Before You Borrow Against Your Whole Life Insurance - Watch This!

[@BetterWealth]

*Want to Properly Create an Infinite Banking Policy in 2024? Talk with our Life Insurance Experts* - www.betterwealth.com/clickhere-life-insurance

[@DenzelNapoleonRodriguez]

I can honestly say I’m someone that tested the idea of running not all my bills but a majority of bills through a policy for a few years and after reviewing it in detail it isn’t efficient long term. I wouldn’t recommend it for the vast majority of people because they will mess it up. I did it for myself as an experiment because that is what I learned from other infinite banking practitioners and it just doesn’t work that well. There is no positive arbitrage when you look at it long term. You have to have enough cashflow to pay the interest on the loans each year just to have a break even and even then you are probably negative especially with any new policy. Great video love the work you both do helps me get better

[@HomeSubscription-ey4yz]

Denzel you are right it doesn't have a positive arbitrage and it's not supposed to what it's meant to do is capture the discount on the cost and applied to the following years premium.

[@DenzelNapoleonRodriguez]

@@HomeSubscription-ey4yz yeah and I did that too personally where I used expenses to max fund my policy then borrow out and pay the bill. You could make an argument there that would be beneficial but you are just buying time at that point which is not bad it’s just not a positive arbitrage and that is something that should be talked about more

[@MiamiDre]

I actually never agreed with running all expenses through because of how long it may take to get the loan customer experience is a thing too the client needs convenience. One thing i will say about this video is i agree with everything but i think there is a nuance to what is the cheaper debt sometimes we only talk arbitrage instead of the difference on the class of interest and the time frame. A slightly higher interest rate on a policy loan that charges interest once a year would automatically make that debt cheaper than the car loan that has a month to month charge. I agree I'd want to spend the money on an asset but there is an argument to be made that 5.5% annual is better than 4.25% charged monthly am I missing something?

[@DenzelNapoleonRodriguez]

@@MiamiDre you are correct regarding car loan rate versus a policy loan rate. Just because the rate is smaller doesn’t mean you are saving money. If that car loan at 4.25% is amortized you are definitely better off at a 5.5% policy loan rate. The car loan would have to be over 2% lower for me to consider financing outside of the policy. In today’s environment it makes a lot of sense to finance a car purchase through a policy. I’m getting ready to do that in the new year when I buy out my car lease.

[@MiamiDre]

@@DenzelNapoleonRodriguez Thanks for confirming I thought I was tripping 😂. Cause the way I've always felt about infinite banking is first based on debt. I think sometimes we hear words like arbitrage and we may think solely inside of the policy instead of saying I'd rather pay 3 annual payment than 36 monthly payments. I've always believed this was important for the average consumer cause ei started off doing debt consolidation insurance policies and it works great. Sometimes money saved is money made. And if we isolate the loan from a how much and I'm making on the money in dividend versus IRR we might miss that the insurance policy is the greatest debt consolidation tool possible and then we can focus on investment which would make the arbitrage conversation much more pertinent.

[@rcruz401]

From $59k to $44k for Jeep Gladiator. Holy smokes! I will be getting you to do my negotiations at the dealership next time I go😊

[@evazquez595]

I’d love to see a video with Caleb, Chris K., and Chris Naugle as there seems to be slight differences in principles and practices on this topic.

[@BetterWealth]

Let’s make it happen! It would be a blast to jam with both Chris’s!

[@Theinfiniteinvestor]

I think the missing component here is the life insurance conversation. The life insurance component is massive. Maxing out the PUA riders is the goal for many of us. For control, access etc. If I never pay back my loans but I’ve created 20 million in death benefit my beneficiaries are not gonna say “hey dad thanks for leaving me 20 million but it should have been 21 million. Why didn’t you pay back your loans” 😂😂

[@BetterWealth]

100% agree! The death benefit is so key even when alive and of course when you pass away! I really appreciate this comment 🙏

[@jjsoccer1010]

Value of Control, Efficiency, and understanding EVA (Opportunity Cost), are the main reasons I listen to your channel. You both add great value in these specific areas. 👍 2.0

[@dbiggybats]

I haven't heard you guys mention the types of interest in this discussion. Amortized front loaded bank loans are never 2-5% because, for example, people tend to trade in their vehicles which leaves them even more in debt. Simple interest from a policy loan ensures you're not overpaying for access to capital. Also, when you pay off a policy loan you now have access to your capital again while if you were to take out a bank loan for a vehicle, you're left with just the vehicle and depreciation. Thoughts?

[@BetterWealth]

Have lots of thoughts on this comment. Will probably make video about this in the new year. Would you be open to coming on and discuss this with me in a video? I think there would be a lot of benefits unpacking this 😊.

[@dbiggybats]

@@BetterWealth sure happy to help folks learn as much as possible

[@wleight1]

Was just about to make a comment on this then read the above. Believe a discussion on interest rates is key to understanding the IBC. Nelson Nash taught that the focus should be on the total volume of interest paid on a particular loan, rather than the rate.

[@timothyboyle3040]

I personally use my CV for lifestyle, business cash flow needs, and purchasing cash flowing assets. I would love to get to a point where premium=income (that might take most of my life though), but I do think this is only possible for people who are expecting windfalls that are large enough to refill their policies. It won’t work without windfalls.

[@MarcusJFloyd]

Funny you asked about the speed. I've been heavily researching IBC and at least have the speed on 1.5x depending on how fast the people are talking. Some people I can do 2x

[@BetterWealth]

I prefer watching everything at 2x myself!

[@thomassittinger8150]

Hypothetical: I can borrow $500k from the policy at 5%. The policy compounds at 4%. I purchase a $500k house. The existing mortgage rate is 7%. Would using the policy instead of the mortgage be the same as creating my own mortgage at 1%? I understand that the policy will still compound, but the net effect would be like the account staying at $500k where the 4% compounding offsets the 5% cost of capital

[@BetterWealth]

Would you be willing to ask this live? The reason I ask is this is a common question we get. The short answer is financially you could justify this move but I would highly encourage people not to do it. The policy growth is happening regardless whether you borrow or not so I really see it as “making” 7%. For some this is a win for others it doesn’t make sense to tie up capital to offset a 7% 30 your mortgage. I would love to chat with you or someone on this subject as a deeper dive on our channel if this interest you or anyone reading this comment 😊

[@MikeRivers23]

I’m definitely interested in diving in more been following along you, Chris k, naugle and Devin for awhile now

[@leeposton1664]

Yeah, I would be interesting hearing discussion. Because when you talk about tying up the capital for 30 years…… I would actually see this strategy getting mortgage paid off way sooner than 30 years because you’re not paying the first seven year front heavy interest part of the scam mortgage loan AND (see what I did there), using velocity banking, running your money back through the policy? It would get paid down much faster from that standpoint as well. But I also understand about the Home itself being bad investment due to not cash flowing. But some people do want that. And then there’s an opportunity cost of tying up the $500,000 when it could be deployed making more than 7%.

[@ashleytaylor994]

Why can’t we pay bills with our policy?

[@mashacamashaca877]

Interest you pay when you borrow to invest tax-neutral? As in you can claim it when you file income taxes

[@eli_the_crypto_guy]

Wrong, a car loan is amortized , you are way better off using your policy loan than an amortized loan. Paying off debt with policy is also the way to go, if you can save 50% in interest you essentially just earned 50%, way better than stock market or using it for private lending at 12-14%.

[@HomeSubscription-ey4yz]

Great video, However, your philosophies are different from Nelson Nash's philosophy. He said in his book that your income should equal your premiums. Not just increase your savings every year. Money is not Math, and Math is not money. Money is a commodity, and it has eroding properties. Math is an abstract and doesn't have eroding properties.

[@jeffwakefield4842]

I was going to say the same thing. He said they didn’t use banks for anything…or at least I thought so.

[@BetterWealth]

Would be you open to discussing this in a video with me? I would love to chat about income equaling premiums and the pros and cons with this.

[@BetterWealth]

@@jeffwakefield4842 Nelson did not use banks for loans but still used bank accounts for commerce.

[@HomeSubscription-ey4yz]

@BetterWealth sure, I am open to discuss income equaling premiums with you.

[@HomeSubscription-ey4yz]

@@BetterWealth sure

[@franklehane8843]

"Sometimes math just doesn't matter." ~ key takeaway. What are the policyowner's emotional perspectives?

[@BetterWealth]

Love the take away!

[@karlkeith2740]

This is an excellent video. I’m a Canadian advisor and I love using whole life as a savings vehicle but have struggled with the IB concept. Thank you very much for this video.

[@BetterWealth]

Glad it was helpful!

[@FBC_USA]

I understand the math when it comes to borrowing and returning; it makes sense if your return is greater than the cost to borrow, a positive spread. However, if your cost is greater than the return, you could use cash flow to accelerate the payments on the borrowed funds. Say the cost to borrow is 10% APR and the asset yields 5% APY--a 2-1 negative spread of -5%. Using cash flow from existing sources (income, asstes) and the new source from the asset purchased, you could effectively pay off this higher cost loan quickly, lessening your exposure to higher interest. I wouldn't be as quick to say anyone is an idiot for taking a negative spread; you can still make it profitable... If you borrowed $10,000 at 10% APR for a full year, the cost is simply $1,000. However, if you paid it all off at month seven, then that's just $583 (7/12 x $1,000). I think a better way to base decisions is to look at the total dollar cost, not just percentages, and build a plan to lessen the total cost by reducing exposure to the higher interest rate.

[@MrWessed]

There is a cost on everything. If your main goal is to increase your business, are you sacrificing your lifestyle and worrying about your next deal over worrying about enjoyment of life?

[@CMMWest]

Caleb, love this content! So helpful… question: in the example where he uses the cash in his policy to get a better cash price deal on the jeep… then he says he refinances after he gets the jeep to repay his policy loan. Is that refi just getting an auto loan at a local bank?

[@BetterWealth]

Yes! Once you lock in the cheapest price on the car then it’s a function of finding the most efficient way to pay for that long term. When interest rates were super low you could have negotiated with car dealers with cash, but the car and then refinance with the bank after. Let me know if that makes sense?

[@SilverBlack831]

​@@BetterWealthI dont understand how the negotiations went. What made them come down in price? I don't understand what leverage you had by having the cash

[@rich_with_rich]

1.75 for me, i can't even do regular speed anymore. i'll be working with ascendant in Canada, i believe you been on there podcast, they seem to finance most things through their policies, whats your thoughts on that?

[@mcr7379]

2x

[@peterlynch599]

The guys at “MONEY MULTIPLIER” are probably getting triggered right now 😂😂

[@VaraFusion]

Excited to hear part two! Good conversation

[@BetterWealth]

Make sure to turn on the bell notification so you don't miss it :)

[@peterlynch599]

Auto focus sucks on this video. That said, simply use the policy as an opportunity fund. That freaking simple.

[@BetterWealth]

Thanks for camera feedback. Yes opportunity fund concept is simple and powerful.

[@peterlynch599]

@@BetterWealth 👊

[@cwall216]

Great discussion

[@BetterWealth]

Thanks for watching bro!

[@FunkyFaulc]

Well done my gents! 1.5 for me on this one :)

[@BetterWealth]

Love it man!

[@cwall216]

1.5 for me

[@BetterWealth]

I just watched this whole thing at 2X 😊

[@diniguez17]

I listen at 1.25

[@diniguez17]

Any faster and I start not understanding concepts.

[@prashanthsrikanthan]

I listen at 1.25

[@BetterWealth]

Speed up function is a game changer!