icing on

the cake, the cherry on top.

But it's what makes this contract have all these incredible benefits that really

won't it, this contract won't compare to any other investment out there.

But you have to realize what you're doing is isolating money that

you're putting away for future.

That is going into a contract that's guaranteed to perform.

And if we can just really wrap this note up understand this about an investment.

Anytime you make an investment, you are going out on the risk spectrum

and you have no control over how that investment is going to.

With this contract, you get a blueprint every year for the rest of your life

that minimally your cash value will step up in value the following year.

Therefore, it's not an investment when you have something that's

spelled out all the way out to the rest of your life or age 1 21.

It is not an investment.

This is a guaranteed contract and you're transferring the.

over to the life insurance company and they're gonna guarantee

you that this policy will.

because it's a whole life policy every single year for the rest of your life.

So it's a contract, not an investment.

And really important that you as a listener distinguish that and make

this part of everything that you're trying to do because within, I would

just say for 99% of people there, there should be a portfolio, a portion of

their portfolio where there's a cash.

Because we always need access to cash in some way, shape,

or form at any point in life.

If you're a hundred percent all invested, then I'll just say you're doing it

wrong.

Absolutely.

And it's also putting cart before the horse.

I see so many people.

By the way, this was me.

This is one of the reasons I got into this business because

I had to learn about this.

You go into your first job and they put your 401K benefits paperwork in

front of you, and you think you're saving when really you're investing

and you're putting all that money and locking it away for 30 years.

And then you know, a downturn like 2000 or 2008 comes around and you

have to liquidate all that money and.

You're essentially starting over.

The same thing can happen with IBC.

If put the cart before the horse, you start, borrowing money against

the policy to invest first before you have a savings built up.

One thing happens and the whole thing comes tumbling down.

And What we're doing here is creating a place to capitalize first, and we

create an emergency fund and then an opportunity fund over and above that.

But I I really like what you said about.

Money going out and what you're talking about leads us right into 0.2, where we're

creating a financial system to replace the one that you are, that we already have.

And you were alluding to paying interest.

And one of the things in the book is the study saved 35 cents of every

dollar that comes into our life leaves to just to service debt.

That doesn't even include our taxes or anything like that.

And so what we see is, Add up the debt service, the taxes that

you pay, and then your lifestyle.

People really aren't saving that much money.

And this is true for someone making $25,000 a year, and it's true for

someone making a million dollars a year.

I see it across the board where the savings rate is really

just not where it should be.

And we see that expenses.

Our income.

As our income goes up, Parkinson's law dictates that our expenses track right

along with it at typically the same rate.

And so what we want to do is we want to pay more attention to that.

And redirect that interest that's leaving our life.

So when we service that 35% of debt service using IBC, couldn't that,

couldn't some or all of that be redirected back towards our financial

system so that it's working in our favor rather than just going out

to someone else's financial system.

And that's one of the cruxes of IBC.

Yep.

Absolutely.

So the financial system that we all know and use is the traditional banking.

The, these banks, they have the most coveted real estate typically

in every town you drive through.

You drive through downtown and how many, bank buildings do you see?

We're all financing.

Their real estate portfolio, all these banks, and all the fountains that they

have, in front of their buildings.

We're all financing that for them because we're directing our outflow through

a banking system that we don't own.

and we don't control.

So we wanna replace that traditional financial system with one that we do

own and control, and we can accomplish that through a whole life contract

because when it gets right down to it, you have to ask yourself why.

Do we go to a, the bank in the first place?

Now the most common answer you might think is because that's

where I deposit my paycheck.

I need to pay my bills checking account.

That's really a way for the bank to collect deposits so that they

can then use those deposits.

To create loans and it's this lending business really that traditionally banks

have made the majority of their profits, they're in the business to lend us money

and charge us interest for that money.

And so if we can eliminate the middleman, which is the

traditional banking system by.

Reorganizing how we capitalize our wealth instead of passing our money

through a traditional banking system that we don't own and control.

Instead redirect that money into a whole life contract that we do

take ownership and control over.

What's gonna happen?

We're gonna start to redirect wealth and recirculate it

within our own private economy.

So that's what we're talking about here.

When we talk about replacing the financial system that you already.

With one that as of right now, maybe you don't know, but it's existing and

maybe hiding in plain sight, but it's been around for over a hundred plus

years and it's these whole life policies that allow you this banking function

that for most people, , they tend to look at these life insurance policies

and all they see is the death benefit.

Or maybe they think of it as a cost.

I'm paying this premium and this is just, out-of-pocket costs

and I get no benefit from it.

You're not seeing the forest through the trees because if you actually look

at what you can do with a whole life contract, you'll realize that you can

replicate this traditional banking system through your whole life policy.

and I'll just add one final point to that.

Not only is the, are the banks in the business of lending to us, but they're

in the business of trading the paper on those loans and making even more money

on everything that we're doing for them.

And we can just, like John Montoya just said, we can replicate all of that stuff.

And so it doesn't just stop with, Buying cars, right?

There's, what we want to do is create an entire financial system that's all

working to the benefit of what we want

to do.

So that leads us to our third point, which is mindset and taking ownership

of your life and your finances.

And one of the most important things, and this is probably what what Nelson

really always led off with is the most important thing is how you.

And how you think determines everything and the way that I think

of whole life and IBC it's really with a business owner mindset because

with a business owner mindset you start to look at your cash position.

in a completely different way than you probably have ever thought of it.

That's right.

And the analogy that I tend to think of and use most often when I'm in a

client presentation, I'll talk about how people who have a w2, salary type

position, they contribute to their 401ks.

And the mindset with the 401K is that you set it, forget.

You make those contributions maybe all the way up to the max and you let

it sit there for, depending on your age, 10, 20, 30, 40 plus years, and

then even longer into retirement.

And it, it's the set it forget it mindset where.

You know that you're putting that money away, but because of the

restrictions involved with a 401k and an ira, you really can't touch

it with without, penalties or taxes.

Save for a nominal amount, I think it's like $50,000 which then you

have to pay back within five years or pay taxes and penalties on it.

But this sets up this mindset that, you don't really.

Control over that money.

So therefore it just gets pushed further and further in the back of your mind.

And this puts you in a position where, if an opportunity comes your way, you

have to let it pass cuz you don't have access to your own money or life throws

you a curve ball and you're stuck because you can't get access to, much

more than 50,000 of your own money.

And what happens in that position?

Well, You gotta go to a bank.

You gotta go borrow someone else's money and pay them interest so

that they can, buy their real estate and pay for their fountains.

When if you had set up, a whole life policy and taken that business owner

mindset to control your capital and your cash flow well, You would give

yourself so many more options in life that you otherwise, won't have

if you have that employee mindset.

IBC I is not an investment, but if you have IBC working for you, what you're

gonna start to realize is that you're going to take this business owner mindset.

And you're gonna apply it in your life to create opportunities

and abundance for yourself that you can't find in a 401K or ira.

There's nothing like the feeling of having some

control over what you're doing.

I've told my origin story, if you will, on, several times on this podcast.

And one of the problems was I was really not very good with money and I remember.

Creating my first budget and figuring out what was going on with all my money.

And I remember like the problem was not solved, but just knowing what

was going on and now having some control over what the next steps

would be was so liberating to me.

And that's really the, if I think back on it, like I really.

My mindset was way off on money before I, because I just never felt like

I had enough to really, do anything special with, but what I realized was

that if I actually have control and I take ownership and responsibility

for my money all these things open up.

And then, when I met John Montoya and we, I started my first IBC policy all

those years ago, all of a sudden, That was one step in the solution where,

all kinds of things started happening.

The control, I was killing a bunch of birds with one

stone on the financial side.

And it really just made all the difference.

And so I'll just quote John Montoya, he said it on this podcast many times.

The business owner mindset.

When we're implementing infinite banking, we're start.

A business and, but it's a business that's guaranteed to succeed.

So he alluded to it earlier, bef, when we talked about the guaranteed side of

these con of this contractual wealth.

It's really a business that is guaranteed to work out.

So what else can you get into?

If you're like me, I was an employee for a long time.

Was lucky to be in the startup side of things.

So it felt like I was a little bit entrepreneurial, but really I was an

employee and almost all the employees I talked to always have this little

bit of a dream to do their own thing.

And by the way, there is absolutely nothing wrong with being an employee.

, but you can also do some other things where you can, people talk about

side hustles, all these other things.

How about just getting into the banking business and starting your own financial

system that you own and control?

What if you started there super easy?

You don't even have to have an idea, it's already done for you.

All you have to do is start taking ownership and being a better steward

of your money by starting the, in the business of quote unquote banking.

And that's what we're doing here with i b.

Yeah, Nelson said it himself.

There, there's two businesses that you should be in the business

that you're currently in where you earn your primary income, and then

the second business is banking.

And yeah what business that you can start gives you the ability with a

hundred percent certainty that you'll turn a profit because this is a.

You have that, that blueprint that this business is going to turn a profit, in

fact in the book becoming Your Own Banker.

Towards the end, there's there's a list of sayings that Nelson has and one of

'em is if I can paraphrase, if you knew that you could put every dollar of this

or every dollar that you put into this, you would get out at passive income.

Tax free, how much would you wanna put in there?

This is a contract that's guaranteed to get better and better.

If you think of it as a business, right?

Because this is a business that you're gonna use to finance your life with,

and it's guaranteed to, turn a profit.

You'd have to be crazy not to get started.

Another way to say what you just said is like, what if every,

if you had a place to put money where every dollar that you paid in premium

created more than $1 of new cash value and that was, had the liquidity of

a cash asset, which is, which it is, man, how much further could you go?

Where else can you get that?

And and I would say nowhere.

Yeah, exactly.

Because easy.

There's nowhere else you can go to get that contractual guarantee.

That's right.

And why this needs to be part of an overall plan.

Let's let's move on to bullet point number four, which is

building on bedrock, not on sand.

John, you wanna touch?

Yeah, and it gets to the back to the contractual wealth side.

And so really what we're talking about here is why.

IBC requires whole life, not some of the other insurance products

out there that have non-guaranteed elements that can affect what's

going to happen in the future.

And so we and in the book he says, you can perform infinite banking with anything.

It doesn't have to be whole life insurance.

It could be a savings account, it could be a, a.

Stock portfolio that you borrow on margin, by the way, I'm

saying that tongue in cheek.

I definitely would not advise doing that, but it could be anything.

It could be iul, it could be vul, it could be your your your home

equity line of credit, right?

However, , all of those things.

None of those things other than whole life really has the bedrock guarantees

and guaranteed growth that whole life has.

And so we want, when we're talking about where we're go going to store

our cash, we don't want to put it.

Anywhere where we can lose or where it can be pulled from us.

So in the case of a margin loan or a line of credit, right?

So we don't want to have any kind of situations where we're, we have our

capital deployed and then all of a sudden.

The capital is in the control of the financial institution, not you.

And they pull the rug right out from under us, and you end up in a situation

where you either gotta put a bunch of capital into a bunch of more capital into

it, or you're gonna have to liquidate.

We're, that's I think where you're going with this, John, where we're

building on bedrock, not sand.

Yeah, a hundred percent.

I agree with everything that you said, and I'll add this.

To, to what you just shared and having a portion of your money that

is certain it's built on bedrock.

The peace of mind that it allows you.

It's, it's really life changing.

So if you've listened to episode 55 it it's my wife discussing her

journey with stage four breast cancer.

And I can tell you that it is completely.

Change things dramatically within our lives.

But the one thing that allows me to sleep at night I is to know financially.

We're taken care of and we've got the liquidity to, pay for

this out of pocket care that we otherwise wouldn't have available.

We'd be reliant on our health insurance and the treatments that only the

health insurance covered, which, We, it would be a quality of life that

would be diminishing rates of return.

So the peace of mind aspect of it, because we have certainty.

We have this bedrock.

Of liquidity that we can access for any reason.

We tend to think of this and then the show, IBC is not an investment where we

tend to think about the investments that we could make because we can use IBC as

an opportunity fund, but don't forget to Th this is really a financial bunker that

allows you to tackle all the curve balls in life that come your way unexpectedly.

And I'll just add that to the bedrock.

It's the peace of mind aspect that you can't put a price on

man, that it's that hits home.

And it's so true.

When we talk about an investment, so you mentioned that we think of

investments with IBC of, capitalizing and then investing with that capital.

But the whole life insurance itself is not an investment.

With an investment, you get what you get, you invested in and you get what you get.

Whole life insurance is such a different asset class because it just, like John

was saying, it gives you so many options.

When you invest in something I like to call it calculating the.

Value of the investment using the vulgar rate of return, which is just, that's

what everybody looks at these days.

How do you calculate in the rate of return, how do you account for

what John, Montoya and Kelly have been going through for their health?

How do you calculate that into your rate of return?

How do you calculate.

into your rate of return, the divorce that you went through, how

do you calculate into your rate of return a special needs child, right?

How do you calculate into your rate of return, the loss of your income

from a disability, for example, or how do you calculate into your rate

of return the opportunities that you, that come your way that no.

That no investment or brokerage house can bring to you the individual

opportunities that come to you just because you're who you are and you where,

and you're, and you are where you are.

How do you calculate into your rate of return, the ability to start a new

business because you have capital.

So there's these kind of, curve balls and then there are the, fast pitches

that we can hit out of the park, and none of that you can put on a

piece of paper as a rate of return.

And so that's one of the reasons.

I think in this bedrock bullet point here that I would like to drive

home that so much more can happen when you're capitalized in this way.

I'll

add one more.

How do you calculate the rate of return on money?

You'll never see again for all the people who are sitting in cash and

want to pay cash for everything.

Yes.

, you give up the opportunity to earn interest on that money when you pay cash.

And one of the beauty of yeah, forever and one of the beauties of this whole

life policy and the banking function within it, you get to borrow against

your cash value as collateral.

And ultimately the death benefit.

You get to keep your money growing uninterrupted, even

when you use it someplace.

That's right.

You can't do that with

cash.

That's right.

The last point we have on here is the moral case for using whole life insurance.

And I guess I would argue that everything we just talked about already is the

moral case and it ties directly into what we're about to talk about now, but

it's do you have a family to protect?

Like what are you doing all this for?

Everything you're doing right now needs to be consumed today by your

family if something happens to you.

So a lot of people will be like, I don't need life insurance

because I've got all this money.

It's okay, yeah, you're right.

You do have all this money that will have to be consumed today by

your family because you're no longer there bringing in an income, right?

And so all of that money.

Is not going to do what it was originally meant to do.

Everybody has a plan.

Your plan's not gonna work out if if something happens to you and

you can't replace that income.

And thinking about our families I just can't think of a better,

so by the way I've never had.

A death benefit claim from any of my clients, but I know a lot of people

who have, and one of the, one of the top things that they tell me about

in the groups that I'm affiliated with is that when they've delivered

a death claim to a loved one, not a single one of them asked about the

rate of return on their cash value.

There's great power in the death benefit in being able to allow your

family to continue doing what they were originally intending to do without

having to change their lifestyle.

You mentioned something there delivering a claim and that

really hits home for me this week because I had a phone call that came

in from the spouse of a client that I had been working with for eight years.

Started working with him in 2015 and I really only talked to the husband

and set up three policies for him.

Two whole life and a convertible term.

And I got a call this week from his wife and returned the call and turns

out he passed away this past Sunday.

Father three kids.

I'm gonna be 47 in a month.

I've lost four clients in the past two years.

All of them younger than me.

The last two clients that I lost.

Father of three kids.

Wow.

And younger than me.

And it, man, it's tough.

This is the toughest part of our job.

Yeah.

You get to know someone.

Man, it hits home.

They become your friends.

Especially for me.

Yeah.

Yeah.

Being a father of three kids and everything that I'm going through and I'm

talking to the spouse and she's crushed.

Yeah.

But unreal.

That's what these policies are ultimately here for.

We have a policy or an episode that we did talking about future planning

and why, you should be thinking about having a convertible term.

This client listened to me.

He had that convertible term.

He hadn't it yet.

He hadn't exercised it.

, but it was there because it also provided additional death benefit.

Yes.

Family was taken care of.

I mentioned you may not, think about IBC for the death benefit.

It's the icing on the cake.

It's the cherry on top, but if you really value it it really checks off a number

of boxes, especially for the people who are married, married with kids.

I don't know how you can go without,

there's nothing I can even add to that, John.

And man, I, I'm sorry to hear and that's tough and I'm just glad that you.

Of all the things that, that families now concerned about, at

least their finances are in order.

And I don't know when I say it sounds callous, but it's like it's

true and it can't be any better.

You know what I mean?

So I appreciate you sharing that.

I That's, , obviously emotional and I'm definitely not looking forward to that.

But I'm glad at least he had you in your life to to help him get where

he needed to be for his family.

Yeah, and I am I, all I can say is that I'm grateful that

he listened to me and he listened to the recommendations that I made.

and he went through and he did the additional policies, he did

that additional convertible term.

And I feel for the family that I am just grateful that at least for this

family, they're gonna be taken care of.

I think that's a great place to wind this episode up.

Really appreciate, I know that was probably tough to say on the podcast here,

but if if you're out there and listening and you wanna understand a little bit

better how some of the things we're talking about can apply specifically in

your life, Hit us up@thefifthedition.com.

Look us up and reach out.

And we can set up a no obligation, 30 minute free 30

minute meeting, talk about you.

The other option, of course, is if you like to just do all the research

yourself before talking to anyone.

We have a, an online course that's recently been updated

and put on a new platform.

And we have a 50% discount there right on the front of the fifth edition.com.

All right, John, I think that wraps it up.

Thank you.