IBC and Rockefeller Myth – Episode 623

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[00:01] Welcome to the Prosperity Podcast. Prosperity thinkers, welcome to the podcast. We’re going to be debunking some myths. You’ve probably heard about IBC and Rockefeller method and death benefit and all these other things that you can get lost chasing. Kim, you’re going to come in with the proverbial hatchet and just chop away and get us clear. Let’s hear it. Oh, so fun to do. So the IBC, we’ll start with that, is the infinite banking concept. And this was written about in a book called Becoming Your Own Banker by Nelson Nash. And I was, and it’s totally provable, literally one of the first people to read his book. And I want to say the late 1990s. And it was a valuable book. It helped a lot of people.

[00:57] It has spawned numerous little kids, if you will, other books, et cetera, including my own. And we’ll talk about that in a minute. And the infinite banking concept or the banking truths YouTube channel that you might be watching or the other book by Pamela Yellen that is often quoted, which is Bank On Yourself, or the numerous other iterations of that are primarily all focused on the maximum cash value, minimum death benefit, whole life insurance policy. And there have been some conversations around universal life, but let’s just leave that out of the picture today. Maximum cash value, minimum death benefit. All right. Then came about what’s been known as the Rockefeller method. So this book by Garrett Gunderson and Michael Isom.

[01:51] And again, numerous little other kids that it spawned has been primarily focused on the opposite, which is maximum death benefit. And I don’t want to say minimum cash value. We’ll say medium cash value because with high whole life death benefit comes substantial cash value. It just had a slightly different approach. So you could literally say on the one hand, you had maximum cash value. That’s the asset that you are living with and using today. Minimum death benefit. And on the other, you have maximum death benefit and medium cash value. Well, I would like to propose a middle ground for two reasons. One, rarely in life should it be all one or all the other. And the middle ground is there and it’s written about in my Live Your Life Insurance book,

[02:52] which literally has part one as the cash value approach and part two as the death benefit approach. And I wrote that book also in the late 90s, early 2000s. The other reason that I want to propose a middle ground is, as is often the case, no one method is right for every single person out there. There are absolutely families that I meet where part two of Live Your Life Insurance, which is a little bit more in alignment with the Rockefeller method and a high death benefit is the right thing for those families. And of course, there are absolutely families that I meet where the high cash value, low death benefit is right. But then there’s one more thing that I want to say. And then I’ll be so curious your perspective on things because you do such a good job of paying attention to what’s out there in the marketplace and what our clients are asking, et cetera.

[03:51] And that is that if you choose the infinite banking approach, the becoming your own banker, the high cash value, low death benefit space, please add some term insurance on top. And what I mean by that is go ahead and buy your high cash value, low death benefit, half a million dollar whole life policy or whatever you’re going to do and add on to that. Not the term rider that all the YouTubers are talking about. That’s fine. But actual term insurance, you can buy it on the web. You can buy it as convertible, but actual term insurance in the million to two million to five to ten million dollar range, depending on your income and your family situation. Because if death occurs early, that death is a loss for that family and what’s known as human life value calculates that death and it should be 15 to 30 times your income or one times your gross worth.

[04:52] And so it’s fine if you want to minimize the death benefit on your whole life. Just please have proper death benefit to do what insurance is supposed to do, which is replace an asset. Oh, I like that. There are so many pieces to unpack in this. So strangely enough, I’m going to pull from a video that I recently watched. This is going to sound disconnected, but I’m going to connect it in because it’s right up in here. All right. It was a video by Gary Vaynerchuk. I’d say most people have heard of him. Social media marketing guru. And Gary explained something that I think ties in with the IBC and with these pieces, but no one would ever mention this. And here it is. He said that he was friends with this guy, Travis, who was starting this company called Uber.

[05:52] This is years ago. Gary had the opportunity to write a $50,000 check because that’s what he was writing at the time when he was making investments. And he passed. He didn’t do it. Now, the reason he didn’t do it, and it’s going to tie in with his IBC. He goes, I at this time bought an apartment in the city and he tied up his cash in that apartment. And he’s an immigrant, immigrant family. Immigrants like to have a little bit more cash on the side. He didn’t feel comfortable, missed out on the opportunity. He passed it of writing the $50,000 check because that would have been worth $540 million. Huge. Okay. So where are families passing on the opportunity? Because fear they don’t have enough cash on hand to they’re not seeing the opportunity.

[06:53] Three, maybe there some people could over leverage themselves. Where does that fit? Help us juggle. Well, it is a great question. And it’s why when I get on the phone with a prospect, I ask five very blunt personal financial questions because that allows me to then guide them on what is best for them. Because you could look at Gary’s situation and say, yes, for his situation, he did the right thing at the time. Although it was a missed opportunity. So then my second question and I’ll cover the five in a minute. But my second question to that is always, well, how can you do both? So let’s back up. The five questions are what’s your income? What do you have in your savings account today? What’s liquid money? Not retirement dollars, not invested.

[07:53] What are you adding to that account today? What dollars are you putting away saving as a noun first and then saving as a verb? And then I’ll usually ask some questions about 401ks and mortgages, especially the cash flow oriented questions. Now, that allows me those five questions allow me to know immediately what is the best approach for that person. And then, as I have said, for decades, go slow and start small. Take a baby step because if you recommend a baby step, the client will take it because they’re not afraid of the dollars being unavailable to them in some way. And so making sure that the baby step is taken so that the opportunity is not missed becomes the job. And then, like I said, can we figure out how to do both?

[08:52] Both, exactly. So let’s talk on the IBC. So there are a lot of people and it can almost be like a religion. You get into it, you learn about it, and it’s like, well, this is the only way. This is it. We’re going cash to the moon. Forget this term stuff. And then you’ve got the Dave Ramsey’s of the world. We’re not going to beat around. We’ve got the Dave Ramsey’s of the world, and it’s going to be, you know, term only. And hey, we’re going debt free and we’re going to punish ourselves for the next whatever time that is. So how are people navigating? It is so important to get clear on what is important to you. And so many people, you know, we as human beings know what we don’t want, but we don’t often know what we want.

[09:39] And so with those questions that I start with that are all on the personal financial standpoint, it’s so important to come behind them and ask what’s important to you. What are you trying to get done here? Because if somebody is a very legacy minded family, if they are very much into the perpetual wealth idea, which brings up the other book that I’ve written, one of many, but we have live your life insurance book, great starter kit, perpetual wealth, heavy duty. How can we help this family develop legacy, not only in the arena of money, but also in the arena of values and passing on other important aspects to their children to put in them, not necessarily give to them. It is critical to get clear on that, which I’ll do with just a few questions to help people identify.

[10:35] And again, a lot of times they know what they don’t want, and that’s fine. I can work with that, but it’s very important for them to start to identify what they do want. And that enables them to have a personalized approach so that it’s not a one size fits all space. And when you can tie a buying decision, we’re all emotional human beings. We think that we analyze things, especially around money, and we do. And we then make the decision emotionally. So if you can tie in the emotional aspect of that decision, whether it’s selfish, which is completely legitimate, I’ve got a lot of single guys, they tend to be more men than women for whatever reason, and they think they’re going to be confirmed bachelors, right?

[11:22] And so it’s a selfish region. But then I also have many young families that care deeply about working their asset base so that it succeeds through generations, plural. And that’s such a fun space to help. And it’s really just a few questions and a Q&A that can help us get that family clear on what it is that they’re going after and then help them do that. That’s excellent. I guess as we wrap this, I want to figure out where it is where people are going to find that mix of the risk of not protecting themselves and the risk of using it as a leverage tool that is getting ahead of them. And you’ve got the five questions. Are there a couple of red flags that you always see that you’re like, OK, hey, this is the indicator.

[12:23] Maybe we can hit that. And then the next step is someone can just contact you and your team and then they can follow up. Well, it’s a great indicator of a negative thing when somebody is borrowing against an asset and not paying it back. So whether you’re borrowing against home equity line of credit forever and ever and not getting that paid back, whether you’re cross-collateralizing real estate deals and not getting the debt on those paid back over time and slowly, but still with effort or whether you’re buying against life insurance cash value and not getting that paid back. That is where the red flags pop up. And so our society today, we are so comfortable with leverage because of the way our country is run and the way a lot of families run.

[13:13] And I’m not talking about living on credit cards. You know, there’s that part of society, but that’s not what I’m talking about. I’m talking about the people that are doing well and they’re leveraged because they’re just constantly seeking the next thing. That’s when some of those red flags pop up because here is the solution and people are not doing this. Take just a little bit of profit off every single deal that you’ve got, whether it’s crypto that’s rising or a real estate deal that’s cash flowing or a fix and flip that’s cashed out. Take a little bit of that profit every single time and pay back the loans. Again, doesn’t matter where the loan is from. It could be a bank loan. It could have been a credit card.

[13:57] It could be a line of credit against cash value of life insurance. It could have been a HELOC variety of things, but let’s take the profit. Skim the cream off the crop just a little bit every single time, every month, every quarter, every deal and get those loans paid back. When I’m not seeing that happen, I see red flags. Oh, so good. OK. And I would imagine this is the case. If you’re not seeing that happen, there is a gentle and firm way to change that. Send an email to support at ProsperityThinkers.com. Set up a time to talk to figure that out. Because if you don’t do it, you and I have both talked with people that are in their 70s and 80s that didn’t do it because because they thought they would get ahead and they never did.

[14:55] The flip side, I’ve talked and I love some of the Dave Ramsey stuff. I remember listening to it in my 20s, and it’s great for some of the things. But if you always live that, you will never have the real legacy piece either. So you’re in the middle like those. That’s the bread. You’re the meat. Get a hold of me. Support at ProsperityThinkers.com. Cool conversation. Thanks. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit ProsperityThinkers.com.