Infinite Banking concept

[pfg1]

The thing about IBC... to me, its really just an understanding of how to use this bucket of money (the CV in your policy). I don't really like how Nelson explains it... agree, way to convoluted.

But to have a bucket of cash that you can access any time, for any reason, no questions asked... that continues to grow even when you are using it, is a great concept. Infinite banking to me, describes the idea perfectly. You have an infinite # of uses that you can use it for. I have a number of clients that use this concept VERY well.

The problem, many (most) advisors don't even really understand this works, and how borrowing $ against these policies work, and thus they cannot advise properly. I had an advisor email me about setting one up for his client so he could use the money in it asap, helping him to build a huge retirement income faster. WRONG.

To the OP... for that kind of premium, I would look at other companies than MTL. Penn, Mass, ON, etc. Its really in the product design as well... not completely based on the company.

SC, I have not ever heard of a company shutting agents down from talking about or selling based this concept. I guess there could be, but most I've worked with are ok with it at the minimum, to actively embracing it and supporting it. Agree, its not the right fit for everyone, but imo as long as they are doing what else they need to do ... having a "banking" policy is a great added value and tool to their portfolio.

 

[pfg1]

How much service work is involved with these? It seems like a service nightmare with loans and that sort of thing...

My opinion, utilizing this concept with clients is a very hands on deal. Not a service nightmare at all, but there is work involved to best serve the client. All my clients that have these type policies, we communicate very regularly on what they might want to do, and the best way to handle it. For an advisor to sell a client (using this concept), my hope is they would be VERY hands on from there on. Unfortunately most aren't and many folks have had a bad experience because of that.

It ain't rocket science, but most clients it will take some time and education for them to understand what they have and how to best utilize it.

 

[DHK]

SC, I have not ever heard of a company shutting agents down from talking about or selling based this concept

I have, but he was a career agent and compliance didn't like how he was actively marketing the concept online. So he left and became an independent agent.

It's hard to market a concept if a compliance officer has no idea how it works, and often agents are taught "funny math" to sell the concept. Such as: "you pay the loan interest to the insurance company and then the company gives you that interest in your dividend". Not exactly true and it's hard for detail-oriented clients to understand that.

When I read the Tools and Techniques book on life insurance planning chapter on life insurance loans, it really helped to solidify how they really worked AND it was a very compliant resource. It helps to really know the truth and still be enamored with it!

 

[scagnt83]

SC, I have not ever heard of a company shutting agents down from talking about or selling based this concept. I guess there could be, but most I've worked with are ok with it at the minimum, to actively embracing it and supporting it.
The thing about IBC... to me, its really just an understanding of how to use this bucket of money (the CV in your policy). I don't really like how Nelson explains it... agree, way to convoluted.

NYL, NWM, Mass, Guardian.

I have personally known agents who have received cease and desist orders from all 4 of them for selling the IBC concept to clients.

NYL dropped an agent because he ignored the cease and desist.


I do know that some carriers embrace it to an extent. Im not aware of any of the major mutuals that embrace it. At least not on a corporate level. Local offices have embraced it at times... and it usually gets shut down by the regional before corporate gets wind of it.


Other systems have been embraced though, Circle of Wealth is a decent system that incorporates WL into the planning. Much easier for the client to follow through on and understand and embrace. Ohio National was into COW for a while, not sure if they still are.

LEAP has been used by probably about all of the major mutuals at some point in time.
Its complicated, but makes sense if you take the time to understand it. But the whole planning process is looooong and similar to IBC, overly complicated. Most carriers dropped it over the years because of various reasons. Then they redesigned LEAP to simplify it here fairly recently. I think NYL might allow agents to offer the new LEAP... idk for sure. I remember hearing that one of the major mutuals allowed it again after the redesign.

But Circle of Wealth and LEAP are different than IBC. They are more of a financial planning process. Not a sales pitch for WL like IBC is.

 

[scagnt83]

My opinion, utilizing this concept with clients is a very hands on deal. Not a service nightmare at all, but there is work involved to best serve the client. All my clients that have these type policies, we communicate very regularly on what they might want to do, and the best way to handle it. For an advisor to sell a client (using this concept), my hope is they would be VERY hands on from there on. Unfortunately most aren't and many folks have had a bad experience because of that.

This is spot-on. If you are doing right by the client, it is a hands on process for the adviser that requires regular communication above and beyond a normal annual policy review.

And imo you are correct, after poor policy design, lack of regular communication to help the client implement the plan is the biggest reason these plans fail.

And doing policy/plan reviews for a client a few times a year doesn't seem like a big deal on the surface at first. But it takes two... and it can become a lot for the client. And the IBC concept is technically a concept that is implemented for an entire lifetime. And as an agent, we always hope that clients stay with us for life. But shit happens. And in my experience, even among the wealthy, very few people have the discipline to follow through with something this complex for their entire life.

 

[eersfan]

The thing about IBC... to me, its really just an understanding of how to use this bucket of money (the CV in your policy). I don't really like how Nelson explains it... agree, way to convoluted.

But to have a bucket of cash that you can access any time, for any reason, no questions asked... that continues to grow even when you are using it, is a great concept. Infinite banking to me, describes the idea perfectly. You have an infinite # of uses that you can use it for. I have a number of clients that use this concept VERY well.

The problem, many (most) advisors don't even really understand this works, and how borrowing $ against these policies work, and thus they cannot advise properly. I had an advisor email me about setting one up for his client so he could use the money in it asap, helping him to build a huge retirement income faster. WRONG.

To the OP... for that kind of premium, I would look at other companies than MTL. Penn, Mass, ON, etc. Its really in the product design as well... not completely based on the company.

SC, I have not ever heard of a company shutting agents down from talking about or selling based this concept. I guess there could be, but most I've worked with are ok with it at the minimum, to actively embracing it and supporting it. Agree, its not the right fit for everyone, but imo as long as they are doing what else they need to do ... having a "banking" policy is a great added value and tool to their portfolio.

I think it was back in the 70's when a bunch of agents in Florida got busted for selling permanent insurance as a "private pension plan".

 

[axeman462]

I think it was back in the 70's when a bunch of agents in Florida got busted for selling permanent insurance as a "private pension plan".

There is a guy, I think out of Virginia, Merl Gilley, that pitches IULs like this. He never actually calls it a "private pension plan", but he comes real close to calling it that.

 

[SamIam]

Mutual trust life tends to be a favorite for this concept - primarily for non-direct recognition of loan balances for crediting dividends to a policy.

I was told Mutual Trust was a Direct Recognition?

 

[DHK]

Run the numbers and look at it line by line. It can still work with a direct recognition company, as long as the annual interest is paid back to the policy each year out of pocket.

If you're counting on dividends to repay the policy loan interest... that's when direct recognition won't work as well.

 

[pfg1]

Direct or non-direct...it will work. And honestly if you really understand how they both work and the difference between them, its not a big issue. They both have pro's and con's. There are folks that tout non-direct is the only way to go and if you don't use a non-dr company, you are messing up - or worse yet, getting screwed. Its really just a marketing spin. some companies offer both.