It's not uncommon people forget why they bought a policy and are paying premiums. They get IBC "amnesia." In this episode, we discuss how to self-diagnose IBC amnesia and provide some reminders and reassurance as to the strategy and process. Have a listen!
Whether you're new to Infinite Banking or perhaps you started years ago, it's crucial you avoid the onset of IBC amnesia. In this episode we discuss how to self-diagnose if you've developed IBC amnesia and the steps to follow so you can take advantage of the capital you're creating in your IBC policies to build your wealth.
We hope you enjoy this episode and if you have questions about getting started with Infinite Banking, please connect with us here.
- Hi everybody, this is John Montoya
- And this is John Perrings.
- We're authorized Infinite Banking practitioners and hosts of the "Fifth Edition." Episode 51. How to avoid IBC amnesia. This episode will be for two types of people. Those who are new to IBC looking to get started and really want to turbocharge their policy or group of policies from day one. The other type of person who will benefit from this episode, will be the person who has started with IBC, but just hasn't gotten it off the ground. Meaning, they've been funding it but they don't know how to go about maximizing the use of their policy or policies.
The idea for this episode really came about through my experience in teaching IBC over the last 15 plus years. And one of the things that I've noticed is that there are the people that really take to IBC and the mission behind it using the cash value to acquire assets, to have liquidity control over your money, and then there are people who come into IBC and it satisfies the guaranteed legacy for their family, and it does provide them with a rainy day fund but they don't fully maximize all the potential uses of their IBC policies. And what happens because they're not actively practicing IBC, is that IBC amnesia sets in.
I think it's really important for anyone getting started with IBC, you have to do the basic stuff first. And we'll talk about what those basic things are, but John, what is your experience with IBC amnesia with your clients?
- For me, it's like, it's maybe not the questions but it's maybe the principles that they forget. If you're doing this and you're not like a financial professional or like an authorized IBC practitioner, it's of course okay that you're not going to remember everything, right? There's a lot of nuances especially to have life insurance policies work and those types of things, but very frequently people seem to have forgotten why they started doing IBC in the first place.
I will get questions like, well, what's the value of me making this premium payment? Like, why would I even wanna do that? Why would I wanna make this PUA payment? Or why would I want to continue to make premium payments for a long period of time and build up cash value? Because, in order for me to get the money now I'll have a loan. And it's like, well yeah, that's how IBC kind of works. It's sort of like we're creating a place to more strategically store cash, somewhere that allows you to have leverage on that cash. It's the leverage that is creating a lot of the value from a banking perspective, and you're storing cash in a place that's earning 40 times what it's gonna earn in a typical bank account.
All those details aside, it's like, well, sometimes I feel like people need to reread the book. So I've been directing people to reread "Becoming Your Own Banker" so that they can kind of sync back up with the principles of Infinite Banking. Re remember to, why they started doing this in the first place.
- Yeah, I think it's so important to recapture your own mission statement, if you will, with IBC. What prompted you to get started? You started a policy, but then it got away from you. And I think reading Nelson's book, is a number one. You have to read the source material.
And going beyond that, you have your policies in place. The next step that you should be taking is taking a policy loan. Even if you don't have an opportunity that you can seize upon, you can at least learn the process. Do I call the insurance company? Do I call my advisor to request a loan? Can I go online to request a loan? And then from there, how quickly will I receive those funds to my traditional bank account? Is it three to five days? Is the insurance company going to snail mail a check out to me, you're gonna learn the process. And once you receive that check or maybe it's deposited directly into your account, then you can repay it. And you'll discover the process of repaying that policy loan, and then guess what? You have that capital restored your policy, and you can do this within the first couple months. In fact, you can do this as quickly as 30 days take your first policy loan. And it's just like learning how to get on a bike and ride for the first time. It becomes second nature to you but you have to be proactive.
Just getting started with the policy and capitalizing, those are two very good things, but you have to take that very next step, take a test policy loan. Figure out what the process is for you, with the insurance company, how quickly can you get those funds, and then repay it. You can rinse and repeat, over and over and over again. But if you get these two things down, you read the source material and you come back to it, it's only 90 pages. You can read a chapter within a couple minutes and then you can put it down. Think about the lesson that Nelson was trying to teach. If you have questions, that's where John and I are here to help answer. We love answering questions that you have specifically about Nelson's source material, and going deeper into IBC and how to best practice it, but, you have to be willing to take those steps.
- And I think, you talking about the process is, that's a huge thing because, Infinite Banking is a process, it's not a product, right? So the life insurance is there because it provides things that other financial tools cannot provide. And so it's an optimal product for Infinite Banking. The truth is they say this in the course material, to become a authorized practitioner, life insurance is not actually required to do Infinite Banking. Just understand that upfront. So when people ask questions about the life insurance policy, sometimes those questions are coming from a place where they're missing the process. And it's super important to become your own banker.
So I think, this kind of hit me, I was listening to the "Banking With Life" guys, and they made this awesome point that the book is called "Becoming Your Own Banker" not "Create This Bank For Me." And so there's a level of responsibility that if you're setting up your own banking system, you have to understand what you're doing. It's a little bit of like, are you actually looking into what is happening and the principles behind this. Are you reminding yourself of it? Because, for me, a lot of my clients are a little bit newer, right? And so, some of them are still in that sort of capitalization period. And so, it's understandable that, maybe they're paying a premium and they're not seeing all the cash value become instantly available because they're still in the capitalization phase. And so, it's understandable to kinda be like, oh man, why am I doing this again? But go, just reread the book. It's very simple or listen to our podcast, very simple. These are not things that should cause you concern. And if they are, don't be afraid to have an actual talk with your advisor about, how these principles are working in your life. It's okay to forget, right?
But, don't try to get simple answers, yes and no answers over text, when everything is subjective, all things are not equal with life insurance. This is a very special product that's built around actuarial math, and so, everything is a trade off, right? And so we have to understand all the other things that are going on in your life to be able to provide reasonable advice which is by the way, we get licensed for, that's what we get paid for. So it's not really a good thing for us to try to answer subjective questions over email that we don't understand the context around.
- I think what it boils down to is like anything repetition. And with Nelson's book it's a book that you should read more than once. When practicing IBC, you should take policy loans. Not just do it once, and then forget about it. The more you practice IBC, I can't guarantee you, it, but I know from my own practice and from working with clients for a very long time now, those that practice IBC, have seen their net worth increase over the past decade. Because they are actively deploying their capital like a business owner would. And one of the things that we've talked about in previous episodes is having the proper mindset. Having a business owner mindset versus an employee mindset. What is that exactly?
An employee mindset, is where you stash cash in a 401 and you set it, forget it, and you hope that it's there when you need it, 20, 30, 40 years down the line. The IBC approach, we stash cash, we capitalize, and then we deploy it. We deploy it where we need to in our lives. And the best use case for me, I always think it's to grow my net worth to acquire other assets. That's a business owner mentality and it requires repetition of taking these policy loans knowing what we're gonna do with them, repaying, recapitalizing, and rinse and repeat. It's not overly complicated once you get the basics down but you have to practice. And the best use case for me I always think it's to grow my net worth to acquire other assets. That's a business owner mentality and it requires repetition of taking these policy loans knowing what we're gonna do with them, repaying, recapitalizing, and rinse and repeat. It's not overly complicated once you get the basics down but you have to practice.
- We're talking about practice, man. We're talking about practice. We're talking about practice. We ain't talking about the game. We're talking about practice, man.
- But have a little something that you're gonna do with that policy loan. Because what you're doing with the cash value matters, right? Like if you're just taking a policy loan and then sitting on the cash, that may not be the best use, the most optimal use for a policy loan, because remember policy loans you pay interest on it, right? So, is that money gonna be working for you and getting you an arbitrage in some way, shape or form, whether it's an interest rate arbitrage, whether it's a life arbitrage, right? I know a lot of people that have used their cash value myself included, to start whole new careers. That's how I got into this business and how I survived for the first couple of years. I used policy loan money. So, there's different types of arbitrage and they're not always interest rate arbitrage.
Having those things that you're trying to do, like you gotta rethink your thinking, is really one of Nelson Nash's quotes, rethink your thinking, in terms of like, how can you use this amazing tool that you have 100% control of, right? Unlike a line of credit with the bank, unlike a home equity line of credit, which is with the bank, like all these other things like you have very little control over what's happening with those contracts. What could you do in your life that could improve your life using this asset that you have 100% control over.
- Great points. I'd like to shift gears just a little bit to talk about another type of amnesia. And this refers to the amnesia of forgetting who the experts are. Because it's so common to turn on the mainstream news, the mainstream financial press, and you're bombarded with this messaging that essentially conditions you to accept information out there and news that's predicated towards building wealth through the markets, through Wall Street 401 s. And the whole industry is basically set up to constantly ingrain and condition you to chase rate of return.
And part of the reason is because we have a monetary system that doesn't maintain its value. It does better than most other monetary systems in the world, but it's a slow bleed. And it forces us into this time preference where we constantly have to be chasing rate of return, because if we're standing still we're never gonna get ahead. And in order to stay ahead and make our money work for us, what do we have to do? We're told that we have to save it in the riskiest places possible. We come to accept it as normal.
There's an amnesia effect that goes on there because, when you get conditioned to accept this, you believe it to be true. And then all of a sudden, you come across IBC and it's logical. It actually makes sense. You have a contract where there are written rules and you can abide by them. Whereas in this other world that everybody else lives in I'll call it the Wall Street world, where you're chasing a rate of return, there is no system of rules that you can get your mind around. That you can firmly grasp and know what you're dealing with. The amnesia effect takes hold because, you're constantly bombarded with it. And then you forget about the logical thing that you have in your back pocket. If you've started with IBC, you forget that this actually works and you know what the rules are, and you kind of have this cheat code with IBC to get around this system, that really is if you can actually view it from the outside you'll see that there is no solution inside the system. You have to get outside of the system. And that's what IBC it's an alternative financial system that exists outside of the Wall Street paradigm. And unfortunately for just about everyone out there, all it takes is going on Yahoo Finance or listening to the Talking Heads, and you forget the fact that they don't actually know what the heck they're talking about. And the more that you can study up on IBC and practice IBC and realize you've got a solution that can allow you to control your wealth and build it, transfer it, you've got something pretty special.
- Yeah, and it's such a good point. I'm glad you brought that up. I wasn't even really thinking about the amnesia from that level.
It's difficult when the only other things you see out there, are risk based type of investing. And it's all in that bucket. The other amnesia that people have, people forgot about 2008. They forgot about 2000. They're following a lot of these people that just talk about getting average rates of return or they're following the real estate experts who have also forgotten that, we're doing all of the same things that we were doing on the run up to 2008, but even more.
A lot of the amnesia comes from these folks who are like seeing all these real estate people talk about real estate, real estate, real estate and all the benefits of real estate, and it's causing them to forget why they're strategically capitalizing in the first place. Now they're in these situations where they owe a bunch of money to the banks, and if things don't work out the way that they plan then it's gonna be another 2008 all over again for all these different individuals.
To John Montoya's point, all we're doing here is creating a place to capitalize that is untouched by the prevailing winds in the market out there. What could possibly be wrong with that? Right? So it's like, and if you don't do it now, like there's this frenzy of people that want to just kinda put the cart before the horse a little bit, and they're so worried about getting a rate of return, they wanna skip the capitalization phase, the strategic capitalization phase, which is what we're doing with Infinite Banking, they can never find the right time to do it. They're like, well, once this deal's done then I'll look into this. Well, guess what? There's always going to be a deal, right? And so if you don't start capitalizing, it'll never happen. You're just gonna keep kicking the can down the road because you're, so focused on getting that immediate return that you're missing the long range thinking of capitalizing first and doing it in a way that's strategic, that allows you to create multiple rates of return off of that same dollar but it just takes a little bit longer to do it. I think that's another big amnesia point that people are struggling with right now.
- So let's sum up how people can be successful and avoid IBC amnesia. We talked about getting a copy of Nelson's book. Not just reading it once, but reading it multiple times. It really should be, what I've recommended to my clients, look, on your anniversary date, pull that copy of "Becoming Your Own Banker" off the shelf, pull it out, put it on your nightstand, and read a chapter. Read a couple chapters, here and there, but revisit it. Because you're gonna glean something from that new reading that maybe you missed the first time or you think about things in a different way. Second thing, take out a policy loan. If it's been years, since you've taken out a policy loan, then you need to get back on that bike and figure out what the process is. We can help you out with that. We can help answer some questions but you gotta be willing to take some action on your part. And to John Perrings' point, take a look at your financial situation to see where the opportunities are, where you can seize upon an area where you can utilize a policy loan either to tackle some debt, or maybe there's an opportunity where an asset is below prevailing market prices, and you can take advantage of that. The third thing, what did we just talk about? We talked about identifying the experts. Who are the experts when it comes to Infinite Banking? It's not the Talking Heads, it's actually the people who are committing their livelihoods to teaching what IBC is all about and how to implement it. And those are your IBC authorized practitioners. It's a Nelson Nash Institute.
- And I'll just say it, re listen to this podcast. Part of what we're doing here is trying our best to clarify and reinforce the message that was from the book "Becoming Your Own Banker." I mean, it's a very simple message, and it's all about capitalizing. And never be afraid to pay a premium and also reinforce what John Montoya just said which is Nelson talks about the golden rule. "He who has the gold, makes the rules." When you have money, opportunities have a way of finding you. And that's when you find the real value out there.
- So John, where's the best opportunity for our listeners to find us?
- Yeah, head over to the fifthedition.com and right there, you can schedule a free, no obligation 30 minute consultation with us and you can also get a discount, 50% discount to our online course, Whole Life Fundamentals, where a lot of your questions can be answered, if you're the type of person that just likes to do a lot of research before you talk to somebody, that's what that's for. And leave us a review, if you can. It's a good place to do it.
- Awesome. Well, everyone, thank you for listening and we'll catch you on the next episode.
- Thanks everybody.