Bruce Wehner discusses the primary components of infinite banking policy design: base premium, paid-up additions riders, and term riders. Following the principles laid out by Nelson Nash in Becoming Your Own Banker, we review the concepts for designing a whole life insurance policy for the Infinite Banking Concept.

https://www.youtube.com/watch?v=S54uejv8g-Q

When my father took out a whole life insurance policy on me as a newborn, little did he know that it would be the cornerstone of my financial planning in the future. From leveraging that policy for a home down payment to understanding the value of banking, I've followed the policy design guidelines of the Nelson Nash Institute to navigate the complex world of finance. Join us in our exploration of whole life insurance and the myriad of benefits it offers not just from a security standpoint, but also as a tool for capital growth and liquidity.

In this episode, we touch upon the long-term thinking involved in whole life insurance policy design. The focus is on the trade-offs we make, highlighting the potential benefits of reduced liquidity in the early years. We also delve into the nitty-gritty of policy design, discussing why a convertible term policy can be a boon for your financial portfolio. Moreover, we illuminate the often misunderstood relationship between banking and insurance, demonstrating how the former can be a profitable venture to exploit.

Lastly, we examine the financial intricacies of policy design, emphasizing the importance of understanding the connection between a policy's base death benefit and premium. We share insights into how dividends are calculated and how factors such as a low-interest-rate environment can impact these projections. Wrapping up, we stress on the importance of affording the premiums and how it affects the potential dividends one can receive. So, tune in, and let's debunk the myths surrounding whole life insurance policy design while learning how to make the most of it.

Whole Life Insurance is Not an InvestmentThe 3 Components of Infinite Banking Policy DesignWhat is Base?What are PUAs? Infinite Banking Policy Design and Base/PUA SplitThe Role of Term InsuranceThe Balance of Infinite Banking Policy DesignLiquidity and Thinking Long-TermOther Facets of Infinite Banking Policy DesignBook A Strategy Call

Whole Life Insurance is Not an Investment

Whole life insurance is a unique place to store cash because it’s safe and it grows. This growth, however, cannot be compared to investments because it’s not an investment. Instead, it should be compared to a bank, which is meant to be “safe” growth. This comparison reveals that cash value in a policy grows at a more substantial rate and is also tax-advantaged. 

Cash value is also fairly liquid, though it takes some time for your cash value to catch up to the contributions you make. In other words, there are some limitations on the liquidity early on. However, this is temporary and is more than worth the trade-off of safe growth—safe from the IRS, creditors, taxation, loss, theft, and death. It’s an iron-clad way to store your cash that you can’t get anywhere else.

The 3 Components of Infinite Banking Policy Design

In order to get the best results from your whole life insurance policy, you want one that is specifically designed for IBC. This means that you want to work with an insurance agent who is familiar with your financial objectives, and can help you choose the ideal policy design. Policy design can be complex, yet the three main components of a policy are base premium, PUA riders, and term riders.

What is Base?

Base refers to the part of your premium that goes to the main (or base) portion of the death benefit you’re buying. This is the foundation you build the rest of your policy upon, such as PUAs and riders. 

When you have a high base, you’re buying more death benefit upfront, and paying for it over the course of your premiums.