Nov. 20, 2021

What Is Different About the New Whole Life Products?

What Is Different About the New Whole Life Products?

At the end of last year, December 2020, Congress passed the Consolidated Appropriations Act. In addition to its many stimulus measures, it contained a provision that affects permanent life insurance products like the ones we endorse for Infinite Banking.

Has anything changed or do the principles of IBC remain the same? Take a listen and find out.

And remember the best time to start IBC is 20 years ago but the second best time is today!

To schedule a consultation to start your Infinite Banking journey, please visit us at

And if you haven’t yet read it, be sure to pick up a copy of Becoming Your Own Banker directly from the Nelson Nash Institute.

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- Hi everybody, this is John Montoya.

- And this is John Perrings.

- We're authorized Infinite Banking® practitioners and hosts of The Fifth Edition.

- Episode number 41, in this episode, we're going to talk about what is different about the new whole life products that are coming out by all the carriers and we're going to discuss how that affects the Infinite Banking Concept® and if you're not familiar with what I'm talking about regarding new whole life products. At the end of last year in December 2020, Congress passed the Consolidated Appropriations Act and in addition to it's many stimulus measures, it contained a provision that affects permanent life insurance products like the one that we endorse for the Infinite Banking Concept, which is whole life insurance. Effectively, regulators are lowering the threshold from the current 4% guaranteed rate on invested premiums into permanent life insurance products to help alleviate the pressure that life insurance companies are facing in the current ultra-low interest rate environment. And up until now, we've kind of held off speculating how and what would, you know, what changes would take place with regards to Infinite Banking and how whole life policies are designed but now we've kind of reached the point where life insurance companies are actually rolling out their new products based on the new interest rates and they're discontinuing their current products by December 31st of this year 2021. So we thought now's the right time to discuss this topic and John Montoya is gonna kick this discussion off with a little talk on what he's prepared.

- Yeah so what I have for us today is an email that an executive from one of the companies that we do partner with and I thought it was a pretty profound message that he put together, so I wanna give him full credit, Marty Smith with Security Mutual Life. And just a quick note here, what we'll have some of our own commentary at the end of this short letter, but also to, if you've been listening to the show for a while, you'll notice that we never discuss specific life insurance companies. This is because we are agnostic and we don't believe that any one company is better for IBC than another. It's all about recommended fit between client and life insurance company. That said, we do feel that Marty Smith's message is powerful and effectively speaks to the entire community of Infinite Banking advisors and clientele. So here we go, here's the message from Marty. So what's different about the new whole life products. At first, I was thinking of preparing a handout that compares side-by-side the old against the new but as I was running the numbers, I saw that the premiums were higher but that the differences were not that dramatic. With the new lower basis of computation rate, the premiums increased about 5%. After considering these factors, I thought this, what I've written now might be the most important message to share with you right now. So what do these new product changes mean to you, your clients and your business? If you don't mind, lemme ask you these simple questions. Do you, your clients or the life insurance company control interest rates? No. Do you, your clients or the life insurance company control what happens in the economy? No. So what do you and your clients actually control. You and your clients control your own behavior. If that's the case, lemme ask you three more questions about what has not changed. Do your clients still need to protect their families and their businesses? Yes, absolutely. And that permanent protection which they need and must own in order to trigger a payout that's guaranteed to happen comes from dividend-paying cash value whole life insurance. Do your clients still need to accumulate deferred assets to supplement their retirement income? Yes, for sure. And that accumulation of deferred assets on a tax-favored basis which can be accessed tax free must still take place using one of the best financial products ever created for that purpose, dividend-paying cash value whole life insurance. Do your clients still need access to current assets to pay for their major purchases, including cars, homes, education, business, equipment, and inventory and investments? Yes, they need cash every day. And that access to current cash and current assets which again can be accessed tax free must still take place using dividend-paying cash value whole life insurance. So what difference do these slight interest rate changes make to our whole life insurance products? It's as simple as this, in order to get the same result as before, when interest rates go down, the solution is to put more capital in, in order to get the same result as before when interest rates go up, the solution is to put less capital in. Obviously we are living in crazy, stressful and unpredictable economic times, dividend-paying cash value whole life insurance is the antidote to this toxicity. You have the same solution. You have the comforting answer. You have the secure and certain antidote to these dangerous economic times. This new series of whole life products works great. Now, for those who want to understand it a bit better, here's what you should know. Generally speaking, the difference between the old and new is pretty simple. The basis of computation rate for the old series was 4%, the basis of computation rate for the new series is 3.75%. What is the effect of the lower basis of computation rate on premiums, dividends, cash values, death benefits, cumulative premium breakeven points and MEC limits. The new lower basis of computation rate in general has these effects. when solving for the same death benefit, the premiums have increased around 5%. The dividends are slightly lower, the cash values are slightly lower. The growth and death benefits are slightly lower. The cumulative premium breakeven for both the guaranteed and the non-guaranteed cash values occurs a year or two later. The MEC premiums are slightly higher. Again, what do these new changes mean to your clients and your business? As my mentor and friend, the wise and wonderful Nelson Nash would say, it really means nothing. What would have that meant to Nelson? What does that mean to me? That's simple, who is ultimately in control of your whole life policy. Who controls how it's designed? You do. Who controls how it's funded? You do. Who controls how it's used? Again you do. You as the policy owner control all these aspects. If that's the case, dividend-paying cash value whole life insurance is going to work whether interest rates go up, go down or stay the same. Thanks as always Marty Smith. So there we go, John Montoya here, if you were thinking about getting started with IBC before these product changes went into effect, really the best time to get started was 20 years ago. I say that tongue in cheek because I can't tell you how many conversations I have with people every single year for as long as I've been doing this and it's the same thing I hear over and over again. I wish I would have got started 20 years ago. If you did that, great. If you happen to miss the cut-off on the existing product, well that's okay. The new products will still work just fine for IBC. Remember IBC is about capital formation and being able to have control and access to your money. It's not about chasing cash value returns. The new whole life products will continue to work for IBC just as prior additions worked for IBC, so all is good. John, what are your thoughts?

- I think that letter is really well said and I love how he mentioned mentions Nelson Nash and I think what you just said is super important. The best time to have started this was 20 years ago, you know, some people are kind of talking about, well, should I try to start a policy now before the changes go into effect or should I try to, should I wait until the new products come out? So the best time to start is 20 years ago. The second best time is today and if you're in the market for life insurance, there's really never any reason to wait or put it off because the one thing is true, we never get any younger and so the best time to implement something is today if you haven't already done it. So regarding these changes, I think the big takeaway is that you can pay more premium, right? So remember, all these calculations are actuarial calculations, they're not straight interest rate calculations. So the interest rates kind of doing something different when it comes to whole life insurance. When it comes to designing life insurance for Infinite Banking, I kind of explain it as three primary forces that we're working with. We're working with the MEC limit, we're working with the total underwriting limit, which is the amount of death benefit the life insurance companies will allow you to buy which is gonna be based on your wealth and your health and then there's the premium amount, right? And so the actuarial calculations with this new lower basis of computation allows for a higher ratio of premium to MEC limits and it allows for a higher ratio of premium to underwriting limit. A lot of people when they see that the basis, the computation basis interest rate goes down, they're looking at that from through the incorrect lens where they say, okay, well, the growth is going down is true but the other side of this is you can pay more premium and the biggest cash value policy will be the policy that you can pay the highest premiums for the longest amount of time, that'll be the highest cash value because it will be the highest death benefit. So what was true before or I should say this, what I just said was true before and it's true now, I don't see a whole lot of people making a big deal out of the, some of these are called the 7,702 changes, but you know, it is definitely a discussion out there and I think the end result, just as the letter you read said that Nelson would say is it doesn't matter, get started, take control over the banking function in your life and everything will be a lot better for you.

- Amen, that was well said, thank you John.

- Well I think this was a pretty short and sweet episode like we've been saying the whole time, it's really not a big deal, everything is gonna continue working like it has been for two centuries and you know, it's just, don't get caught up in the noise like we always said, don't get caught up in any noise out there that where people are trying to talk about, you know, the new product versus the old product, it's still a really high performing cash asset and taking control of the banking function as a higher performing activity where all of a sudden, the world opens up to you when you have cash.

- So with what you're saying, it makes me think of one huge takeaway that I always keep in mind for IBC and it's this, it's something that Nelson said that when you start a whole life policy, when you open a whole life policy, you're essentially starting a business from scratch, that's really the perspective that every single person coming into IBC should have because Nelson would say, the business of banking is the most important business in the world and if you're not owning a portion of that money that exists worldwide to become your own banker then you're gonna rely on others, that traditional banks that do it for you. So it's best to do what you're doing for your income, but also you want to be in the banking business. So new product, old product, it doesn't matter. How you think matters and you need to get into the business of banking 'cause if you don't, you'll always be reliant on third parties for that banking function.

- Okay, well I think that wraps up episode 41, all about the new whole life products that are coming out and if you have any questions and you want to understand how this could affect you personally, you can head over to our brand new website, which we just updated, You can contact us there, you can schedule an appointment if you'd like and as part of the new launch, I'd like to announce that we also have what we've developed as an entire course on whole life insurance fundamentals, so if you're the type of person that likes to do a lot of research and you like learning online, we have an entire soup to nuts course that has everything you need to know about whole life insurance to better talk to your advisor. For all the listeners out there, right on the front page, you can get a 50% discount to the course, If you wanna head over to and as usual, we really appreciate you listening and we're happy to be the ones to help you understand the Infinite Banking Concept all the much better.

- All right, thank you John, thank you everyone for listening, take care.