E115: The 5 Top Beginner Questions About Infinite Banking Answered

In this episode, we answer the most common questions we receive from individuals who are just starting out on their infinite banking journey. These are the wonderful beginner questions about infinite banking that nearly everyone has.

Topics Discussed:

  • What fuels and grows the policies?
  • Understanding compounding interest?
  • How do policy loans work?
  • What can you buy with a policy loan?
  • What limiting factors and MEC limits are
  • What paid up addition riders do for you

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Podcast transcript for episode 115: Top Infinite Banking beginner questions

Nate: In this episode, we are going to answer the most common questions we receive from individuals who are just starting out on their infinite banking journey. She’s Holly, and she helps people find financial freedom.

Holly: He’s Nate. He makes sense out of money. This is Dollars and Nonsense. If you follow the herd, you will be slaughtered.

Nate: All right, welcome back to the show. Today, we’re going to focus on what we’re going to call part one of frequently asked questions, you could say, because Holly and I, we tend to get asked very similar questions quite often, from whether it’s our existing clients or those who are investigating infinite banking. So we thought we would just kind of have a nice, quick episode here, where we’re going to answer really five of the most common questions that we get asked, especially by those who are just starting out learning, or maybe they’re new to it, they just got their first policy, more what we would call entry level questions, you could say.

And then next week, or I guess in two weeks when the next one launches, we will be doing a part two of these frequently asked questions, and we’re going to dive into maybe some more complex questions that are maybe asked more commonly by those who’ve been doing IBC for a bit longer. But let’s go ahead and dive in today to the common questions, part one. These are the questions we get from most people. So by the way, if you are an individual who’s just now starting out, you’ve found a sweet spot, because I think you can get a lot of your questions right off the bat. So Holly, let’s go ahead and open it up with question number one.

Most people, when they first realize about infinite banking, and they’re learning about how these policies work, your first thought goes to, “Well, how does the policy actually grow? What’s going on in the cash values that produces this growth?” So Holly, how does a policy grow? What’s going on inside the cash value that makes it grow?

Holly: Well, I would say the policy grows basically by premium, Nate. And there’s different types of premium that we’ll break it down into, but it really is that premium that is compounding uninterrupted, that really is going to cause the policy to grow. And we, the way it’s going to lead to another question I’m sure that we have on there, there’s base premium and there’s paid up addition premium. And both of those have interest rates that they are growing by that are actually driving that growth in the policy that allows for that uninterrupted compounding to occur. The reason it grows is literally because there is uninterrupted compounding take place. But it really is based on the premium that you’re putting in and how much premium you’re putting in that causes that growth to occur.

Nate: Yeah. So there’s definitely no growth if we don’t put any money in the gig, absolutely right. So you got to put the money in first. And some people think maybe when they first hear about this, and if you are actually brand new, just kind of a 20,000 foot overview of IBC, what we’re trying to do is put capital, put cash into specific types of whole life insurance policies issued by mutual companies. And then we use that cash buildup in these policies to finance the things in our life. And what a lot of people, I think, Holly, they can get confused and maybe this question comes up is because they think that maybe something about the loan that we take against our policy has something to do with the growth. I would say that’s a pretty common question.

Well, when you first get involved, does me taking a policy loan to, let’s say, buy a car, or go on vacation, or make a down payment on a home, or whatever it is, is that loan what makes the policy grow? Or is it something else? In which case, Holly, you and I would answer no. Actually, the loan, yeah, the loan does not make the policy grow. The policy’s going to grow whether or not you borrow against it or not. It’s guaranteed to grow, earn interest, every single year, guaranteed from day one, and every year, based on the profit of the company that you have bought the policy from, you’re also an owner of the company. And so you’ll receive dividends.

So your dividend every year and your guaranteed growth are going to be there. It doesn’t matter if you take a loan out or not. So what really makes the policy grow is the guaranteed interest and dividends that are received, but those are all based on how much money you’ve put into the policy, not based on any loan or anything like that. So absolutely right, premiums are producing the cash value that’s growing with guaranteed interest and dividends, not the loan. So how’s the policy grow? Well, it’s guaranteed to grow and also earns dividends. It’s one of the best places in the world to have capital build up, and to be able to move it for the various things that we need in this life. That may do it for question one. How does the policy grow? We’ve kind of covered that.

The next one that then this leads to, and once again, Holly, you kind of allude to this a little bit as well. The next question is: Well, what can I do to make it grow faster? So I’ve got this policy. It’s growing with guaranteed, I’m earning dividends. Nate, you tell me the loan itself is not making it grow faster if I take policy loans out. So whenever I get my hands on this thing, what can I do to make my policy grow faster?

Holly: Well, I laugh, Nate, because it kind of goes with question one. You’ve got to put more premium in if you want your policy to grow more.

Nate: Not rocket science, is it, Holly?

Holly: No. It’s not rocket science. But I think people are like, “Oh, well, I paid the loan back. So as soon as I pay this loan back, my policy grew by more.” And instead of understanding the policy was growing whether you took the loan out or not, so when we say paying more premiums, you literally either have to make an additional purchase of single paid up addition, and basically, we say that’s an extra interest payment. But you’re putting more cash into cause the policy to grow faster in order to yield you more growth long-term.

Nate: Yeah. You’re exactly right. So what I like to think of it as, as soon as you start a policy, let’s say, Holly, you’re going to start a policy. And you want to put in $10,000 a year of premium or something like that. So you’re wanting to fund this policy. I want to put in $10,000 a year. You’re plugging along. Everything’s going well. You’ve gotten this idea maybe once or twice that if I borrow against it, I can make my policy grow faster. Well, maybe we’ll talk about that in just a second, but not exactly true. And you’re plugging along, and you look down the future and you have X amount of money. How can I end up having more than that amount of money? Right, Holly?

Holly: Right.

Nate: If at age 65, I’ve been putting in 10 grand a year, now it ends up being $500,000 of cash value has been accrued in the policy. I want to have more than $500,000. What can I do to have more? Nobody complains about having more. But you’re exactly right. The only way to really get off the trajectory that you’re on, on this policy, so you’re putting in $10,000 a year, and it’s bringing you to this point, the only way to get off that trajectory and onto a better one is by putting more money in because there’s nothing you can do to kind of magically maneuver the numbers. So with that being said, Holly, you brought that up, that with an IBC policy, and we’re actually going to answer this question next as well, of how we actually design it.

But just for right now, your policy is going to have typically room to pay a little bit of extra premium through your paid up additions rider, which is an element of the premium that goes into this policy. And so once you made one additional contribution, just one, all the numbers in the future have changed forever. Your dividends are bigger. The interest you’re earning is bigger, even your death benefit’s bigger. Obviously, your cash value’s bigger. So your trajectory has changed, and if you do that enough, if you’re able to add enough money over a period of time, many years, you suddenly look way different over time.

And one of the ways that people do that, Holly, is through what we call paying ourselves extra interest. What we did say that taking a policy loan does not make the policy grow any faster, however, when you take a policy loan, there’s going to be a minimum amount of interest you have to pay. But we encourage you to pay more interest than what the minimum is. And it’s that extra interest that you pay above and beyond the minimum that’s going to go into the policy and boost the cash value. And if every time you take policy loans out, you pay yourself back with a little bit of extra interest, that will add up over time to where the trajectory you’re on has been completely changed, and you do end up having a lot more money over time. So how do I make my policy grow faster? It’s really how you work with it, how much interest you choose to pay back when you use it, let’s say, or whether you choose to put a little extra in as time goes on. Holly, what’s the limiting factor on how much extra we can put in?

Holly: The limiting factor is what’s really called the MEC limit.

Nate: Yeah, so the MEC limit, as you said, Holly, is the limiting factor. So every policy that’s started has a limit that is going to be the max amount of premium that can fit in. And so whenever you do start paying back with extra interest or things like that, you can’t just pay yourself back 200% interest type of thing, typically, or else you would create what’s called a MEC, which we don’t want. So maybe go back to previous episodes, you’ll learn more about what the MEC is and how to avoid it. But all that to say, there is going to be a limit. So that means it’s possible, maybe you shouldn’t be thinking of: How can I make this policy grow faster? Maybe the question really should be: How can I be a better banker?

The money that you have may not be able to fit into the one policy you have, but opportunity abounds to open additional policies. And so the key is getting more and more money into premium. How can I redirect cash flows that are walking out my door, to capture them inside my policy cash value first, and then utilize them to pay for my expenses? That will change your trajectory and make your system more profitable.

Holly: Well, and I think Nate, too, a lot of people want to know. Well, what is that MEC limit? It literally does depend on the premium that’s going in that determines what that MEC limit is and how much insurance it’s buying. So it’s not a set answer for every single person, if you put $10,000 in, you get to put X amount additional cash in the policy to help it grow. So it’s really just not a basic answer. So as much as we want to say it’s based off the MEC limit, it literally is designed based off each policy. And that number is individual for each policy that’s starting.

Nate: Yeah. You’re absolutely right. So it’s hard just for us to tell you, here’s what the MEC is, because it’s so tailored to an individual. We may end up going into more detail in part two, what we’re deciding, which questions to add to that, but we’ll talk about more advanced things then. There’s only so much we can have time for today.

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Nate: So we’ve talked about: How does a policy grow? We’ve talked about: What can I do to make it grow faster? It’s really how you operate with it, especially when you borrow money, and how much you choose to repay and so forth. But the third question, and we’ve already alluded to this. What is so different about the design of an infinite banking policy compared to just your normal policy you go buy down the street? What separates IBC? Essentially, the question that we commonly get is: How do you design a policy that works well for IBC? So Holly, I mean, I know that can open up a whole bunch. But how do you design an IBC policy?

Holly: Well, I would say, Nate, there’s two parts to it. There’s the base premium that you pay for the entire life of a policy, and then there’s also what’s known as the paid up addition rider that is added to the policy that creates that banking policy. The design itself is really essential in what we like to say is, we’re trying to design the policy so that we create the maximum efficiency for your cash, so the money going in is as efficient as possible. And we also try to get as close to that MEC limit, but we do want a little wiggle room, I say. So should you want to put in extra premium, you’re able to. What we don’t want to have is that you’re so close to the MEC limit, you can’t put a single dollar more in the policy without creating a MEC.

Nate: You’re exactly right. And I don’t know how deep we want to go in here, but as Holly said, the thing that differentiates a high cash value policy that would operate well for IBC is the fact that you don’t want all your premium to go to base premium. Do you?

Holly: No.

Nate: Because the base premium, though it does build cash value, and over a long period of time, the policies actually look okay. But with the paid up additions rider, it starts so slowly, it takes forever to start gaining traction when it’s all base premiums. Actually, a majority of the premium, so if you’re wanting to put let’s say $10,000 a year into a policy, the majority of that $10,000, let’s say maybe $6000, $7000, somewhere in that ball park, typically goes into the paid up additions rider, not into what’s called the base premium. So you want the majority of the premium going to that paid up addition rider. But that sometimes gives people a false impression on what’s actually going on with the base premium.

So there needs to be a blend between the two. It’s not that the base is an evil, it’s just that you put all the premium from day one to the base, it’s going to take forever to gain traction. However, inside of a policy, if you look over a long period of time, it’s the base premium that actually starts driving the growth of the policy, not the paid up additions rider. So you have some people who say, “Well, why don’t we just blend in a whole bunch of term insurance, or do some sort of wild design to limit the base premium because they say it’s an evil thing?” And then you look long-term at the numbers and you realize that they’ve handicapped the policy by trying to avoid the base premium because they thought of it as something they didn’t want. In reality, the base premium is a great thing. It needs the paid up additions rider for the policy to look the way it should. I’m having a hard time putting it exactly the way I want to.

Holly: I would say, Nate, it’s the paid up addition rider jump starts that cash. It causes that cash to really start growing for you immediately from the very first day of the policy going in force towards after a period of time, and normally, some four or five years, that paid up addition rider has done its job, and I say jump starting the policy. It’s what gives you the cash initially in order to let the base premium catch up to the growth.

Nate: I like that. Yeah. And so the base premium is certainly the slow mover, but I like the way you said that, giving time for the base premium to catch up because once you get past around year four or five, every dollar you pay towards the base premium actually ends up producing more cash than the dollar you paid to the paid up additions rider. It becomes the most efficient part, it just doesn’t start that way. And it doesn’t look that great unless it has its trusty sidekick, the paid up additions rider, to boost it. The metaphor we’ve used, Holly, many times, is that it’s the rocket boosters on the space shuttle. The paid up addition rider acts as the rockets that boost the shuttle into space. But once it’s out in space, those rockets are no longer needed. And many times, they just fall off and the shuttle continues on efficiently by itself.

And that’s actually very common with the policies we build and our suggestions to our clients. Normally, what you want is to get as many rockets boosted, as many shuttles I mean, boosted into space as you can. So many times, we will actually drop or stop funding the paid up additions rider in order to free up more capital to continue capitalizing new policies and get on new trajectories. Really, how we build IBC policies, we’re not fans of way too much base premium. That doesn’t really work out. But we’re also not fans of limiting the base premium to such a small, tiny amount of the policy, which will hurt it long-term. You need a good blend, so typically, about 30%, 40% of the premium in the base and 60%, 70% in the PUA will get you a really good blend for a max efficiency contract. And then also, that’s typically a good split or blend that doesn’t create a MEC without doing anything funny to the policy.

Holly: And remember, the design really, like we said, our design really is to make your money as efficient as possible for you, as quick as possible. So that’s why you need a little of both. You can’t have a lot of base and a little PUA, and you can’t have a lot of PUA and a little base, or else it’s just not efficient for you long-term.

Nate: Yeah. Exactly right, exactly right. We’re looking at short-term and long-term together, how to get the perfect blend of both. And I think we’ve done that pretty well. But with that being said, let’s jump onto question four. We’ve got two left. We’re going to do five of them, so we’ve got two left. The fourth question that’s very common has to do with policy loans. What exactly is a policy loan? And how does this whole loan interest thing work? I know we’ve tackled this. Actually, I think we’ve delved whole episodes into this, so we’re just going to maybe touch on this because this is certainly, even for people who’ve been doing this a long time, the policy loan and the loan interest can get confusing. How is this working in my benefit? What’s actually going on behind the scenes? So let’s see if we can delve in a little bit to: What exactly is a policy loan? And how does the loan interest work?

Holly: Well, the policy loan really is a loan from the insurance company. And I say they use the death benefit as collateral. But in some ways, people call it a prepayment of the death benefit. So you’re taking this loan out initially against the future value of you graduating from this Earth, the death benefit portion. But what it is, it allows you to actually borrow money from the insurance company, Nate. It’s not money that actually leaves your policy. It’s a loan from the insurance company to you with an interest rate that they are expecting you at some point to pay back. And if it’s not paid back, then it comes off the death benefit. But it is a loan. What it allows you to do is allows your money to keep compounding for you, uninterrupted, while you still access and use that cash for something else that you might need.

Now we’ve said this before over and over again. The loan is typically designed for something you want to do with that money. You don’t just take the loan out and go park it in the bank just because.

Nate: Right. Once again, that goes back to: What do I do to make my policy grow faster? Well, it’s not policy loan. You don’t just take a policy loan for fun and let the money sit on the sidelines. You do it when you have a purpose for it, exactly right. So the policy loan, it’s collateralizing our policy, which is really cool when you understand how this whole thing works, that I can have cash value of $100,000, and I can go have, let’s say, an investment opportunity come my way to go buy a piece of real estate or something for $100,000. And I’ve got my cash value inside this policy, it’s growing with the guaranteed interest and the dividends that we’ve already said. This is how it’s growing.

And I can take a policy loan against my policy and have my $100,000 of cash value still there, still growing, earning interest and dividends. And the insurance company will actually write me a check for 100 grand using my policy as collateral for this loan. And now I have my $100,000 to go write a check to somebody else to buy their property. Now I have two things. I don’t just have a policy. I don’t just have a property. I have a policy and a property, and they’re both growing for me at the same time. So a policy loan is cool, as Holly said, because it’s essentially a prepayment of a death benefit, some people have likened it to. What that means is that you take out that loan for $100,000, and the insurance company does not have any loan terms for you. They don’t care if you ever pay it back. You pay it back at your own discretion, and you really pay it back for your own benefit, not for theirs.

You have this loan. You go do essentially whatever you want with it because they know at the end of the day, you’re going to die at some point in time. And they’ll just take the loan balance at the time off the top of the death benefit at that moment. So they do not require principle payments over the course of your lifetime. But what do they require on a policy loan, Holly?

Holly: They require interest.

Nate: And why would I want to pay interest to borrow my own money? You know?

Holly: Interest. Yeah.

Nate: Why would I want to pay interest on my own money? That’s a common question.

Holly: We say a lot of times, the reason you want to pay the interest, number one, you’ve got to be a smart banker. Right? This is banking. And so you would pay interest to a bank, and you are the banker, essentially, as a shareholder. So you need to pay interest back to the insurance company. But the other reason you want to pay the interest is, if you don’t pay the interest, what happens is it reduces your cash value as you pay your premium, so you get this larger and larger, the loan keeps growing, basically, by not paying the interest. And instead, if you pay the interest, you’re a shareholder. Right? So if we think like a bank, we normally don’t like paying our bank interest really-

Nate: Because we don’t get any of it back.

Holly: Yeah, we don’t get any of it back. We don’t see a single dollar we give to the bank because we don’t own any part of the bank. We’re not shareholders of the bank. But remember with the mutual companies, you’re a shareholder. So you do, in a way, you do get that interest coming towards you because you receive dividends, and you receive profits from the insurance company. We’ve said this before. The insurance company works for you. You’re the shareholder. So you want to pay your interest because you’re a shareholder. This is helping you. It’s helping the company. You are a shareholder, so therefore, it’s helping you in what you receive in dividends.

Nate: And that’s the thing. It can be a little bit confusing. So they don’t require any repayment at all of the loan, but they do bill for interest. I call this an interest only loan for life. That’s what they’ve given you.

Holly: Yep.

Nate: You just pay interest every year. As Holly mentioned, the reason the interest I pay to my policy feels so much different than the interest I used to pay to everyone else, because they’ve already guaranteed not only that I’m going to receive this guaranteed cash value increase, but they’ve also probably declared the dividend for this year. They’re already paying me all this money, and they’re able to give me the interest and dividends on my full cash value. It’s really my interest that I pay to the interest company for my policy loan, is that revenue that they needed somebody to give them in order to continue paying my interest and dividends. So remember, everyone, life insurance companies are really just big banks. They take our money and they lend it to everybody else. That’s that they do. It’s their whole business. It’s just like a big banking business.

The difference between operating at a conventional bank and operating for your own self at a mutual life insurance company is what Holly said, is that at a bank, I get nothing. But at the mutual life insurance company, they are in business to profit me, the owner of the bank, the owner of the insurance company. So the insurance company has to put the money to work someplace in order to continue crediting my cash value interest and dividends they’ve already promised me. So how are they going to do that if I take all the money out? Well, they’ve got to charge me interest. They have to charge me interest to be able to do that. Otherwise, they can’t just give me a loan for free and still pay me my interest and dividends. That is called a Ponzi scheme.

Holly: It is.

Nate: And that is not real. So but what we’re trying to teach people is that it’s actually financially in your benefit because the loan interest is just based on the balance, it’s a simple interest, really. So they send you a bill for it, you pay it. The balance just stays the same. But your cash value is a compounding interest, which means every year, you’re earning more and more than you did the year before. No matter how we run these numbers, every time you take a policy loan, and even though you are going to pay interest back to the policy loan, your policy will always end up recapturing more in growth that it receives than in the interest that you actually have pain on the loan over time.

And so we may need to do details on that at some other point. But essentially, how a policy loan works, they take our policy as collateral that allows our policy to continue grow and earn dividends on the full amount. They lend it to us. The only thing required is the interest every year that we pay them in order to continue crediting the interest and dividends they’ve already promised us. And it’s important to pay it in order to make this thing work the way you really want it to work.

Holly: I would agree.

Nate: Anything else?

Holly: No.

Nate: We’re good there, okay. Last question then, Holly. How do you choose the right insurance company? This is very common for someone who’s getting started out, or maybe even if you’ve been around for a while, you’re just curious. What goes into this choice, all these different mutual life insurance companies? Because there’s probably, Holly, I don’t know, seven, eight, nine, maybe 10 good mutual life insurance companies. How do you choose the right insurance company to work with when diving into IBC?

Holly: We’ve talked about this previously, Nate, but I’m going to say you want a good rated company, an A rated company, that you’re really working with. But the bottom line is most of the mutual companies that you’re working with, you’re asking a question of 20, 30, 40 years down the road what happens. Right? And what you want to see, you want to work with a company that you see the growth based on that illustration, but really, it’s the principle of the money you’re putting in, that premium, that base premium and stuff that’s going to grow long-term over time. So the reality is, you really can’t go wrong with an insurance company unless you pick one that really is not servicing its customers, or maybe they haven’t paid dividends forever. But you want to work with a company where they have been paying dividends, that you know it’s a mutual company. You know that they’re taking care of their shareholders.

And I would say we can show you three, four, five different companies and illustrations, and each illustration, one might look better right here, one might look better five years from now. It just depends on each of the illustration and how they’re designed. But the reality is almost every mutual company you’re going to work with, it’s not about the insurance company as much as it is about what works best for you and how that design works and looks for you long-term. And so I would say that you want to look at an insurance company that is long standing, has been around, that is taking care of their customers, I would say. But also, that you are comfortable with based off what the insurance illustration has shown you.

So we have preferences, Nate, you and I, back and forth. But I would say as an agent, I will not sell you a policy with a company I myself wouldn’t buy that product from, or even to the extent I actually own the product. So I think that’s one of the key questions if you’re working with somebody is: If they don’t own that product from that company, or they’re not buying that product now, why are they selling it to you if they don’t believe in it? But the reality is, it’s a mutual company. And mutual companies have been around a long, long, long time.

Nate: I guess that’s what we’re trying to get at here, Holly, is that you almost can’t go wrong.

Holly: You can’t.

Nate: I think you mentioned that. There are certain mutual life insurance companies that may be better at certain things than others. But at the end of the day, most mutual life insurance companies are old, they’re strong. They’re A rated. They’ve paid dividends every year for over 100 years. And guess what, all their policies look really similar.

Holly: Yeah. They do.

Nate: They look really similar. I wish we could answer the question, but essentially, really, you just throw a dart on the dart board and you pick one, because they really are … There’s no way that we can know which policy at which insurance company will end up being better over the next 30, 40, 50 years of ownership. We have talked about this before about life insurance policy illustrations. You could go talk to an agent and have them run you illustrations with 10 different mutual life insurance companies. And then you could scale them, you could rank them. Okay, at age 65 or age 70, which one produces the most amount of cash value? And you can make this hierarchy if you wanted to, from one to 10, and then you could say, “Okay. I’m going to choose the guy who’s number one. I’m going to get the policy that produces the most cash value.”

But because the illustrations show what’s called the current dividends that insurance companies are paying, these dividends will move around. The way the policy is illustrated may or may not happen exactly the way they showed it. Other companies may have dividends that were lower now, but won’t be lower later. So when you look at a policy, it’s kind of a snapshot in time, what they think it’s going to do, or what it might do based on the current numbers of the insurance company, but those always change. So what I’m trying to get to, Holly, you could go do that same thing five years later. You own this policy. You chose number one back then, and now it’s time to go start another policy. And guess what, you asked 10 more guys to send you 10 more illustrations with 10 different insurance companies.

And you look at the numbers, and guess what, the entire hierarchy has been completely changed, and all the insurance companies are in different orders. And the guy who used to be on top is not on top anymore. I bring this up to say you cannot tell by just looking at a policy illustration whether one company is better than another. And in reality, what you really are looking for is a strong, well run, mutual life insurance company that’s been around for over 100 years, since the 1800s, preferably, has been paying dividends every single year since the 1800s as well, without missing a single year. That’s how you know, hey, this is going to be a good company, and their policies are going to work well.

So you kind of need two things, Holly. You do need a properly designed policy with a good mutual life insurance company, of which there are quite a few. And once you have those two things, you can’t really say, “I wish I would’ve started with this other company or this other one.” Or at least there’s no way to know today whether you made the right choice. People don’t like to hear that. But I’m just saying that’s the truth. You can’t control the dividend scales over the next 50 years of life. You just won’t be able to do it, so we can’t know based on today’s numbers exactly how it’s going to pan out.

Holly: And Nate, I think that’s really key here, is that some of us want that magic ball, the magic eight ball that you shake and say, “This is a company that’s going to be it for the next 20, 30, 40 years.” And I’ve had policies that are going to be 15 years old. Right? And I have policies that are three or four years old. And they’re with different companies and they’re both great policies. If I had to do it over again, I’d probably pick the same way. So I guess the reality is there’s not one surefire that’s the best company out there, that’s the only one you should ever go with. In fact, we say a lot of times, diversify. Right?

Nate: Yes.

Holly: Have different policies with different companies just because you wouldn’t want … I say you don’t want all your eggs in one basket. So in reality-

Nate: Yeah. Who you start your first policy with is not that big of a deal because chances are pretty high when you practice IBC that you’ll own more. And our suggestion would be don’t just stay all policies with one life insurance company. I don’t think that’s a wise decision.

Holly: Yeah. I think that every company out there offers a different product. But like you said, if it’s designed properly and it’s designed correctly, they’re all going to be so similar, I mean, really, really similar with numbers and all of that, that the reality is you can’t go wrong because chances are, you will start a second, and you will have a third.

Nate: Yeah. I like to say that the insurance companies, they’re all essentially run the same way. The cost of operating the insurance companies is very similar to scale across the board. The actuaries that they’re hiring to build out the life insurance, death benefits and so forth, those are all the same. The places that they invest the money in are practically all the same. So what you can expect is over a long period of time, most of the insurance companies are going to gravitate toward the mean. For periods of time, some may be performing better than others. But over a long period of time, there should be no logical reason really that we can think of why one would just tremendously outpace another.Although, I do think, based on some research I’ve done, that there may be a few that are a little bit better for different reasons than I would expect. But nonetheless, that’s why Holly and I say, “You present me a mutual life insurance company, chances are pretty high I’ll own that policy if you … ”

Holly: Yeah.

Nate: I mean, there’s not one that I wouldn’t own for the most part.

Holly: And we really work to design it. It goes back to the design of the policy, Nate. That’s what’s the key here. It’s not just the company. It’s the design. And if you have a good design policy, almost any mutual company out there is going to meet that need for you.

Nate: Exactly right. So these are the five most common questions we get from those who are newer to the IBC journey. Next podcast, we’re going to finish this up with part two of common questions, but they’re going to be more focused on some of the advanced questions that we get asked by people who’ve been around for a little bit longer. So stay tuned for that, that’s going to be fun. This has been Dollars and Nonsense. If you follow the herd, you will get slaughtered.

Holly: For free transcripts and resources, please visit livingwealth.com/e115.

Announcer: Dollars and Nonsense Podcast listeners, one more thing before you go. Ease your worry and start your journey towards security today. Visit livingwealth.com/secretbanking. You’ll gain instant free access to the special one hour course Holly and Nate made for you. Again, that’s livingwealth.com/secretbanking.