BankNotes – May 2022

Earlier this year [2012] we (Robert Murphy and I) asked a high level executive of a life insurance company if his organization had any problems with the increase of policy loans on their balance sheet resulting from the popularity of the Infinite Banking Concept. His answer still resonates inside my head. Although not an exact quote, this is in effect what he said—“Not if I can still fund them out of cash flow. So long as we stay in a high premium environment such as what we have today, I have no problem whatsoever with policy loans.”

BankNotes – April 2022

Radio talk show host Dave Ramsey has made a national name for himself guiding people out of debt. I occasionally listen to his show (Ramsey and I both live in Nashville), and I applaud much of what he tells his listeners. In particular, Ramsey stresses the importance of having a specific budget and communicating with one’s spouse about money. Furthermore, as a Christian, I also like that Ramsey ends each show by saying that ultimately, the only path to financial peace is to walk with the Prince of Peace.

BankNotes – March 2022

In this third and concluding article about an IBC Tax Strategy, a strategy that I personally use, I would like to shift gears and steer our thoughts in the direction of some very important rules that govern life insurance policy loans. As individuals that practice IBC these discretionary guidelines with regards to policy loans should be fully understood, whether we are members of the general public, or financial professionals. This is the main reason that I reiterated several times in the preceding two articles that this particular tax strategy was not for novices, or those new to IBC.

BankNotes – February 2022

In this article I want to start by briefly reviewing some of the key components of the groundwork I initially laid out in Part I and then walk through some actual numerical illustrations that will help expand our understanding of this unique tax idea. As a reminder we are specifically discussing a tax strategy that calls for taking the cash flows that are already earmarked for paying your taxes and re-routing them through a correctly designed IBC policy that has the capacity to adjust to your particular situation and provide the freedom to not be dependent on outside bankers. As before, I want to emphasize that this idea does NOT reduce your tax liability—I am simply presenting options for people to redirect cash flows that would occur anyway.

BankNotes – January 2022

It’s been said that people would rather die than think. But I am going to see if I can incentivize you do just that by showing you a way to fund a large Infinite Banking Concept (IBC)-type life insurance policy, while using
cashflows that are dedicated to paying your taxes. I should say upfront that this discussion will make sense immediately to business owners, but I hope that salaried individuals see relevance to their households as well. Now in order to provide this intriguing maneuver a fair disclosure, I will need to do it in two parts. In this first part, I will lay the groundwork, and then in next month’s article I will provide some numerical illustrations to show exactly what I mean.

BankNotes – December 2021

A common method of showing the public the power of Nelson Nash’s Infinite Banking Concept” (IBC) is to stress its feature of “constant compounding.” In contrast to many other asset classes, dividend-paying Whole Life insurance always increases in value. Indeed, some proponents of IBC enthusiastically declare: “There’s nothing else like it!”

BankNotes – November 2021

There are various ways of motivating the philosophy of Nelson Nash that he lays out in his classic book, Becoming Your Own Banker (BYOB). In this article I want to focus on the benefits of “owning your debt,” a phrase that I first heard from David Stearns. I want to be clear that what I discuss in this article is not the sole rationale for implementing Nash’s Infinite Banking Concept (IBC), but I hope my discussion resonates with a large segment of American households who are crippled by outside debt.

BankNotes – October 2021

I spend a lot of time motivating difficult financial topics by constructing “thought experiments.” In a thought experiment, you can only focus on one or maybe two moving parts, while holding everything else constant. This is the way to isolate the impact of the factor you want to understand. However, it means the whole exercise is necessarily unrealistic.

BankNotes – September 2021

In his classic work Becoming Your Own Banker, Nelson Nash claims that the standard approach to life insurance has things backwards. Consumers have been taught to get their desired death benefit for as little outlay as possible. Yet Nash argues that people’s need for finance while alive is more urgent than their need for a benefit check when dead. In this context, then, Nash concludes that a consumer should buy a life insurance policy that maximizes premium payments and minimizes the (initial) death benefit. In this article I’ll explain this seemingly counterintuitive approach, because it underlies Nash’s Infinite Banking Concept (IBC).

BankNotes – August 2021

Nowadays the average American has been taught to believe that a very
responsible financial strategy is to plunk as much of his paycheck every month as possible into a “diversified” and “conservative” mix of stocks and, if he wants to really play it safe, to mix in some government bonds. Naturally the acme of savvy saving is supposed to be a tax-qualified vehicle such as a Roth IRA for the self-employed, a 401(k) for salaried employees, or a 403(b) for educators.