Wealth Without Wall Street - IBC

[Brian Carlson]

 I'm interesting in Infinite Banking and poking around at a few different outfits. Anyone have experience with WWWS?

Thanks

[Thomas Rutkowski]

Quote from @Alicia Marks:

Quote from @Thomas Rutkowski:

Quote from @Jeffrey Evans:

@Thomas Rutkowski curious why you wouldn't want to pay the premium as a lump sum annually vs monthly?  isn't is more expensive to pay monthly?  I thought the cash value would grow faster if put it all in up front each year.  

thanks for the info

Jeff

Sorry for the confusion. I'm not referring to annual vs monthly. There is no difference on that.

Some people think they can kickstart their "banks" by putting in $50,000 from savings the first year and then following that up with $12,000/yr premiums after that, for example. This is a huge and costly mistake.

 Can you more clearly explain why that wouldn't be the better option? I've considered this option, as my term policy is up in two years and I know several people who use them successfully to invest. 

The problem with a lump sum has nothing to do with creating a MEC.  It's important to understand that the death benefit is a function of the first-year premium. When I design a maximum over-funded policy, I am solving for the lowest possible death benefit that still meets the definition of life insurance. When the first-year premium is 4X the subsequent premiums, you will end up with 4X the death benefit. It's also important to understand that the charges in a policy are also primarily driven by the death benefit. That means there will be 4X charges hitting the policy for the next 10 to 15 years and taking a big bite out of each of the subsequent premiums.

Determine the most you are willing to commit to for at least 5 years. That should be considered the shortest funding period for a policy. Longer is fine, just don't go shorter. 5 years is the sweet spot between minimizing the charges and getting your money working in the policy. 

The problem is that most agents are unaware of this. They will happily design a policy with a large lump-sum premium up front. They either know what they are doing or they are ignorant of it. Either way, and using my example above, they end up with a 4X larger commission, and you end up with a policy bleeding cash value for the first 10 years.