Your Family Bank

Discussion in 'Life Insurance Forum' started by FBN, Apr 10, 2013.

  1. scagnt83
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    Actually what I meant was that the big producers dont sell the BYOB concept at all. System or no system. It is different than just using the Cash Values of a policy to help fund retirement or future expenses.

    I do not sell or support any type of "banking" concept using WL or IUL.

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    Also, comparing it to 401k Loans (or a 401k in general) is not a fair comparison.

    WL was designed to utilize the Loan feature on a regular basis. 401k Loans were designed as a "last resort" and participants are discouraged from using them.

    Also, 401Ks are designed for accessing in retirement, not before. It would be like comparing a fixed annuity to a mutual fund... they are different products with different goals.

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    If an agent wants to learn the product they need to study illustrations and run illustrations with multiple scenarios. Its the best way to learn the product.

    If they cant learn it from illustrations and carrier required training; then they have no business selling the product. Especially since those systems do not go into the real details of the product.

    jmho
     
    Last edited: Aug 31, 2017
  2. DHK
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    There's a lot of "shoulds" and "shouldn'ts" in personal finance.

    People shouldn't access their home equity because it would delay the payoff of their home... but they do.

    People shouldn't cash out their 401(k) to pay off credit card debt when they change jobs... but they do.

    People shouldn't take out 401(k) loans for whatever reason... but they do.

    People shouldn't get into so much credit card debt for whatever reason... but they do.


    So, what "should" WE as advisors do? Help people to make the best decisions possible with as much information as possible to help them understand their options and the consequences of those options.

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    Forbes: New Report Shows Credit Card Debt Is Hindering 401(k) Savings
     
  3. scagnt83
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    People not following through with the original financial plan is the exact reason I would NEVER sell WL or IUL based on a BYOB system. Its hard enough to get high-income clients to follow through on financial plans... much less middle-income clients.

    If an agent actually followed Nash's system, they would never write any prospect who did not have 3-5 months of living expenses in the bank. How many agents selling this system are actually abiding by that do you think???

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    And none of that relates to making product comparisons when those two products are dynamically different in their intended purpose.
     
  4. AOKING
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    AOKING Super Genius

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    I have never understood the whole "magic" behind Bank on yourself or Becoming your own banker.........In reality, it's simply using the policy as collateral instead of spending your cash.......there are better options to set up to use as collateral....i.e. Bonds....

    But, to be fair......even the multi millionaire business owners I know don't know the basics of finance......The last guy I met that understood the cost of paying cash.....was on the board of a private equity firm
     
  5. DHK
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    If you use securities as collateral, you may be subject to margin calls, depending on the underlying value of the securities at any given time.

    If you use a bank account to secure a loan/line of credit, the interest costs on the loan are more than you earn on your collateral.

    If you use a 401(k) balance, you can only do it while employed. If you leave your job for any reason, the entire amount is due within 60 days, or the entire amount is taxable.

    If you use home equity, you have to be approved by the bank to borrow against it. A home is a horrible savings account because it is not guaranteed to return your money back to you, or guaranteed to access your equity when you need it. (Not including reverse mortgages, which is a separate animal entirely.)

    Life insurance may be a "wash" situation with 0% loans, or reimbursing your policy back for the loan interest charged by the insurance company. It's more equalized compared to other secured forms of borrowing.
     
  6. adjusterjack
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    Are you implying that paying cash is a bad thing?

    That people should be in debt all their lives?
     
  7. DHK
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    You finance everything you buy. You either:
    - Charge it (go into debt) and pay interest
    or
    - You give up the interest earnings you could've had, had you kept that money growing over your lifetime (paying cash).

    This is called opportunity cost.

    Yes, it's bad to go into debt, and paying cash is better than going into debt. But there's a 3rd alternative... and that is to "Bank on Yourself".

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    What if you paid interest all your life... but you OWNED the bank you paid the interest to? Meaning that the bank CHARGED you interest (as any other customer), but you also earned the profit on top of the interest payments you make to your bank?

    That's infinite banking.

    Assume you have $100,000 in policy cash value earning 4% per year for $4,000 earnings.

    Assume you want to borrow $50,000 from your cash values COSTING 4% per year or $2,000 in loan cost.

    $4,000 earnings - $2,000 in loan cost = $2,000 net earnings.

    However, if you reimburse the interest costs back to your policy, you restore your policy's earnings.

    $4,000 earnings - $2,000 in loan cost + $2,000 reimbursed costs = $4,000.

    Plus, your policy is participating in the profitability of the insurance company (Par-WL) and so you continue to earn DIVIDENDS based on that profitability and other factors. (Dividends and dividend scale are not guaranteed and may or may not be declared every year.)
     
  8. pfg1
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    ^^^ and your DB went up.
     
  9. jboussea
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    that's what it seems like . I haven't dived into it but I don't want to waste my time because the focus is on something that it's not. Typically not a fan of any marketing plan that tries to hide the fact that it's life insurance. I will always have an awkward moment when I eventually bring it up.
     
  10. pfg1
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    Yeah, I know its a marketing tool. I was just curious if anyone used it and if so, what actual feedback they could provide. Many of the marketing programs give a super in depth look at how they work (before you buy), this one does not. Looks like nobody here uses it. I was just curious. thx
     
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