Infinite Banking concept

[marindependent]

I'm a numbers guy. Just show me how one million in cash value is better than three million in a Roth IRA or 401k for retirement income. If you can I will contract with that company Monday morning.

Well Said.

 

[Golfnut2112]

Your spreadsheet is definitely flawed, not going to get into to deep but your statement about paying interest to yourself is misleading. When you borrow against your policy you are paying interest to the INSURANCE COMPANY and not to yourself. How would your numbers look compared to a bond yielding 4 or 5 percent inside of a Roth qualified plan if people are scared of stocks.

 

[Allen Trent]

But if you don't believe that taxes are a big deal in retirement... you won't believe it anyway.

IRS facts & stats show that taxes are a non issue for 60-70% of seniors, plus a minor issue for another 10-15%. So, I think we can agree that the tax conversation is best suited for the top 15-20% of income earners & clients of wealth. Not saying the other 80-85% should own the products, but they likely should not be oversold on the tax play being a huge benefit. Millions of seniors buy NQ annuity because agents tell them they are tax deferred. The problem is that most owners of NQ annuity are in the 0% or 10% bracket, thus deferring taxes they don't owe in small increments annually to them be paid out in large lump sums at death to kids in higher tax brackets. Life insurance is better than NQ annuity for those situations, but just saying you can't super impose a tax sake across the population that doesn't have one. It needs more surgical precision if being used as a replacement for other retirement income devices.

 

[DHK]

Your spreadsheet is definitely flawed, not going to get into to deep but your statement about paying interest to yourself is misleading.

I didn't say that.

Please show me where I said that in this thread.

 

[DHK]

IRS facts & stats show that taxes are a non issue for 60-70% of seniors, plus a minor issue for another 10-15%. So, I think we can agree that the tax conversation is best suited for the top 15-20% of income earners & clients of wealth. Not saying the other 80-85% should own the products, but they likely should not be oversold on the tax play being a huge benefit. Millions of seniors buy NQ annuity because agents tell them they are tax deferred. The problem is that most owners of NQ annuity are in the 0% or 10% bracket, thus deferring taxes they don't owe in small increments annually to them be paid out in large lump sums at death to kids in higher tax brackets. Life insurance is better than NQ annuity for those situations, but just saying you can't super impose a tax sake across the population that doesn't have one. It needs more surgical precision if being used as a replacement for other retirement income devices.

You're comparing stats and demographics. I'm looking at the formula.

Therefore we are comparing two different things.

You're also looking at this as a NEED based sale rather than a WANTS based sale. If someone WANTS to do this planning, with full comparison disclosure, it's still up to them.

None of this negates the validity - only that one is deeply rooted in their belief structure and only selling on needs, rather than wants.

I believe the tax code will change and get worse.
I believe that the stock market will have higher volatility and create more insecurity.

You cannot change my beliefs, particularly in those two areas.

 

[marindependent]

You lost me on this one DHK? What formula?

 

[DHK]

The tax formula?

 

[Golfnut2112]

I didn't say that.

Please show me where I said that in this thread.

You stated it in your spreadsheet near the bottom. You wrote How would you like to pay principal and interest to yourself instead to a bank or other financial institution

 

[DHK]

I never posted a spreadsheet.

I DID post my blog. And in my blog article I posed THIS question:

What if, you could borrow from yourself and pay the principal and interest back to yourself... instead of the banks and other financial institutions?

That's a cash flow allocation. When you pay the interest back to your policy, you are restoring your policy's earnings back to it - after your policy was originally charged by the life insurance company.

 

[DHK]

Btw, let me really twist your mind here:

If you borrow against your life insurance (and the insurance company charges you interest), but you are borrowing for the purpose of turning a profit in a specific endeavor... what can you do with that interest charge?

Can't you now deduct it from your taxes? Can't you write a check to your policy to pay the interest (to document it for tax purposes) and then borrow it back out?

And even if you don't pay the interest back to the policy, isn't the IRS paying you to borrow that money - for the purpose of creating a profit? (Now, if you don't create a profit, you won't be able to deduct it forever.)

And if the policy is earning more than you pay in interest... and the IRS is allowing the deduction (as long as the endeavor is profitable)... is there any real reason to pay it back?

(Just to clarify - this had NOTHING to do with retirement income planning.)