In the wrap up of the Create the Entity section, Mike and Chris discuss Universal and Variable Life in relationship to Infinite Banking. They talk about how Nelson felt about those products and the reasons why he had those opinions. Enjoy!
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In the third part of Creating the Entity, Mike and Chris expand upon Nelson’s idea of having multiple policies to accomplish the long term goals of Infinite Banking. They also reiterate how Whole Life Insurance is misclassified. Pay close attention to this one. The principles are integral into the success of Infinite Banking and center to Nelson’s teachings.
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Chris interviews Mike Everett in the first of our team interviews. We cover the gamut and think you’ll enjoy this #tbt post!
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Chris Bay:
Welcome to the Life Success Legacy Podcast. My name is Chris Bay and I’m joined today with the founder of Life Success & Legacy, Mike Everett.
Chris Bay:
Thanks to our listeners for joining us today. This next set of podcasts are going to be a little bit different. What we want to do is we want to introduce you to the team members of Life Success & Legacy and our stories as to how we got introduced to the Infinite Banking Concept. How we learned about it, how long did we study and research it, how it’s impacted our lives, et cetera. So today what we want to do, and each of our stories is unique and diverse, and you may find that you connect with some of these different stories because we all have very different stories of how we were introduced to IBC. Today what we’re going to do is focus on Mike Everett, the founder of Life Success & Legacy and how he was introduced to the infinite banking concept. How it’s impacted his life and where he is today with his IBC strategy.
Chris Bay:
So, Mike, why don’t you start off with telling us, take us back to the day when you were introduced to the Infinite Banking Concept. How old were you? Where were you in life? With kids and that kind of thing.
Mike Everett:
Well, I had just turned 50 years old and I was a little bit disenfranchised with where I was in my career in the property-casualty business. And then I had gone into Applebee’s after church one day and all of a sudden this guy made a beeline over to our table and said, “Hey Mike-”
Chris Bay:
So you knew him?
Mike Everett:
I did.
Chris Bay:
Okay.
Mike Everett:
I did.
Chris Bay:
Okay.
Mike Everett:
Yeah. He basically asked, he says, “If I could show you and Linda a way to recover the entire cost of all the cars you purchase the rest of your life, would you be interested?” And I said, “Well, who wouldn’t?”
Mike Everett:
Long story short, he sent me the book. It came on that following Wednesday in a Manila envelope. So I opened this envelope, out comes a book, out comes a letter that tells you exactly how to read the book. And the book we’re talking about obviously is Becoming Your Own Banker by Nelson Nash. And along with all of that, there was a bill for $22 there. And I literally hollered in at Linda. I go, “Honey.” I said, “He sent us a bill with the book.” This is a book he wanted me to read. So I was a little upset about it. So I just took the bill and I tore it up and I threw the trash. So literally I threw this book over by where I do all my reading and this was Wednesday. So Thursday, Friday, Saturday, Sunday came along. Right after the news, the book somehow made it to the top of the pile.
Mike Everett:
And so I said to Linda, she was getting ready bed and I said, “I’m going to read this book.” I said, “I’m going to read it tonight.” Because it was only 92 pages. So I started in on it at 10:30 at night, began to read it and-
Chris Bay:
Oh, wait a second because that goes against everything we tell people.
Mike Everett:
It does.
Chris Bay:
Please do not read this book after eight or nine o’clock at night because it’ll mess with your sleep.
Mike Everett:
Well, let me just tell you, after my first reading, I was so excited. I did exactly what the letter said and I read it a second time and finished my second reading at 1:30 AM and immediately went in and woke my wife up and said, “Honey, I know what I’m going to do for a new career.”
Chris Bay:
So, you weren’t just thinking about how this could impact your financial life. You were looking at it in addition to because it was so powerful to you.
Mike Everett:
It was.
Chris Bay:
It just made sense to you.
Mike Everett:
It did. As many of the people who know me, I’m the guy who jumps off the high board and I don’t really check to see if there’s water in the pool. So literally I have decided at 1:30 AM that I was changing careers, just like that. But it wasn’t a giant shift in my career change. I went from property-casualty insurance to dividend paying whole life insurance. So it was all in the same family, just a little bit more specific, a little bit more focused.
Chris Bay:
Yeah. That makes sense.
Mike Everett:
I woke up at 7:00 AM and started calling this guy’s office at 8:00 in the morning only to find out that their office doesn’t open until 9:00. I left three voicemails between 8:00 and 9:00 AM in the morning, I was that amped up about it.
Chris Bay:
So you went to work with him?
Mike Everett:
I did.
Chris Bay:
Okay.
Mike Everett:
I did.
Chris Bay:
Tell me about just your personal IBC experience. When did you start your policies? How did you get started? Those kinds of things.
Mike Everett:
I immediately did two applications the first time I met with him within that first week. I decided to do a policy on myself and a policy on my wife. But then all of a sudden it dawned on me, I didn’t have any money. So I had to figure out how to go get money. So literally I went down to the bank and one of the loan officers-
Chris Bay:
This is going to be exhibit two of what not to do, right?
Mike Everett:
It is.
Chris Bay:
Are there future exhibits?
Mike Everett:
Well, I’ll just tell you. I went about it a different way, let’s put it that way. But there’s a really great ending to this story.
Chris Bay:
Absolutely.
Mike Everett:
I went down and borrowed money to do policies for my wife and I. Number one, I tell people don’t do that unless you have equity in a place that you can use. I had no equity. So I borrowed money, started my first policies and then off we go.
Chris Bay:
Yeah. So at that point, tell me where you were in life with family. And what was your thought process in terms of how is this going to benefit you or family or who’s going to benefit from this?
Mike Everett:
I think my daughter was a sophomore or junior in high school and my son was already out of college. So this was a pretty big shift for us because I had started to then think about infinite banking in a completely different way.
Mike Everett:
First off, when you buy life insurance, normally you buy life insurance because you love someone. It is that simple. You’re actually not buying it for yourself, you’re buying it for the people that you love and care about. So when I was buying my policies for Linda and I just knew deep down that these were not for me, they were for the next generation.
Chris Bay:
So you didn’t see how this IBC thing was really going to benefit you in the meantime?
Mike Everett:
No.
Chris Bay:
Okay.
Mike Everett:
But let’s just go back to Nelson’s number one principle, think long-term. So I knew when I was purchasing the policies that somewhere down the way my family was going to benefit.
Chris Bay:
Right. So talk to me about implementation of your IBC strategy. How did that go in the early years?
Mike Everett:
Well, there were about 25 to 35 of us. Some real small number where we literally, we were learning this thing as fast as we could. We were going around wherever Nelson was, we’d go. We’ve needed information because literally it felt like something so new and so different. But yet it was so exciting because we just needed information. So literally we were doing three, four, five seminars a year and going to places wherever Nelson was, or having him come to Lawrence, Kansas and learning about IBC. It was pretty darn exciting because nobody had ever taught me about something like this that can set people so free in their financial life.
Chris Bay:
Yeah. So fast forward for me now, how long has it been since you started your first policies?
Mike Everett:
Well, I just paid my 13th premium, so 13 policy years. But I’ve only been in this for a little more than 12 years and this is all part of the learning that we help with clients learn. But, so I started out with two policies. I think in the first year I had five policies. I borrowed all the money to do this, which I was telling you, I was an idiot. But…
Chris Bay:
How’s that played out for you now?
Mike Everett:
Well, now it’s played out unbelievably because what happened was, as life grew and things changed quickly, so did a number of things in my life that made it easier to purchase additional policies. Now we have 16 life insurance policies. They’re not all on me. I’ve got some on me, some on Linda, some on Kurt, some on Karen, some on the grandkids. So-
Chris Bay:
I know at one point Nelson had 49 life insurance policies and now you’re up to 16 policies.
Mike Everett:
16.
Chris Bay:
That’s right. Yeah. Have you learned a few things from the time you started that you might put in the category of wisdom that you can share with your clients-
Mike Everett:
Let’s put it this way, let’s go back to day one when I went to the bank and borrowed money. Now, because of the way we’ve assembled our team and the learning curve that I’ve gone through and the things that were misfortunes to me, can greatly benefit the clients that we work with. We can see a little bit further down the road to where we can help somebody avoid the mistakes that I made.
Chris Bay:
Absolutely. Mike, thanks for sharing your story. When we do our live boot camps, when you do share your story, it always has the room just rolling. And at first, just honestly, it used to freak me out because you just messed it all up so bad. But the beauty of it is, even as bad as you messed it up in the beginning-
Mike Everett:
It still works.
Chris Bay:
… it still works.
Mike Everett:
It does.
Chris Bay:
That is what’s amazing to me. So thanks for sharing your story-
Mike Everett:
You bet Chris.
Chris Bay:
… appreciate that. To the listeners, our next podcasts are going to be you getting a chance to know the rest of the team of Life Success & Legacy and how we got introduced to this crazy thing called the infinite banking concept. Check out our website, lifesuccesslegacy.com. And if you have not read Nelson Nash’s book, Becoming Your Own Banker, we cannot encourage you strongly enough to do that. Thanks for joining us.
Mike and Chris pick up right where they left off and continue to the ins and outs of creating the entity. Nelson spends time explaining the classification of Whole Life, which he contends should have been called a ‘banking system with a death benefit thrown in for good measure’. Remember, we used to think that potatoes were poisonous because of misclassification… rethink your thinking.
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This next section will be a multi-part podcast on the idea of Creating the Entity. Mike and Chris take a dive into the world of Life Insurance Actuaries… yeah, we know you’re riveted. However, this is critical to understand, if we are to understand Whole Life Insurance, and how it is the best tool for banking. Watch and learn, we promise it’s more exciting than it sounds!
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In this #tbt podcast we review the question that we get all the time; is Infinite Banking a scam. The original podcast was released in February of 2018, and honestly, the question probably gets asked more now than back then. We all get so caught up into our current way of thinking, that when something comes along that challenges those thought processes, we often find ourselves doubting the validity of it. If you haven’t listened to this podcast, or even if you have, it’s a great one to review.
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Chris Bay:
Welcome to the life success legacy podcast. My name is Chris Bay and I’m joined today with the founder of Life Success & Legacy, Mike Everett. Mike, today we want to talk about a question that if you do too much Googling it doesn’t take you long to find the question, “Is IBC a scam?”
Mike Everett:
All right.
Chris Bay:
So when people bring that up in their investigation of the Infinite Banking concept, we always tell them education research, those kinds of things are going to tell you whether it is or not. We know it’s not. Everybody on our team was a client at one point.
Mike Everett:
Correct.
Chris Bay:
So including myself, this is something that we experienced personally. And then I personally left a 22 year career to teach other people how to apply Infinite Banking into their lives.
Mike Everett:
That’s correct.
Chris Bay:
The way that I got there was through educating myself. So walk us through the education process that helps people understand and learn why IBC truly is not a scam.
Mike Everett:
Well, first off you’re using a 250 plus year old product called dividend paying whole life insurance, number one. Number two, because we are using a dividend paying whole life insurance, all we’re doing is we’re re-engineering or reallocating the money. So literally we’re using this product that’s been around for all these years. So how could it be a scam if we’re using a product that is sanctioned by every state in America, and we’re utilizing it as a financing option in somebody’s life? We don’t really do anything but educate people about dividend paying whole life insurance. But the Infinite Banking concept just happens to be a strategy that we use.
Chris Bay:
It’s not fancy.
Mike Everett:
It’s not.
Chris Bay:
I tell people all the time, it’s not fancy, it’s not sexy. It is simply dividend paying whole life insurance. And then what Nelson introduced in his book, Becoming Your Own Banker, is simply re-engineering it.
Mike Everett:
A hundred percent.
Chris Bay:
De emphasizing the death benefit, emphasizing the cash value part of it, and then you have a tool that you can use to finance your entire life. That can be debt. That can be your living expenses. That can be investment. That can be business. It can be all kinds of… It could be your family members debt. Some of our clients, they’re doing very well for themselves simply by financing their extended family’s debt. They have become the bank for those people.
Mike Everett:
A couple of questions that we always ask somebody is, “Would you spend $0 to find out the possibilities? Or would you take two steps backward to go 10 steps forward?”
Chris Bay:
Unpack that a little bit. That, “Would you be willing to spend zero to see what was possible?” If a client contacted us, and we always encourage people to just call us, we love teaching this concept to people. We will never ask you. We aren’t going to try and sell to you. We just want to educate people. And when we do that, it becomes pretty clear. So can you talk about for that $0 that they’re going to pay, what do people get as they go through our education process?
Mike Everett:
Well, literally when we say spend $0, we’re talking about potentially doing one of our online webinars or attending one of our boot camps. We don’t charge anybody any money to find out what’s possible in their lives. The only money that they will ever spend, ever with us, they’re going to spend $20 if they buy the book, it’s 25 on the website, cause we got to send it to you. So we’re going to charge you five bucks, even though it costs me 6.95 to send it to them. But the bottom line is we want people to educate themselves, spend some time learning about this, because if half of what we’re telling people really does work, it would be totally worth their time to check it out.
Chris Bay:
If it were a scam do we think that our existing clients would be coming back to us to open new policies?
Mike Everett:
They would not. And I’ll tell you where this all came from. This came from back in the late seventies, early eighties, when a company called AL Williams was doing buy term invest the difference, they got kicked out of all 50 states. That should tell you something. But part of the reason why it’s been coined it’s a scam, is life insurance agents in general have not done very well in educating themselves about the products that they sell. We do. We spend hours and hours and hours educating ourselves of what is the best possibilities. What is the best design? What is the best strategy for each and every customer?
Chris Bay:
Yeah, it’s interesting. Since the time that I came on board with Life Success & Legacy, of my client base, and I’m going to say it’s, I’m going to guess, I know it’s probably about 170 or more now. Not one client has dropped their policy. Not one. Now I attribute that to several things. One, is we do an unbelievable job in my opinion of educating people up front.
Mike Everett:
Yes, we do.
Chris Bay:
And we do not let them move forward with this until they understand what they’re doing.
Mike Everett:
That’s correct.
Chris Bay:
And that if there’s a marriage that both parties are on board.
Mike Everett:
That’s right.
Chris Bay:
Secondly, we do an unbelievable job, in my opinion, of not overextending people. We design policies. We design IVC strategies to address their needs, to solve their problems.
Thirdly, we become their coaches going forward. You and I know that all day long we’re getting emails, text messages, phone calls from our clients, and they’re paying how much for our…
Mike Everett:
Zero.
Chris Bay:
Zero. We become their coaches going forward. One of our biggest challenges that we face is when we have clients who this really clicks in for them and they get down the road a little bit using their policies, they see the power of it with their lives, they want to start new policies right away.
Mike Everett:
Right away.
Chris Bay:
And what do we do?
Mike Everett:
We have to pull them off the ledge.
Chris Bay:
So many times we’re saying, “Yes, we understand, but you’ve got to wait. We got to capitalize this what your system that you’ve got in place first. And then we’ll go from there.” So yeah, we’ve got returning clients who are wanting to do more policies, not one of my clients has dropped their policy. It’s because of all these reasons that we listed. And that truly is a reason why, if you do all that, you know it’s not a scam.
Mike Everett:
That’s right.
Chris Bay:
Yeah. Well, it’s a good question. There’s, of course, lots of information out there. I’ll finish with this. I’ve read some stuff out there on the internet, around looking at IBC. And the main thing that people forget when they start analyzing it is, they look at it as an investment. It is not an investment. In fact, in Nelson Nash’s book on page three, second column, first full paragraph, it says “IBC is not about investments of any kind. It is a way to finance your needs in your life.” And that certainly can include in vestments, right?
Mike Everett:
Yeah.
Chris Bay:
Good discussion, Mike. Thanks for the time. For those of you listening in, again, we encourage you to go to our website, lifesuccesslegacy.com. If you have not read Nelson Nash’s book, Becoming Your Own Banker, it is a life changing read. Again, it is not a how-to book. It is a book about imagination and possibilities. If you want to see what is really possible in your life, we will charge you $0 to find out. Just give us a call. Thanks for joining us.
This week would have been Nelson Nash’s 90th birthday and in this episode Mike and Chris pay homage to the man that impacted their lives so much. In fact, we know he left his mark on thousands of people. We hope you enjoy this short tribute.
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In this #tbt podcast, Mike and Chris dive into something we hear all the time, that whole life insurance is a bad place to store your money. In fact, I bet you’ve either said it yourself, or heard someone make the claim. However, this is the absolute brilliance of Nelson Nash and his Infinite Banking Concept. When you take a step back and look at it through the lens of this podcast, or for that matter through the lens of Nelson Nash himself, you will quickly realize that there is in fact NO better place to store your money. If you are still in the camp that whole life is bad, I suggest listening to this podcast, you might come away with a new perspective!
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Chris Bay:
Welcome to the Life Success & Legacy Podcast. My name is Chris Bay, and I’m joined today with the founder of Life Success & Legacy, Mike Everett.
So Mike, today, I want to address one of the questions that was a huge stumbling block for me. When Shawn and I first were introduced to this concept of Infinite Banking and I got a hold of Nelson Nash’s book, Becoming Your Own Banker, and I read it multiple times, there were pieces that really fit and made sense to me. But I had a mental block, and that was because I had been taught that whole life insurance was the worst place in the world to put our money.
Mike Everett:
We hear this over and over.
Chris Bay:
So let’s dig into that. There’s a lot of people out there, a lot of financial people, a lot of financial personalities, that are out in the world that are saying whole life insurance is the worst place in the world to put your money. Why did they say that?
Mike Everett:
Well, if you go and you look at a traditional whole life insurance policy and the way it’s designed, I really would tend to lean towards what those personalities have said, that whole life insurance is a bad place to put money.
But if you go back a couple of generations right now and you think, “Where did people put money before 401ks and IRAs became the traditional place to put money … ”
Chris Bay:
Tax qualified plans.
Mike Everett:
You got it.
Chris Bay:
Before those every came about.
Mike Everett:
I’m going to just tell you. The only place most of those people, and you’re talking about my grandparents and my great-grandparents, they only had one place that they could … Well, excuse me, two. They put it in whole life insurance programs, policies, or they put it under the mattress at home. That’s the only place that they did.
But if you go back and you think like Nelson does, you think long term. Whole life insurance is the safest place you can put your money regardless of how it’s designed. But because of the way in which we go about re-engineering the way the money is allocated in the policy, it’s the safest, best place in the world, and it’s got more guarantees than anything that somebody would put their money in.
Chris Bay:
Yeah, I think from my standpoint, or at least how I was taught to think about money, it’s because whole life insurance may be traditionally designed, which was designed to emphasize the death benefit. You want to pay as little as possible.
Mike Everett:
That’s right.
Chris Bay:
Right? Well, when you look at that and you’re looking at it purely as an investment, that maybe it doesn’t match up to some other things. But honestly, I’ve seen some work out there by some folks, where actually it can even show up to be better than some of the investments that are out there.
Mike Everett:
Well, in Nelson’s book, I’m going to just tell you, he uses a couple of examples, one with the twins and one with the equipment financing. If you look at this over the long haul, I’m just telling you, it outperforms the market. It outperforms inflation.
Chris Bay:
What’s interesting, when we read Nelson’s book, the examples in the book aren’t even designed-
Mike Everett:
They are not.
Chris Bay:
… to emphasize the cash value part, which is how we would design it for people.
Mike Everett:
That’s correct.
Chris Bay:
Why did he do that?
Mike Everett:
Well, the reason why he did that was he wanted to make sure people knew that it would work even if the policy wasn’t designed properly.
Chris Bay:
If it’s designed traditionally to emphasize death benefit-
Mike Everett:
The death benefit.
Chris Bay:
… and pay as little into it as possible, there’s some debate amongst people whether it would be better to do that versus some other things.
But when you start factoring in that a policy could be designed to de-emphasize the death benefit and you could emphasize the cash value portion of it, and then you introduce the whole concept of using it for banking, financing your financing needs in your life, there is no comparison.
Mike Everett:
There’s not. One of the questions that we always ask people right this very minute, “What is more important to you, cash or life insurance death benefit?” What do they all say?
Chris Bay:
Cash.
Mike Everett:
Cash every single time. What if there was a program out there where you could put money in and have access to it income tax-free all along the days of your life. We need cash from right now til the day we die. We only need death benefit one day. We can show you through the program, through IBC, through the policy, that if you did this all along your life, not only would you have access and be able to utilize the cash that’s flowing in and out of your money; but at the time of your death, you’ll end up having two, three, four, five times more death benefit than what you could purchase right now.
Chris Bay:
You know how I would phrase it is, so many of us look at, whether it’s whole life or an investment or whatever, we look at it as an either/or. Really what this is about is a yes/both.
Mike Everett:
That’s exactly right.
Chris Bay:
If you really want to invest in the market or other types of things, you can do that.
Mike Everett:
Yeah, absolutely.
Chris Bay:
But if you’re smart, you’re going to run your money through your IBC system, get all the guarantees that they offer, and then take loans against your policy and go do the stuff that you love to do.
Mike Everett:
Exactly.
Chris Bay:
Yeah. It’s a great question. It’s a hard one in our culture because so many of us have been told that whole life insurance is bad, bad place to put our money. But truth be told, it’s actually the best place in the world to store our money. It’s foundational to a whole financial economic system for ourselves.
Mike Everett:
It is.
Chris Bay:
Yeah. Great discussion, Mike. Thanks.
Folks who are listening, we encourage you as always to go to our website, lifesuccesslegacy.com. If you have not read Nelson Nash’s book, Becoming Your Own Banker, please get yourself a copy of that and spend the time to read it at least once, if not more.
Nelson wrapped up the Human Problems section with a one page chapter on the topic of Use It or Lose It. Mike and Chris venture down into the main principle, EVA, or Economic Value Added. Which is the “recognition of the fact that your own capital has a cost, as well as that which has been borrowed from banks.” Seems simple enough, but as Nelson wrapped the chapter up he states it perfectly, “Just like EVA, to be effective, IBC must become a way of life.”
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This weeks #tbt podcast was originally released January 4th, 2018. The sustainability of Infinite Banking has very little to do with the concept itself, but is a question about the insurance industry itself. I believe this question is rooted in the uncertainty of the federal reserve and our monetary system, and as a result, we feel like the insurance companies must be as unstable as those entities. However, if you take a listen (or read) to this podcast, you’ll quickly realize that the two are not equal. A lot has changed since the original release of this podcast, but the constant is that there is not a more reliable and sustainable vehicle than whole life insurance.
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Chris Bay:
Welcome to the Life Success Legacy Podcast. My name is Chris Bay and I’m joined today with the founder of Life Success & Legacy, Mike Everett. Hey Mike, one of the other questions that we run into amongst the variety of questions that are out there has to do with, okay, once people get to the idea where they’re like, this really makes sense, why would everyone not be doing this? Right? Then they start thinking, well, what if everyone started doing it? Could the life insurance companies handle that? Is it financially sustainable if everyone started doing this? So what I’d like for you to do is talk a little bit about how insurance companies, how they design this, the work that they do, the actuaries do, the engineers of the life insurance companies, and how it truly is sustainable.
Mike Everett:
Well, first of all, life insurance actuaries work with 10 million selected lives. That means that they know how many people are going to die every year, regardless of what’s going on. And they can do this very, very accurately, number one. Number two, I guess I start to think about whole life insurance in the term of IBC, because most people, when they go to buy life insurance, what do they buy? They buy term insurance. So it’s really just a little tiny premium to get a great big death benefit. And that’s the way 90% of the people out there are buying life insurance. So you have 10ish percent that are out there buying whole life insurance, but they don’t understand how the policy can be re-engineered so they can start utilizing their cash. So you think about it from a life insurance company’s standpoint, they’re normally used to getting 300, 500, 1,000, or $2,000 for premium for term life insurance.
And Oh, by the way, term life insurance is one of their most profitable centers. So you think about it from a life insurance company’s standpoint, and you said, is this sustainable if everybody starts doing it? Well, most of the people that we work with, at least a great percentage, their premium amounts aren’t two or three or $4,000 a year. They’re five and 10 and 15 and $20,000 a year. So from a life insurance company’s standpoint, do they want a little money sent to them? Or do they want a lot of money sent to them? The more, the better. So part of the thing is we have to get people to understand that the whole life insurance company knows what they’re doing when they’re designing the policy.
Chris Bay:
So in our culture though, we always hear people talk about high risk investments. You want to get your money into higher risks because you have higher returns, greater returns, those kinds of things. Can you talk about the risk involved in kind of the investment thing? Because life insurance companies are doing something with that money. Right?
Mike Everett:
They are.
Chris Bay:
And isn’t that putting my money at risk?
Mike Everett:
Well, here’s the nice thing. When you work with a hundred year old companies, and all the companies that we work with are more than a hundred years old. That means that they’ve been doing the same thing day in, day out, day in, day out for more than a hundred years. In fact, one of the insurance companies that we work with has paid dividends for more than a hundred years. So they’re not putting any of the money at risk. So what they’re doing is they are taking those premium dollars and they are taking those out and investing them in very, very conservative ways so it’s not putting any of the money at risk.
Chris Bay:
Bonds, things like that.
Mike Everett:
Yeah. Very simple investments. [crosstalk 00:04:15].
Chris Bay:
Things that are [crosstalk 00:04:16].
Mike Everett:
Guaranteed.
Chris Bay:
Yeah. Guaranteed. That’s right. And that’s one of the surprising things to people. It actually was really attractive to me because, back in my days when I was a principal, I remember a teacher came in, would have been in 2008 and she was ready to retire. And then come the spring when the market crashed, she couldn’t retire.
Mike Everett:
The 2008 meltdown.
Chris Bay:
That’s right. And I didn’t know about IBC at that time, but when I heard that story, I filed that away in my head. And I thought, I don’t want my money at risk. I wonder if there’s a way to do, a place to put my money where I can benefit from it. And it’s not at risk like her money was.
Mike Everett:
Yeah.
Chris Bay:
Yeah. So there’s also some regulations with life insurance. Right? That kind of guarantees that they’ve got to have a certain number of reserves and those kinds of things. Can you talk a little bit about that?
Mike Everett:
Well, in the banking industry, I’m going to start with the banking industry. The banking industry, when you put a dollar on deposit at the bank, so you’re saving a dollar, they have the ability to loan out $10. That’s called fractional reserve banking. So here’s the deal. You and I put a dollar in and they’re able to loan out 10. So the question that we always ask is where did they get the $9 to loan out? Well, they got it from thin air because the federal government, the federal reserve, said that you guys can do this. If you get a dollar in, you can loan out 10. Now you think about that from a customer’s or a client’s standpoint. Is their money at risk. Yes, it is. There is so much stress on that money. That’s why you hear about banks going down all the time. A life insurance company, on the other hand is when you put a dollar in, they have to have a dollar set aside for death claims and the life and death claims, dividends, et cetera, et cetera. So there is absolutely zero stress on that money at all.
Chris Bay:
So when a person, let’s say that Joe, we’ll just take Joe as a name. Let’s say that Joe is issued a policy. At that point, day one, if he were to pass away, that company has to have the ability to pay that death claim. Right?
Mike Everett:
Yes, they do.
Chris Bay:
Okay. And they’ve got to have, by law, they’ve got to have reserves.
Mike Everett:
That’s correct.
Chris Bay:
Can you talk a little bit about that number? The amount of reserves and then also really the companies that we work with and how safe they are.
Mike Everett:
The average life insurance company is required by law to have at least a hundred percent in reserves, a hundred percent. So that means that you have to have a hundred percent of the money set aside so if everybody dies on the same day, guess what? We can pay a hundred percent of the death claims.
Chris Bay:
Even in a catastrophic event.
Mike Everett:
Even in a catastrophic event.
Chris Bay:
They have to be prepared for that.
Mike Everett:
That is correct.
Chris Bay:
Yeah.
Mike Everett:
But the companies that we work with have 600 plus percent in reserves. They have six times more than anybody else out there in order to make sure that there is absolutely zero stress on your money plus the fact that they can actually guarantee that they will honor the contract that they have made with you through whole life insurance.
Chris Bay:
Yeah. It just came to mind, a lot of times and what’s out there in terms of financial conversations and stuff, the term diversification comes up, and people will ask from time to time, they’ll say, well, Chris, don’t you diversify? And my way of thinking is, well, the reason that we diversify a lot of times is because there’s risk.
Mike Everett:
That’s correct.
Chris Bay:
But if there’s no risk involved, is there a need to diversify?
Mike Everett:
None.
Chris Bay:
None.
Mike Everett:
Zero. Nada.
Chris Bay:
Now, if I have cash value, I can use that for a lot of different reasons. Right?
Mike Everett:
Absolutely.
Chris Bay:
What are some of the ways that people utilize their cash value?
Mike Everett:
Well, we show them how to take policy loans against their policy to pay off credit card debt, to pay off student loan debt, to pay off auto loans, and even mortgages. So imagine if we were able to actually utilize a policy loan to get somebody debt-free how simple would their life be?
Chris Bay:
Okay. So one is turning the wind current that we’ve talked about in previous podcasts.
Mike Everett:
That’s correct.
Chris Bay:
That’s one. What are some other ways that people use their cash values?
Mike Everett:
Well, some of the, sometimes what they do is they use them to go on vacation. They use them to pay for their kids’ college.
Chris Bay:
So living expenses.
Mike Everett:
That’s exactly right.
Chris Bay:
So once you’ve paid off debt, you can then utilize it for what we talk about the second pillar. And that is financing your life. Right?
Mike Everett:
That’s correct.
Chris Bay:
What about businesses? Business opportunities?
Mike Everett:
Well, it’s amazing when you have a pool of cash available business opportunities find you, so you’d have the freedom to be able to invest so to speak in another business, whether it be real estate or whatever you choose.
Chris Bay:
Nelson talks about the golden rule in his book. What’s that golden rule mean?
Mike Everett:
Those who have the gold, make the rules.
Chris Bay:
That’s right. So there’s opportunities for people. And we have clients like this that they have started business opportunities, utilizing their cash value and their policies. They’ve taken loans to start businesses. They’ve used it for real estate. And let’s just say, somebody loves the stock market.
Mike Everett:
They can go do that too.
Chris Bay:
Couldn’t they borrow from their policy, against their policy…
Mike Everett:
Yeah. That’s correct.
Chris Bay:
… take a loan against their policy and go invested in this great stock that they heard about, they got a tip about? They’ve got the guaranteed growth from their policy, plus the death benefit. Right? And yet they can still take a loan against their policy and go and invest it in this great tip that they got.
Mike Everett:
Absolutely.
Chris Bay:
So there’s all kinds of ways that they can do it and limit their risk factor and actually be safe with their money as well. And have lots of flexibility with it. Well, Mike, thanks for talking through that. A lot of people wonder if it is sustainable, if everyone started doing it. And clearly as you’ve explained, it’s very safe. Life insurance companies are built for this kind of thing. Please join us in future podcasts. I’m Chris Bay joined today by Mike Everett, the founder of Life Success & Legacy. Check out our website by the same name, Live Success, and Legacy. If you have not read Nelson Nash’s book, Becoming Your Own Banker, you can get a copy of that on our website. We highly recommend that you educate yourself in reading that book and utilizing some of the other resources we have on our website.