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This is The #1 Objection with Infinite Banking & Whole Life! | IBC Global - YouTube
Channel: Insurance Business Concepts (IBC) Global
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So today we are going to address
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a very debated topic
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around cash value life insurance
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which is how to maximize the cash value
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but specifically
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when it has to do with infinite banking.
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Our company IBC Global
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represents insurance business concepts
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as we discuss
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a variety of different concepts
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in the insurance business
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specifically referring to
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whole life insurance
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and how to maximize the cash value
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whether the concept
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is cash accumulation
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retirement planning
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business planning
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being SERPs
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non-qualified deferred comp plans
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whatever it might be
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we go over a number of concepts
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specifically around
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whole life insurance
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and the idea of the banking concept
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is one of them.
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Now with that said
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around the idea of the banking concept
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a heavily debated topic
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and where so many
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so many consumers
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have vented so much frustration
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just over the years
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is around the cash value
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but the number one objection
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that I have heard for years is
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I am interested
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in the maximum cash value
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I do not care about the death benefit
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this is exactly what consumers express
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how do I maximize the cash value?
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And then in the infinite banking world
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what people often hear is
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well this isn't about
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maximum cash value
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this is not about maximizing
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the internal rate of return
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it's about much more
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it's about taking control
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of the banking function in your life
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and you can use a dividend-paying
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whole life insurance policy to do that
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because you can.
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But the thing is
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when it comes to a high cash value
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life insurance policy
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if I want to practice
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the banking function or not
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why not maximize the cash value first?
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That has always been our
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number one go-to
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regardless of what concept
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someone is practicing
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how do I maximize the cash value
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just like banks do
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just like corporations do
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just like the wealthy do?
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Why do I have to have
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something different
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if I want to practice this?
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So not about the cash value
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I should use a small
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to medium-sized company
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with a little bit higher base premium
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than I could typically go
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so if I can lower the base premium
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which reduces
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or I'm sorry
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the higher the base premium is
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that reduces the cash value upfront
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commits me to a larger amount
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as a consumer
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and it does not maximize
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the cash value.
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So if my goal is maximum cash value
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and I'm being recommended to go
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with a small to medium-sized company
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that has not provided
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any proof of performance in the past
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and go with a higher base premium
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which sacrifices upfront cash value
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no matter how you spin it
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the translation
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being in the industry is this
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don't look at the cash value
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because it impacts my commission.
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Speaking completely straight
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that is my opinion on it
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whether you like my opinion or not
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that's my opinion on it
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but at the end of the day
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when you look at cash value
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life insurance products
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regardless of what your goal is
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with the concept
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what concepts you want to practice
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small to medium-sized companies
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high-based premiums
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do not give you maximum cash value
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when you look at the data
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which if you've watched
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any of our videos you know that.
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So here's my encouragement
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before we move on to some data
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is anytime you're interested
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in a whole life insurance policy
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specifically for maximum cash value
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you've got to remove this.
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Our company
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insurance business concepts
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works with engineers
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I.T professionals
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data analysts
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more than anyone else
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very technical minded individuals
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when we work with those individuals
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what I've found is
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if you're going to share a story
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or something with them
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they appreciate it
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but they don't care
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they're very data-driven
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what do the numbers look like
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is everything optimized
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and then they're going to make their decision
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based on the numbers
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and this is often why engineers
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are very good at what they do
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they're very focused on the transaction
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making sure things are
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systematically in place
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and I'm not going to
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get into what an engineer does
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because they can explain it
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better than me
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they don't put emotion
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into their decision-making process
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it's all factual it's data.
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So whenever you're looking at
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a whole life insurance policy
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designed for maximum cash value
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my encouragement
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would be to do the exact same thing
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always dig into it
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remove emotion from the decision
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when it comes to numbers
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because at the end of the day
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it is your money going into the product
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you have to be careful here.
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Getting into some data
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when we work with banks
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so our largest client is a bank
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there between $700,000,000
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to $800,000,000 in assets
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that's the size of their bank
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not mega-bank
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like Bank of America or anything like that
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but when I first had the privilege
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to meet with them to really present
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high cash value life insurance
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as a BOLI [Bank-Owned Life Insurance] product
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I met with the CFO
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and the examiner there.
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So if you don't know what an examiner is
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very very technical individual
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his name's Mark
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he's a really nice guy
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but with numbers
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like you're not going to pull anything over him
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I don't care who you are
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it's not going to happen
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but you've got to know your stuff
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going in there.
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If I go in there
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and try to use some kind of pitch
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as far as using a
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small to medium-sized company
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or go with a higher base premium
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because you'll have more money long term
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I'm going to get thrown out
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of that board room so quickly
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they're going to go with the competitor
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they're not going to do it
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they're not
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like it's not going to happen
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I know that going into it
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everyone knows it too.
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But with these guys
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they have maximum cash value upfront
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yet over here
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we hear and see different things
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like come on
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like if we want to copy what the wealthy
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and corporations are doing
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see exactly what they do
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and then emulate it
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to the closest degree possible.
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Why I say like that
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not exact degree
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or not copied exact
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is you and I individuals
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cannot acquire what banks have
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bank-owned life insurance
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is a different product
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that is available to the general public
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and even small
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to medium-sized businesses.
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When you look at tax
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and estate planning attorneys
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that know cash value life insurance
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in and out
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they know how a policy should be set up
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and they will make that recommendation.
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You know there's a couple we work with
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I admire them very very much
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just they're in business
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they're younger than me
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and I've learned a ton from them
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but when I met with them
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they're interested in cash value life insurance
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they pulled an attorney in
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just to qualify me
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to vet me if you could call it that
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and this attorney
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knew cash value life insurance
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better than most agents I know
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I was extremely impressed
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and she was really defending them
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so that you ever want to hear the story
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at first it was kind of like whoa
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I'm on your side
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but it worked out very very well
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where I actually hired her
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we've had her on some podcasts
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she's one of my good friends
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I like to refer to her as well.
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But she knows how cash value products
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should be set up
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uses it in her international tax planning
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maximum cash value
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try and pull something over
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like it's not going to go well
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like they know what to look for
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they know their stuff inside and out.
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When you look at actuaries
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Scott Witt
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is one of the top actuaries I know
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he knows cash value life insurance
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that is his thing
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he knows it inside out.
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The inside joke with him
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and his fellow actuaries
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when it comes to high cash value
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life insurance policies
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is he would say blended policies
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with term Riders
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minimum premiums
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maximum cash accumulation
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with the actuary's choice.
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He's actually discussed policies
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where he's seen strong
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internal rates of return
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disclose the exact numbers
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you have to reach out to him
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if you actually want to see the numbers
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or hear about them from him
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but he's provided proof of performance
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one of the few people I know
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because we dig into historical performance
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he does as well.
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But here's what
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all 3 of those have in common
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company selection
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performance analysis
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is what they look at
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this is exactly what the wealthy
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exactly what corporations do
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company selection
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performance analysis.
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Specifically what companies
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have a track record of delivering
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the strongest cash values to consumers
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regardless if I want to practice
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the banking concept or not?
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I just want maximum cash value
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that's my goal
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and then I intend to use the policy
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however I intend to use it.
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What companies have delivered
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the strongest cash values?
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MassMutual
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Guardian
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New York Life
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and Northwestern Mutual
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in particular
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when the policies are designed properly
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when they're not designed properly
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it's a different story.
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Performance analysis
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what do these guys look at?
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These guys
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guess where their eyes went straight to?
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What's the guaranteed rates?
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What are the guarantees look like?
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Internal rate of return.
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You know when I met with the bank
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the CFO
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I was actually asking him questions
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because I wanted to see
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how much research he had done
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or what our competitors
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people were up against
[537]
had educated him on
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and I asked him hey
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when you looked at the illustration
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did you notice that the
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internal rate of return
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went down each year?
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Even though the crediting rate
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advertised on the illustration
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was the same that didn't change
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he immediately went
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yeah I did notice that
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like why are the returns
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going down on our money?
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Well the reason why
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is how that BOLI product works
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is you've got an increasing insurance expense
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with a constant rate of return
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associated with it
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so what happens
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is when those expenses come up
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because the returns not going up with it
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they actually gradually come down
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they were always cash positive
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and they were very attracted to it still
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but that was something
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he wanted more information on
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but that's the stuff they look at
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he was interested in that.
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The break-even point
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upfront cash value
[583]
individuals
[584]
wealthy individuals
[585]
wealthy couples
[586]
opportunity cost
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that is what they value
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more than anything else.
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Top companies
[592]
maximum cash value
[594]
like that is where people's interest are
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at the end of the day.
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So we talk about data all the time
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our company IBC Global
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having historical performance
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on cash value life insurance policies
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if you have a policy with us
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you've seen that data
[609]
you have access to the full data
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in our client user package
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now I'm going to touch on some of it.
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So this is actually from a blease report
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which anyone can search right online
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for the full report
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we just took the data here and simplified it
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and I categorized it the way I wanted to
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so we have a 20-year study here
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it's a little dated
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we've got some more
[634]
but this is based on a 45-year-old male
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a $250,000 policy
[638]
it's not an apples-to-apples comparison
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meaning this does not show policies
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where the individual paid
[644]
the same dollar amount in
[646]
with the products designed
[647]
in the exact same way
[649]
which would be
[649]
an apples-to-apples comparison
[651]
but what it does show
[652]
is the actual cash value
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the actual IRR
[657]
the full blease report actually shows
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what was illustrated
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then compared to what actually happened
[662]
but here we go
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what do you notice?
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I'm going to draw a red line here
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and with that red line
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what do you notice above it?
[674]
Company selection.
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Sound familiar?
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There's your internal rates of return
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the only companies I've seen
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consistently deliver
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IRRs of 4% or greater
[687]
have been these 4
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now with that said
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I'm gonna see other companies making moves
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it would be these guys
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just for full transparency
[696]
they've got a good business model
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and it seems like they do know
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what they're doing
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they made a dedicated effort
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toward whole life insurance
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I haven't seen the 4% IRR yet
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but I think that we will in the near future
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for full transparency
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again that's my opinion.
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So there is a historical performance report
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now personally
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I like the independent policies
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side-by-side comparison
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properly designed
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fully transparent.
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So to look at some examples here
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which we've got examples
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from different time periods
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here's a policy issued in 1980
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on a 50-year-old male
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this study here
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was a 10-Pay policy with MassMutual
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is based on actual performance
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on the far right
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you know I should provide
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a little bit more detail to this
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this is available to the public as well
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annual IRR
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and then the dividend interest rate.
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So we always talk about
[751]
the dividend rate being a gross rate
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that's credited after the company's
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insurance expenses
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mortality charges
[757]
all that good stuff
[759]
and this policy
[760]
also happened to live through
[762]
a very attractive dividend
[763]
interest rate period
[765]
with double-digit dividends
[766]
however
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you know what happened
[768]
during that period of time
[770]
interest rates were much higher
[771]
than those dividend interest rates were
[774]
but again this is based on
[775]
the actual cash value performance.
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And this one actually runs
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I've got to update this through 2015
[781]
the IRR through 2015
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was about the average IRR
[786]
that's the annual
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but what it averaged out
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over this period of time was 6.19%
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however as the years have passed
[794]
as we run this study through 2021
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this individual is older now
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he's in his 90s
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the actual IRR
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is closer to 5.6%, 5.7%
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I'm going to run the exact
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but as you grow older that IRR
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will gradually come down
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as it has been
[812]
but has still produced
[814]
a phenomenal cash value.
[816]
Here's a New York Life policy
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where the IRR to date
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through 17 years just over 4%
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and then what we also ran
[826]
was the projections moving forward.
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How we got the 4.07%
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is we took the individual's
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total payments each year
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his total cash value
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based on a statement at the time
[836]
and that's where the 4.07% IRR came from
[840]
but this is the kind of stuff
[842]
that has to be disclosed upfront
[845]
critical
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no one wants to do that though
[847]
because it's the fear of hey
[849]
if it doesn't deliver this
[850]
or if it's a small company
[851]
where I can't get that information
[853]
not saying they don't have it
[854]
so I'm not disparaging small companies
[855]
any way shape or form
[858]
but if we can't get that information
[860]
it's like where is it then?
[861]
Like we need that.
[863]
So let's look at another policy here
[866]
actually let's look at this one
[868]
one more over
[869]
this was a policy
[872]
we put in force right after I got married
[876]
and we've measured
[877]
the performance each year
[878]
this is one of my favorite things to do
[879]
when it comes to high cash value
[881]
life insurance policies
[882]
seeing what was originally illustrated
[884]
and then what actually happened
[886]
as we tracked the performance
[887]
year-over-year.
[888]
So original illustration
[892]
plan funding was $150,000 for 3 years
[894]
then $125,000 for 3
[896]
and then $50,000 through policy year 10
[898]
for a total of $1,025,000 in.
[902]
Now the original illustration
[904]
assumed a 7.1% dividend
[906]
all the way through
[907]
obviously that hasn't happened
[909]
it would be nice
[910]
but it has not happened.
[912]
So when we look at the actual performance
[915]
here we go
[916]
it starts out less in the 1st year
[919]
because we backdated the policy
[921]
but typically what happens
[922]
when you do that
[924]
2nd year
[926]
hit just about what was projected
[928]
however
[929]
dividend has come down a little bit.
[932]
Now what I want to add is
[934]
on the in-force illustration
[936]
so the in-force
[937]
is from year 6 moving forward
[940]
this is based on what actually happened
[942]
each year years 1 through 6
[945]
how we obtain this data
[946]
is each year
[948]
I run an in-force illustration from him
[950]
but then what I'll also do
[951]
is pull the annual statements
[953]
that's where I get the actual dividend from
[955]
and the actual year-end cash value
[957]
this way we can track
[958]
the real numbers
[959]
match it up with his online account
[961]
to make sure hey
[962]
is it performing as it should.
[964]
I mentioned earlier
[965]
we work with a lot of engineers
[967]
very technical minded individuals
[969]
he's one of them
[970]
but I like him a lot
[972]
he's actually become a good friend.
[973]
So dividend rate moving forward is 6%
[976]
we've got to track the performance
[977]
year over year
[978]
we've got the annualized IRR
[981]
in our full historical performance study
[983]
we do disclose the average as well
[985]
as this will easily do north of 4%
[988]
it's getting close already
[990]
but very very strong
[991]
in terms of actual performance
[994]
and this is the data we look for
[996]
and these are minimum premium policies
[998]
if a policy is designed in that matter
[1000]
we see it actually deliver
[1002]
and this is the key objection
[1004]
like this is people's pain point
[1006]
that they have
[1006]
where they are attracted to the idea
[1008]
of the banking concept
[1010]
but then they do not get answers
[1012]
around how to maximize
[1013]
the cash value of a product
[1015]
or some weird objection is thrown at them
[1018]
like it'll MEC [Modified Endowment Contract]
[1018]
or something like that
[1019]
or you can't pay into it
[1020]
for a long period of time.
[1021]
My thing is
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just provide clarity to someone
[1024]
in the same manner
[1026]
you would want clarity provided to you.
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So I hope this video was helpful
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if you're interested in a maximum
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cash value life insurance policy
[1034]
feel free to reach out anytime
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and as always
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I hope this helps.
[1038]
Enjoy.
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Hey guys Steve Parisi here
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if you enjoyed the content you just saw
[1044]
please subscribe
[1046]
like
[1046]
and hit the notification bell
[1048]
for future videos.
[1049]
If you'd like more information
[1051]
or to see some
[1052]
custom policies for yourself
[1054]
feel free to call
[1055]
or email our offices
[1057]
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