One of the most common questions we get about starting the process of acquiring a whole life insurance policy for Infinite Banking® is how the application process works.

Applying for life insurance can be somewhat daunting but it doesn't have to be. With an experienced advisor it is possible to navigate the underwriting process with ease. Even if you have some pre-existing conditions.

Tune in to this episode and learn all about the application process for IBC whole life.

Episode number 59, the IBC application process.

In today's episode we're gonna talk about what it's like to apply for

life insurance for the purposes of implementing the infinite banking concept.

Quite a few things that go into this, we'll talk about, Getting

synced up with your agent or advisor.

How to qualify, what are the qualifications to get life insurance?

We'll talk about the actual application itself.

We'll talk about underwriting the timeframes and the amounts and

the delivery of life insurance.

So stay tuned.

Awesome.

We'll also to include there, making sure that you're also working.

infinite banking authorized practitioner because that's really important as we'll

talk about later on in the episode too.

Absolutely, you can go to www.infinitebanking.org and that's

where you'll find all the actual authorized infinite banking practitioners.

Super important.

And so as we talk today about the application process one of the things.

To understand is first of all, why do you even have to apply for it?

And it's one of those assets because of the actuarial nature

of the, of this type of asset.

It's so powerful that you can't just buy it.

You have to qualify for it.

And that's one of the important things that I think, people, I don't know, it,

a lot of people really just overlook how powerful life insurance is.

And we've talked.

Ad nauseum, how you know, all the benefits of life insurances.

So you can check out our other episodes to get that information.

But the fact is it can just do, it does so many things that no other financial

asset can do, that you have to qualify for it, and you have to qualify for

it with your health and your wealth.

And so that's what we're gonna talk a little bit about today

in terms of how that works.

Yeah.

So to begin, are you in good health because.

What the life insurance companies are looking for, especially when it comes

to a whole life policy, which you know, they are undertaking to accept

premium from you for really decades.

These contracts go out to age 1 21, so they wanna know with as much clarity

as possible, are you in good health?

Are you a good risk for them?

To hold onto that premium, invest it for the long run because with a whole

life contract, they know they are providing you with an exchange, your

premium for a guarantee that there's gonna be a death benefit there to

be paid out to your beneficiaries.

So you gotta be in good health.

You wanna make sure you're taking care of yourself.

And the, there, there's that adage, the best time to get started was 20 years ago.

Second best time is.

Today, and if you're one of those people who you know are really unsure

about your health or you've got a family history of certain chronic

illnesses, take advantage of today.

Make sure that you take care of your priorities, your

financial priorities, and you.

Go through this process to qualify.

So number one you gotta be in good health.

The second thing is what is your source of premium?

Because if you're committing to this contract and it is a contract, there's

really one side of the equation that you have to focus on, and that is funding

your policy each year with premium.

And you want to make sure that the source of premium.

Matches the funding period.

That's something that we've talked about in previous episodes.

If you're making, let's say, a hundred thousand dollars a year,

$200,000 a year, How much are you setting aside for tomorrow?

What is your standard?

Everybody should have a standard savings amount that they are sticking with

each year in order to build wealth.

And there should be a portion of that is part of your premium.

The underwriter's gonna want to know what is your source of premium and that could.

From income, it can be also from a portion of your assets as well.

And then the last thing the last question that we would ask as practitioners

is, Who benefits - cui bono?

Who is the insurable interest?

Because if there is no insurable interests, the underwriter's gonna

come back to us and they're gonna say who, who is this death benefit for?

So it makes me think of the janitor policies that you say be

underwritten in the corporate side where the best example is Walmart.

Walmart which they used.

Ensure even their janitors.

And these were, the lowest paying employees on their payroll and

Walmart would pay the premium on their policies for them.

And these people wouldn't never even know that the corporations

took out these policies.

But who benefits Walmart, right?

When it comes to individual policies, who benefits?

It should be someone who has an insurable interest in your life.

If you were no longer around.

Who would benefit from the death benefit?

So to sum up our young, good health, what is the source of

your premium and who benefits?

Yeah.

And the insurance is an indemnification against loss.

And so when you, when we talk about the source of premium, there has to be an

income or there has to be assets there to.

Protect and replace.

And in the early years what you're doing is you're replacing your

income if you were to die prematurely so that your family doesn't

have to change their lifestyle.

We're indemnifying your family against the loss of your income, and then in

the case of whole life insurance, The insurance becomes asset protection so

that we can replace the value of all the other assets that you were able to

accumulate over the course of your life so that you can use and enjoy more in

retirement without worrying about not leaving any for the next generation.

So there has to be that income there and there has to be that source of premium.

And speaking of source of premium John Montoya has a pretty crazy

story about . Premiums for what we saw with another potential client

and an advisor that he talked to.

Correct.

And it potential advisor.

So we had someone reach out to us through the podcast and had learned about infinite

banking through another advisor and I.

Did the introduction, learned a little bit more about his interest in IBC,

figured out where his education level was in terms of, what he knew about IBC.

And he was really gungho on getting started.

In fact he had gotten started yesterday, so to speak.

In fact, the previous week he had submitted an application.

The person who had introduced him to IBC, but he really wanted to learn

about IBC from an expert, in fact, potentially become a practitioner himself.

So that's how he reached out to us.

And so I went through my normal process and I was asking questions

about, his background, what he does for a living, and come to

find out that the application that.

Submitted for life insurance for an infinite banking policy.

The previous week it it didn't make any sense.

And I was talking to him about, if you're gonna be a practitioner,

you have to have integrity.

You need to submit good business because ultimately when you

submit bad business you.

You're not gonna stay in the business for too long and life insurance companies

really aren't gonna work with you.

Here's what happened.

Married, couple kids.

He's got an income of around a hundred thousand.

The wife works too.

Income is twice his amount.

And what I come to find out is that the premium on the application that

was submitted was for $200,000 a year.

And I asked them where's the source of this premium coming from?

Because this is twice your income.

And I come to find out.

The wife is also going to contribute.

And I said okay.

Help me make sense of this.

Does your wife have any life insurance?

No.

Is she applying for any life insurance?

No.

Okay.

Tell me where this, where the red flag is.

You tell me your income is this amount.

You're applying for coverage with premium that's twice your annual.

and yet your wife has no application in process, so cui bono who benefits, right?

These should be simple questions that are answered and unfortunately,

it's not very difficult for people to come into this industry.

But it's very challenging for them to stay in this industry long term.

And so that's why we mentioned, you wanna really find out who is an authorized

I B C practitioner and who isn't.

Because with just some simple questions, we're able to pull the

rug, pull the curtain back and see that, okay, this individual, you might

have learned about infinite banking from this person, but they weren't

looking out for your best interests.

They.

In this situation based on income your financial situation, overall assets,

there's some big holes that need to be filled here, and they're not being

serviced in the way that they should be.

And it's just, a matter of answering some simple questions.

But this is why you want to talk to an Authorized IBC practitioner

because we gotta find out, we have to ask really pertinent question.

To get the best possible solution, not just for you, but for your entire family.

Yeah.

And to become an authorized practitioner, you go through a

significant vetting process and so you know, everybody that you find on

that site has already been vetted.

And, going back to John Montoya's story here, the reason why the

premium is a problem, we talked about an indemnification for loss.

And so if you make a hundred thousand dollars, the insurance

company's not going to indemnify your family for $200,000 a year.

They're going to indemnify your family for a hundred thousand dollars a year.

So the fact that this per this agent, wrote a $200,000 a year.

Premium , it just they're not doing this.

They're not basing that on just basic insurance methodology.

Like where on earth would this person who's making a hundred

thousand dollars come up with twice his income to fund a policy?

The general rule of thumb which is also appropriate to this conversation is

the life insurance company will let you fund about 25% of your annual Income

. Into a policy in the form of premium.

And so you can see that having 200% of your annual income.

That's a pretty big jump.

And I think, and then the problem is they were using his wife who earned $200,000.

They were saying that she could fund the rest of it, but then it also goes against.

Basic protection principles of why would you want to ensure the

husband for $200,000 of premium and whatever death benefit that bought,

and not ensure the wife who earns twice as much as the husband, right?

So it's like that spouse needs.

Even more protection than the original spouse.

So a lot of problems going on with that.

And unfor, what unfortunately happens sometimes is when people, first learn

about I b C, they forget, or they just glo they gloss over the importance and.

and the fact that we're dealing with life insurance, like this isn't,

it's not like a magical thing here.

We're using a specific financial instrument to perform some very

specific things, and we can't just make it do stuff that insurance

can't do, if that makes sense.

Man, that's a really good story in my opinion of What to really look

out for in the underwriting process.

And if you're seeing stuff like that, , it's probably a good clue

that there's a red flag there to maybe look in some other directions.

Yeah, and it brings home the point.

You can't just buy it.

You have to qualify for.

Yeah.

And that guy definitely would not qualify for a $200,000 a year premium.

Yeah.

It it, it really, it's great to have that enthusiasm, but

everything's gotta make sense.

That's right.

That's right.

So let's talk about the actual application process.

And there's two methods these days.

There's paper or electronic and they're really both pretty easy

for a seasoned professional.

One is definitely.

Simpler and easier than the other.

It just depends on, which life insurance company is being

used and what their process is.

And,

And what state you're in,

correct.

you happen to be in New York State, you're most

likely doing a paper application.

Yeah, there's one state out of all of 'em that definitely makes life a

little bit more challenging than the rest of the states, and that would be New York.

But aside from them, Yeah, paper, electronic.

And obviously, coming outta covid electronic is the easiest way.

Cause I think most everyone is gotten used to doing a Zoom appointment.

In fact, it's been I can't think of the last time where I had an

appointment and the person had yet to do a Zoom appointment.

Even that withstanding, if it has to be done entire, Over the

phone or prehistoric, in person.

Nothing wrong with that.

But these days, everything is so conveniently done with

the use of the internet.

Life insurance companies are making the move to, to handling this process,

the application process electronically.

It's great to have more and more life insurance companies take

advantage of what's available.

Yeah.

As a side note, I started in this business in New York most of my earliest

clients were all New York clients.

So I did a lot of paper applications, a lot of scanning

and signing and scanning again.

But it, again, it also does depend on the carrier and either way the application.

Is still pretty straightforward and it's usually no matter which

way you do it, as John Montoya mentioned it's usually pretty easy.

The only thing that you really need to have ready is just your basic

information, like driver's license, address, income, all that stuff.

And then most importantly all of your medical information.

So if you have any, medical stuff going on, you need to have your

prescription information ready, medical history ready, doctor information

ready, and they're gonna ask for all of that info on the application.

Yeah.

I would say from start to finish, it will take on average, I've

done it as quickly as 10 minutes.

But depending on how much health information that needs to be provided

can take anywhere, an additional 15 to 20 minutes beyond that.

But it's not a burden burdensome type of, Issue or challenge.

It's just it is what it is.

An application must be filled out.

It must be filled out completely.

And you are testing Yes, exactly.

You are testing that everything that you are answering is true and

correct to the best of your knowledge.

So you wanna make sure that you're not leaving anything out because we

live in the information age and you.

Maybe, or maybe not.

Be surprised.

You know what the life insurance companies can pull on you.

They're, let's talk about, real quickly what they're gonna pull.

They're gonna pull a motor vehicle report.

They're gonna do a prescription check.

They're going to request your medical records, and they're really going to.

Look for and see as much as they possibly can to determine if you're gonna be

a good underwriting risk for them.

That's right.

And you know, it doesn't look good if you leave some things off or you're

not honest about something, that, that can be reflected in the application

and the underwriting process.

And quite frankly, if we're all doing this to , a, as a fellow owner in a mutual

insurance company, we want everyone to be honest like it, if we're gonna be

partners in this same mutual company, I don't want people in there that are,

providing inaccurate or false information to the life insurance company, for which

we're, doing all this underwriting and using, again, the actuarial science

to back up the individual policy.

We need people to be honest to when they're filling out the application.

And I'll say one more quick thing.

There are some reasons that benefit you to be honest on an application.

One is what I just mentioned as a co-owner in the mutual insurance company.

Every policy owner is a, is an owner of the company, right?

So that benefits you for everybody to be honest.

But you also don't want to have any kind of situation where you

provided inaccurate information.

, and then the person, the insured actually dies, and then that inaccurate

in information comes to light, right?

We don't, we wouldn't want to have anything like that happen where it

could invalidate a death benefit, right?

So those are very important.

Another thing is that even if you get a suboptimal rating a rating that's

less than the best you can get.

You can make improvements in your health if it's just something

temporary, like you're a little overweight or something like that.

You can make improvements in your health and you can have the policy Redone and you

can actually have the policy be reissued at your current better health rating,

a year down the road and that can lower your premiums and doing these things.

So nothing is like a totally permanent thing.

However, you also don't wanna do it the other way where you're like, oh,

my rating's not as good as I wanted.

Maybe I'll hold off, right?

Because then we don't know if you can qualify at all down the

road, which we'll talk about.

And just to interject, One thing some things are permanent.

Meaning if if you have, I actually did run into this there was a person

who really wanted to get started with IBC and he had a brain injury.

Yep.

with this type of brain injury, he would forget that

he and I would have a conversation.

And this transpired over four to five years . He would reach out to me like

every four to five months and initiate the whole conversation over again.

And at a certain point I really just had to take him off my email

list and just block his number.

So he wouldn't call me anymore because unfortunately he

would he would never remember.

We had these conversations and that he couldn't qualify.

There, there are some things that are permanent.

And going maybe a step further because cancer is so prevalent

in our society you do have to be.

10 years in remission in order to qualify.

There, there are some things that are permanent.

You're not gonna be able to qualify.

But there are other ones, whether it's losing weight that's,

one year assessment typically.

And on that note, whatever weight that you do lose, let's say you lose 20 pounds.

Over a 12 month period.

The way that the underwriters are gonna look at it is they're gonna

say, okay, you lost 20 pounds.

We're gonna take half that as weight loss.

So there, there's different levels to it but.

Here's where you want to engage with a practitioner, someone who can provide the

answers for you based off your situation on whether you're a good candidate.

Now, what needs to be addressed?

And, maybe you're not a good candidate for I B C, but there's someone

that you know in love who does have an insurable interest in you.

And so we look at other ways to get you qualified and start

that application process.

A secondary.

Yeah.

And we probably ought to talk about the other major bifurcation in the

health part of a life insurance.

And that's whether or not you're a smoker, right?

Tobacco and non-tobacco are two.

Macro classifications that you can get.

And those make a pretty big difference on the price of the life insurance premium.

And so a lot of times a question will come up, and by the way, they consider tobacco,

that can be vaping packets, smoking all the, patches, they're really looking at

nicotine use as opposed to just The smoke.

And a lot of people will be, will maybe think they could hold off for a month and

quit smoking for a month and then apply.

And again, it gets back to the honesty side of things.

They're also probably going to require a paramedical exam which is another.

Possible requirement during the application process.

And just like John was mentioning with cancer, having a 10 year period

before you can qualify again, smoking is depending on the carrier, somewhere

around a year where you need to have quit smoking for about a year before

you can qualify as a non-tobacco policy.

And then really quickly talking about the paramedical exam.

Sometimes what's required, and we don't really know when the underwriters

determine this and they'll say, Hey, we need to do a paramedical exam, which is

just a, usually a blood and urinalysis.

Body weight measurements, that kind of thing, a basic physical type of thing.

And we, those are usually done by third parties and they submit the

information to the life insurance company for the underwriters to evaluate.

And that helps them make an underwriting decision.

A lot of people are already aware of that, but what they may not be aware

of is for under certain underwriting amount, Let's just say, 5 million or

3 million depending on the carrier.

A lot of times they don't even need a paramedical exam anymore to approve you

for life insurance which is a pretty big deal because it makes the underwriting

process even faster for certain cases.

Yeah we're talking about as quickly as minutes

from completing the application.

That, that's how quickly you can get an automated approval these days if you

have a clean prescription history, clean driving record, clean medical history.

We've seen it happen and help clients get started.

Really, it's almost like 24 to 48 hours.

Yeah.

taken the application.

So the standard underwriting time used to always be four to six weeks

because a paramedic exam Was required, we talked a little bit about how life

insurance companies are stepping into the 21st century and using technology.

Thi this really cuts down on the underwriting timeframe.

So what used to be four to six weeks standard.

Can now be as short as 24 to 48 hours.

So you just have to mentally prepare yourself because sometimes, people have

experienced qualifying for life insurance outside of IBC, and they're accustomed

to it taking four to six weeks, maybe eight weeks, and they're just not

accustomed to hearing, oh, you're approved right after taking the application.

But that's awesome news to share with people.

Yes.

Yeah, it can happen pretty fast.

And so our job is to really get you very comfortable with the principles,

the idea, the premium amounts and all of those things so that we're able to

narrow things down and that starts to get into the, underwriting amounts.

And so one of the things we wanted to talk about, we mentioned, qualifying

with your health and your wealth, and.

How much can you qualify for during the application process?

And so there's two primary ways of doing that.

And the first one is what's called human life value.

And we talked about that.

That's indemnifying your family against the loss of your income.

And so what they'll do is they'll just take your current income, multiply that

times a number of years based on how much, how long you have left in the.

You're, the working world.

So for example, if you're 35, they'll, and you make a hundred thousand dollars,

they'll just say, okay, you've got 30 years left where you're gonna work.

So we'll take 30 times a hundred thousand.

That's $3 million.

And the other way to do it is through assets.

It's actually, it's not net worth, it's gross worth.

And so they'll use an assets based calculation methodology

in whichever one is greater.

When we, typically, the way that we work is we, during the application

process, we try to get you.

Qualified for your full human life value.

And so meaning we're trying to get you qualified for the maximum amount of

insurance that we think you can get.

And the reason we do this is, because we can always get that maximum approval.

And since an application doesn't obligate you to anything, we get you

approved for as much as we can, and then we can work down from there based on.

what Your requirements are, and the reason we do it that way instead of the

other way, is if we start low and try to go high and you actually wanna get higher

than what we got you qualified for, then we have to go back through underwriting

to get that additional approval.

So it's always easier to apply for the max because there's no obligation.

It doesn't cost you anything.

So we just get you approved for the max and then we work with.

, within those parameters to get you what you want based on, your cash flow, your

insurance needs, all of those things.

Well said.

The last item, once your application is in, you have the

approval, it's gone to issue.

There's two ways for policies to be delivered.

They can be delivered in person or snail mail.

The other way is now electronic delivery.

So DocuSign allows for the process to be done basically through your email.

And because it is something that doesn't create a, something

tangible, something in your hand.

What I always recommend to people who are doing a electronic delivery

is make sure that once you.

DocuSigned for the policy.

Once you've paid the premium, you keep a copy of this digital contract.

You store the whole contract, keep it as a soft copy, but you also print out

the first couple pages and you keep that with all your important paperwork,

your birth certificates, your passports.

Basically wherever you keep your important paperwork, you need to

include your contract because.

something happen to you, you want to be sure that your loved ones know

that you have this life insurance policy, you have this asset, and

that a claim needs to be filed.

So really important that you, especially if you are doing the electronic delivery,

you print out the first couple of pages.

That's great.

I never thought of that.

I'm going to definitely add that to my operating procedures for

me personally and my policies.

So that's an awesome tip.

And, It was, it's assumed in what you just said, but I want to just point out

what John Montoya was also saying is, you need to communicate the presence

of this life insurance policy to your loved ones or, and or whoever's going

to be, in charge of things if you die.

And when you die, the communication and knowing where everything is.

Huge thing when my, when my dad passed, I was, we had to go through

all his documents and, this is not an original story by any means but,

sifting through things and, we found a couple life insurance policies,

actually, they weren't that big, but, we didn't even know they existed.

And centralizing and backing up and communicating all of your financial

plans is super, super important.

As we wrap up here we mentioned, the best time to buy life

insurance is, 20, 30 years ago.

The next best time is today and.

That sounds a little cavalier, when you say it, sometimes

it's, but it's a good parable.

Best time to plant a tree is 30 years ago.

The next best time is today.

But let me put a little context with that as it relates to life

insurance and what we would call more typical type of financial planning.

Most of the time if people are bought into the typical financial

planning, They're going things maybe a little bit out of order.

A lot of times people just start investing in things.

We talked about this quite a bit, where you go in and you do your HR paperwork

at your new job and automatically you have a bunch of money rerouted into these

qualified plans where you lose control and use of that for the next 20, 30 years.

The thing about this is.

When it comes to investing or any other type of asset that you could buy real

estate, crypto, like whatever it is.

Of course there's timing issues in, in the market, but outside

of those, market timing things, you can buy that stuff anytime.

You can buy it today, you can buy it tomorrow, you can

buy it five years from now.

You can buy it 10 years from now with life insurance.

On the other hand, you can buy it today if you qualify.

, but we don't know if you could buy it tomorrow or we don't know

if you can buy it five years from now or 10 years from now.

And so when we think about the order of operations of things life

insurance should be one of the first things that you buy, not only from

the protection side of things, but also from the IBC side of things and.

The acceleration.

By having the correct structure in place, it's going to accelerate everything else

that you're doing from an investment standpoint, but also it's not something

you can put off because we don't know if you'll qualify for it in the future.

And so that's something that we wanted to make sure we put out there on this

particular episode, talking about applying and qualifying for life insurance.

That's a golden nugget right there.

Great talk John.

If anybody out there has any questions, as always, you can go to the fifth

edition.com and right there you can listen to all our podcasts, you can get

transcripts, you can register for our online course and get a 50% discount.

And most importantly, if you wanna see if this is something and find

out, have questions for how it could apply in your life specifically.

You can book a no obligation free 30 minute consultation with one

of us and we can have a chat.

Wonderful.

All right everyone.

Thank you for listening.

We'll connect with you on the next episode.