Oh yeah. So that’s the deal. It’s not easy to convince people. First of all, it’s not easy to explain. Even people that have been listening to me now for, what, five years? Mm-hmm. . You think they would get it by now? They show up to every webinar and a webinar, it’s a sales meeting. I say the same thing every single time and every single time I’ll get a comment, man, every time I go to your webinar, I learn something new.
I’m like, really? I haven’t said anything new in five years. But office hours in the academy, that’s where you can learn.
Welcome, BoomXers. Let’s throw out the old playbook. It’s time to tear down the traditional way of looking at your life and money. And leverage the laws of money to our advantage.
That’s right. There are actually laws of money and those who learn them and leverage them win. Stay tuned as asset protection attorney, Darol Tuttle, educator and leader of the BoomX Nation shows us how.
I don’t know if you can hear this, but in the background is Russell Brunson on Facebook and he is walking potential customers of his through, his latest project and he’s talking about sales funnels and ClickFunnels. What’s amazing about him and all the other people that I see on YouTube who know how to sell something, they talk so fast and they are just consistent.
They don’t seem to make any sort of mistake in their presentation. Whereas for me, I am not that smooth and I really just kind of get my legs under me when I’m having a conversation with another person. And I’ve learned that I’m never going to be smooth. I’m never gonna be a great salesperson as Russell Brunson and these big names in the entrepreneurial world are, and I should not try.
And another thing I’ve learned is audio. So the quality of audio I have been told on a podcast should be perfect. I now live in a culture on the Caribbean where it is just loud and I’ve postponed sending out podcasts because I just couldn’t find a quiet moment, what with the party atmosphere here and the roosters that are crowing all the time.
And I hope that you accept this new episode, season three, episode 44. That’s amazing on the BoomX show. Today, I have a great conversation with a smart young man, and by smart I mean, he is clearly an educated but thoughtful person and he, I don’t know how old he is, but he’s gotta be 30 years younger than me.
But I respect his opinion. And we talk about a very interesting way to invest money that offers a few things that other investments will not give you, namely, privacy. And we explain what that means. And more importantly, as far as I’m concerned, as an estate tax and elder law attorney, planning attorney is an ability to pay for a future tax, estate tax.
Remember, there are 10 states in America that have an additional estate tax other than the federal system in the future. And his name, first of all, I wanna say he’s from Chicago, one of my favorite towns. His name is, Sarry Ibrahim. And if I got your name wrong, sorry, I apologize. I’m working on it. All the resources that he mentions and his website are links in the show notes, so you can just click it to learn more about him.
And so let’s just dive in right where the conversation picked up. You’re going to hear candid moments between the two of us, what we’re really thinking, and I think that you will get something out of it.
What about you? What’s going on with you? Yeah I think we talked about that I’m a financial planner. I’m doing the certified financial planner program about almost done with it, almost done with that program. And yeah, just helping clients, mostly with the bank on yourself concept, similar to the infinite banking concept and a long term approach to financial planning.
And now, with you now we could probably talk about estate planning and elder law and the after part of planning financially. Right. Yeah. Tell me like if you had just time enough with a couple, potential clients or just maybe somebody you meet, some casually and they found out that you were an advisor, what is like the one thing, you have limited time, the most important thing, what unique problem in the world are you trying to solve for your clients? Yeah, it’s helping solve the problem of thinking to the next generation, right? I think a lot of people don’t think about that, but that’s really important, planning for the next generation. How does the next generation continue to do what you’ve done?
But even probably at a higher level, of course, right.? Better education, more financial freedom. So I would get them to probably solve that problem, thinking about the next generation, which is hard to do right when it’s not here, when it’s not now. It’s difficult to think that way. Right.
Let’s get into the nuts and bolts of it. So your thing is generational wealth, basically. Yes. I read this article, I was reading a operations manual for attorneys on LLCs. Mm-hmm. . And there’s this one sentence that really resonated with me and it’s, wealth as a family collaborative. And I’m like, that’s it, that’s what I’ve been trying to say is bring the family together.
My clients, I don’t know about yours, but they just have this instinct to just give the kids everything outright. Yeah. And then they just blow it within a generation. What is your program? How do you solve that problem? Tell me about the nuts and bolts of your offering and your solution and the service that you provide.
Yeah, yeah, definitely. So consistent with the bank on yourself concept. We’re using high cash value, whole life insurance in a way where you can use a lot of the cash value while you’re alive in the meantime. And then of course, still the death benefits do grow over time. So we do try to grow them as much as possible for the next generation.
So that’s exactly what some of our meetings are talking about. We’re talking about usually starts off first with them becoming their own source of financing, them building up cash, them using that cash for their business or for real estate. And then, it ultimately becomes about the next generation. So typically, that’s one of the strategies we use, passing the wealth through the life insurance policy to the next generation.
Yeah. And then of course, as you know, right, being an attorney, there’s tax benefits with doing that. And then also asset protection. Like in my state, in the state of Illinois and correct me if I’m wrong, i’m not an attorney, but the cash value and the life insurance are protected from creditors.
I think the only exception is you have to list your spouse as the beneficiary on the policy. Other than that, so this is a really good way to protect your money, have it grow, have a compound, and keep it out of the hands of creditors. Right. One of the things that I try to point out to people, okay.
There’s a question before I get to this point, and that is, how do you deal with people’s sometimes visceral reaction to the word life insurance or whole life? Yeah, you’re right. Yeah, definitely. It has a very powerful, it could really stop a conversation quickly, right? Sure can, man. And that’s why I do a lot of podcasting like this right now.
And we do a lot, we have our podcast, Thinking Like a Bank, So we try to share that content with people to give them the benefits. I show them some of the relevant benefits right,for them. Cause there’s so many different ways it can go and it can benefit people but I think it has to be the right benefits for the right person.
So I try to share as much content as possible with people, so that way when we are talking, when we go to the financial analysis meeting, and then it comes time to present the solution, it’s not really that big of a surprise now because they’ve already heard me say it on podcast. I’ve already spoken today.
They’ve reached out with questions about how the concept works. There’s many books out there about this concept. You know, I didn’t invent this concept. It’s been happening since life insurance companies have been in business, which is over, well over a hundred years, right?
These are like almost like secret strategies the wealthy had been using. And I think that when people start learning about infinite banking and they start learning about bank on yourself, it breaks that barrier. So what they’re comfortable not hearing whole life insurance because they look at it from the point of what it can do, not what it’s called anymore, but what it can do.
I frankly, I don’t care what it’s called, it’s, I’m looking more of how do we grow wealth on a tax basis. How do we pass it the next generation on a tax basis? How do we protect it from creditors and how do we even help against the unexpected costs of long-term care, which we were talking about before we were recording.
So I think when people look at it from those functions and those aspects then it kind of changes. Yeah, my first exposure to life insurance, while I was a young lawyer and we had this problem in Washington. We have a 2 million dollar death tax credit and a lot of people are above 2 million. And so one thing that we can do is use a credit shelter trust, or we can do lifetime gifting but once we get to those advanced concepts, like we’ve run out of all the easy things to do, yeah. Then you’re looking at wealth replacement and sometimes, charitable trust. Both are hard to sell to the client. And so there is this great, whoever came up with this, I’m not saying he was a genius, but he was a pretty smart dude.
So gift to an irrevocable trust. And so that money’s outta the estate. So the taxable estate’s going down as your gift, right? That’s just lifetime gifting. Then once it’s in the trust, the trustee buys life insurance on the client’s life. So when the client dies, like at some point there’s going to be in estate tax and if you know it’s $500,000 in the future, then the trustee can buy with the trust proceeds.
A life insurance policy that just magically has a death benefit of 500K, but the premiums were only 150K, and so you paid the estate tax ahead of time, pennies on the dollar, and it’s all tax free. You know, I mean, like what’s not to like, what I’ve learned is I have to describe the concept and get the client to agree with it before I mention the word life insurance, because once they hear that, they just freak out.
And I’m like, you guys, just forget about what it’s called. Think about what it does. Yeah. I wonder what exactly is behind the negative response to life insurance. It’s very odd like how people are either open to it or they are just simply not open to it. I wonder what caused that, do you know?
Yeah, I think number one, it’s the term life insurance, right of words. So you have to die so the beneficiaries can get that money. So now there’s already a turnoff in itself the aspect of death being involved. And then the second thing too is probably like Dave Ramsey and Susie Orman and like other media financial influencers out there who have been talking about like, never put cash into a whole policy.
It’s the dumbest thing you could do or any type of cash value life policy. Even a lot of financial advisors I run into sometimes, they’d say like, why would you ever buy anything beyond. And I think that when you say it that way, like ever, it’s too broad. I think that there’s a lot of things you’re excluding. You’re excluding, like for example, somebody’s 40 years old today, they’re in good health.
Financial advisor says, skip whole life, don’t do anything with cash value life insurance. Only do term for a 30 year term. Okay, that I see that perspective. I’ll agree with them. I see that perspective during just that 30 year period, and then they get term life insurance, and then at age 70, now they’re diagnosed with a condition, which is not a surprise for a 70 year old.
And now they can’t renew that term. And if they could renew that term, the term life, the company that’s offered the term policy could have some sort of provision that increases the term premium monthly. Every month they could increase that term premium and the vast majority of people in that situation end up canceling the term life policy because it gets way too expensive.
It goes a thousand dollars a month, $1,500, $2,000 a month and until they tap out, they cancel. And then next year or two years after that, the person ends up passing away. But if they had a whole life policy in place, we can set it up so that way you pay in it for 30 years and then at the end of the 30 year period, it keeps growing the cash value and the life insurance, keep growing regardless of market conditions without any more premiums. You could use it for long-term care. You could use it to pass out to the next generation. You could use it to finance other investments. And then by the time the person passes away, let’s say 80, 90 years old, then they’ve accumulate all this money without having to worry about the premiums that age.
So you kind of get it like long term, beyond today’s rates, it changes everything. Cause today I could show you Darol a quote for a million dollars, 40 years old term life insurance will be like, let’s just say $150 a month, not that much. And then a whole life policy for a million dollars on a 40 year old could be $30,000 a year.
You know what I mean? But the problem with that is we’re just looking at it at today’s rates and today’s death benefit. What about the premiums that are building up? What about the tax benefits? What about the ability to use it for long term care expenses? What about everything else afterwards? I think that’s what people need to really open their eyes to and see.
Yeah. So I’ve been a lawyer now for 27 years and when I was younger I kind of took it but you know, now I’m grumpy. Yeah. And basically for earlier in my career I get these old farts with their spreadsheets and, they’re not really trying to plan but they’re using financial planning and estate planning as recreation in retirement.
Yeah. And their big thing battle cry was by term and invest the differenc, right? Yes. And I’m like, even those guys, I’ve been a lawyer for 27 years. I have never seen anybody in my entire career actually do it. You say it, but no one does it. And if you think about whole life or even, I don’t really understand the difference between universal life and whole life.
Yeah. I’m not sure it matters, but really, there’s a cash value in whole life that’s increasing in value and there’s a death benefit of, it could be flat or it could be maybe fluctuating a little bit, but if it’s a 500K death benefit and the cash value is maybe 50K in growing, isn’t that the same thing, like basically the insurance company is doing it for you?
Yeah, and I would think far less risk than some guy riding the stock market with a spreadsheet and not agile enough to adjust when we have a market adjustment like we’re having right now. I think not to the belabor the point, but you know, this 12 year bull market just skewed people’s perspective on really how the market works and why take a risk with something.
Well, that’s the other thing, but let me get your reaction to that part first. Yeah. And then I kind of wanna talk about how these guys think it’s an investment when really it’s a strategy. It’s a long term generational wealth vehicle that investing does not offer.
But and by term, invested difference emotionally, isn’t that just baloney really when it comes deployment on the ground? Yeah it is. It even mentions that in the certified financial planner program, it mentions that some advisors might compare whole life insurance to doing term and investing the difference. And even in that situation, even in the text as it mentions, it’s a highly unlikely situation that people are gonna get a term policy.
And they’re gonna stick to a monthly allocation like every month they’re gonna invest a difference in the stock market. And then let’s just say people did that. Let’s just say that everybody did actually follow that. The problem with that is, what if the market is down? Are you gonna keep putting money into it when it’s down and then the market is up, you gonna keep buying when it’s too high? I think it’s too narrow to always say that no matter what you put money in the stock market cause it’s not always the best place to put money. It fluctuates, it goes down in value. It sometimes could be good, sometimes it could not be, not a good time to buy. But also you mentioned like you’re, when you do a whole life policy, even though it’s not an investment, you’re outsourcing part of the growing the wealth part to the insurance company. And the insurance company has arguably the best track record as far as growing wealth, they’ve been in business for over a hundred years.
They’ve been paying out dividends to their clients. They’ve been paying out life insurance claims. They’ve been providing loans to other financial institutions and their policy owners, so they have much more stability. There’s actually a book called All About Annuities, and the author mentions in the book that there’s 2000 life insurance companies in the United States.
If you took all their reserves, all the life insurance companies’ reserves, and you pulled it together, it would be more cash than all of the banks and oil companies in the world combined. It kinda gives you a relative comparison to how much cash US life insurance companies are actually sitting on.
Arguably, they have the most cash in the world and probably a lot of things that happen internationally happen because of the financing of life insurance companies. They’re building some headquarters in Switzerland or Germany or wherever. A US life insurance company probably has something to do with funding debt.
So this isn’t like the financial advisor down the street who’s really good at following the S&P 500 or the Nasdaq. This is greater than 100-year organization with arguably the most cash in the world handling. your money. So I think like people need to understand that they’re not trying this out.
They’re not experimenting with this life policy to see if it might work. They’ve done it over, they guarantee that they can maintain a life insurance amount and cash value amount until age 120. And then at that point, they give you the endowment, the endowment age, whatever it is, whatever that amount is, the death benefit at H121.
They give it, they give you that. So they’re that confident that they can maintain their assumptions and dividends. Well, one of the experience, the second experience that I had with life insurance as a professional was I worked tangentially on a portfolio of a bank and these big banks have what they call BOLI, bank owned life insurance.
And so people are like, oh, you know the banks, that’s better. That’s this or that, or they’re used to a bank. But banks have, I’m not saying they have a lot of credibility, and integrity, but they have some, and all the banks, what they do is they buy life insurance on the lives of their employees.
Yeah. Cause they have an insurable interest. And then it’s their job to keep track of the retired employee, figure out if he died or not. But they see the cash value on the books. They see the tax-free death benefit, tax-deferred growth, and then a tax free payout. And to them it’s a good investment.
And so I’m like all the banks in America, the big ones, have billions of dollars in life insurance. And somehow Dave Ramsey thinks it’s baloney, you know, I’m like, I don’t understand. Yeah, a hundred percent, they’re the biggest purchasers of life insurance. I think as of now it’s $300 billion in just banks in the US have about $300 billion in life insurance.
So yeah, they’re the biggest purchases of it. And that number’s increasing. I think it grew by about 33% over the last three years. When I first checked the number, it was around 200 million, three years ago, and then now it’s about 300, 300 billion. Sorry. So, that number’s increasing and yeah, you’re right.
They do that for the tax benefits. They do that for the growth too. And they’re also required, I think the Federal Reserve requires them to have 25% of their reserves in a life insurance policy, either universal life or whole life insurance. Oh, wow, I didn’t know that. Yeah. So there’s legal requirements for banks to own life insurance.
Sometimes the old farts go, you know, the security, the life insurance company might go under. And I’m like, okay, there, there is a guaranteed fund. Yeah. In Washington state, of course they point out it’s only $500,000 limit or whatever, at this point, you know, the guy’s just arguing with you.
But so get this, the security of a bank as compared to life insurance. So the BOLI portfolio of this project was owned by Washington Mutual, which is now the front. It was one of the big culprits in the 2008 mortgage back security downfall. Yeah. And so that bank went under, the BOLI portfolio is 100% intact.
Another big bank, I can’t remember who, which one just bought it. And so it just poured it over because it’s a good, secure investment for any bank. It’s ridiculous. Yeah, exactly. And even for small businesses and individuals, when you buy life insurance and the cash value and the life insurance, it’s on your assets.
It’s on the asset side of your balance sheet. So in some situations, you could sell it with your business, like how you mentioned what the bank did. So yeah, it’s definitely, it’s not a sunk cost. It’s not something that you just spend money on, I think term is like that.
So even though we do a lot of term policies, right? Some clients only need it for certain things. Like sometimes when you get a loan like a commercial loan, a bank might require you to get a life insurance policy and then have them assigned to it in case you pass away. They can collect the remaining principal interest owed on there from the death benefit.
And then give the rest of your beneficiary. So I see some benefits of term, but even with the term policy, every month as you’re paying those premiums, those are some cost. It’s going and you can’t recoup, you can’t replenish that money that you’ve spent with a term policy.
With whole life insurance on the other hand, it grows, I usually use mutual life insurance companies. So it’s going to a mutually owned life insurance company in which you’re a mutual owner of, and then you end up getting that money back to compound interest in the cash value and the dividends and the growth of it.
So you end up recouping your initial cost in a whole life policy. Whereas a term, it’s kind of like that money that when he is gone, unless you pass away and then the money goes to your beneficiary within that time period. Well, like a buy sell agreement for like law firms. You got the partners, for the partners.
In Washington state, probably every state, only lawyers can own a law firm. And so one partner passes away and now you got a problem because his Last Will and Testament, estate plan, left everything to his wife to include his ownership interest in the law firm. And so now a non-lawyer potentially owns a share, so you know, that’s a problem. And so the law firm will just buy out his interest and seems to me like term would be a better product in that case because you’re only insuring the life of the partner for what, 20 years or so, that’s an example of term making sense. Yeah, exactly. Yes. Mm-hmm. Definitely agree. I feel like we’re the warriors fighting disinformation. I listen to the Dave Ramsey. Dave Ramsey bothers me for a lot of reasons.
He’s about my age. We’re both bald, so all bald men look the same. But one difference is, he’s just a mean guy. Yeah. Like the way he treats people is just horrible. And he thinks he’s all that. And so he gets on this rant about infinite banking, and he won’t even let the person who called in to ask the question, like, really finish the question.
And he goes on this rant, and one of the things he keeps focusing on is Prudential and how they’re crooks and how infinite banking and whole life and all this. Well, you go to their website, they don’t even sell whole life. Yeah. Yeah. And I don’t even think they’re a mutually owned company. I think. They’re not.
Yeah. But you used to watch the video. You probably have seen it, but pay attention to that part of it because, he just ready, fire, aim, sort of thing. It bothers me because a lot of people listen to him and think that he knows anything about planning. He’s never consulted with a client and given advice in exchange for a fee in his entire life, let alone for 27 years. He’s never worked on a case. He seems to be completely unaware that there are 10 states that have a separate estate tax. I’ve heard him say, you don’t need to hire a lawyer unless your estate’s over 24 million thinking of the federal limit, right?
Yeah. And I’m like, okay, what about Oregon? Like everybody, but Oregon’s credit amount is only a million bucks, anything above that, it’s taxable. We have the highest rate, by the way. We’re number one. We have a up to a 20% death tax rate in Washington. Right. And just think about life insurance.
People have their assets tied up doing other things. And if you know, there’s a 20% reduction in my portfolio when I die, over 2 million. A business would say, okay, let’s come up. Let’s earmark that and let’s apply a solution now and then forget about it. And they don’t get into all this emotional turmoil about what it’s called.
And using a trust, it makes a lot more sense. But even just buying a policy when I die, here is a 500K kids, paid the death tax. The worst thing that’s gonna happen, not the worst thing, like one of the other benefits is the kids go, man, my dad was a rock star. He even paid the tax. You should hear what kids say about their parents after they pass away. If they didn’t plan, there’s a lot of grumbling and it ruins their memory of their parent actually and people don’t take that into consideration. Yeah, that’s actually a really good point. And you could actually do them almost like a disservice by leaving them a bunch of assets in a big tax bill.
Especially, right if those assets aren’t liquid assets, like what if it’s all real estate? Now they have to, like, what would they do in that situation? They’d have to either sell some real estate to pay the death tax or even borrow, they don’t even think about, it would put them in like a.
Yeah. Okay. Like the real estate guys, like rental property guys, that’s a different breed there. And they have great wealth and a lot, it is just not, they don’t have the liquidity that other, like stock market guys. And they had this different mindset, and I don’t know about you, but I’ve never run into a rental property guy who could even conceive of insurance. I mean, they have liability insurance. That’s it, basically. Yeah. And so that, that’s a hard argument for those guys, but they don’t understand liquidity and the only thing to do is sell. At least they get a step up on basis. The kids do. So that’s nice.
But another thing too, myth, it’s a lot of people think, like family is a wealth collaborative. That article was basically saying people keep their wealth secret and that causes a lot of problems. At the same time, they appoint their children to be their agent under a power of attorney.
And you get the call, just imagine getting the call, mom fail, broke a hip, she had a stroke, and you’re like, and they say, and you’re the agent under the power of attorney. A lot of kids don’t even know they were appointed. Follow me? And then it’s this, oh, where, what does my mom own? I have to apply for Medicaid.
She can only have 2000 bucks. What does she own? I can’t even find any paperwork like annuities and life insurance. They only send back in the day, it was one letter a year that told you what you had, and now it’s all online. And so just imagine you make a Medicaid application not realizing that your mom is a millionaire. It’s very common.
There’s a lot of secret millionaires and what they do is at the reading of the will, that’s when the kids find out that actually they weren’t poor. They didn’t need to recycle paper plates and we’re millionaires. Surprise! And a better approach would be just to include them because what I’ve found is like this gift of life insurance at death, like a life insurance death benefit, tax free, paid out to the estate. So the kids have liquidity to pay some bills, rockstar.
Instead what happens, the stress that comes with an unorganized estate plan is off the charts. Like I used to buy tissue at Costco because everyone, all these kids would come in when the parents were dying or dead and just, it was so emotional and because the kids were at odds with their feelings of grief, but also frustration and anger that everything was in disarray and stress as to what to do next.
And I think that life insurance, like if you think about it in terms of a soft landing for your family. Yeah. Who wouldn’t buy, what kind of mean person wouldn’t buy out? Well, besides Dave Ramsey, I mean he definitely has a personality cult, I mean, you know. Yeah. Okay. So, I wanted to drill down cuz we’re running outta time here a little bit.
When I did the podcast on infinite banking, what I really liked about it was you can, I’m gonna screw this up, so bear with me cuz it’s been a while now since I thought about it. But you can take a loan out, but really it’s as if you never took the loan out. The cash value’s still accruing.
I thought, okay I’m gonna take a withdraw from the cash value. That’s what a bank would do. If you had a debt, a credit card bill, and you’re like, oh man, this thing’s accruing at 18%, I better pay it. And so you go to the bank, you take out money from your savings account. You used to have $10,000 in your savings account, and now you only have five.
What’s weird about infinite banking is you can take out money from this policy that you purchased, but the cash value is still 10,000 and it’s still accruing is that true? Yeah, a hundred percent. Yeah. So you have the cash value, you have the life insurance, right of the death benefit, and both of those are growing every year.
And any time you wanna borrow, that’s the key word, borrow. You take out a loan from the life insurance company using your policy as collateral. So that’s how it’s possible. Cause a lot of times you are like, how can I put money in something and then take money out and it keeps growing. You’re not technically taking money out of it.
You’re using your policy as collateral, and when you’re borrowing from the life insurance company, you’re taking out a loan, like a personal loan from the life insurance company using your policy as collateral. And that’s how it’s able to keep growing. So ultimately what happens is it doesn’t make a difference whether you take out a loan or not as far as your anticipated non guaranteed dividends and your overall cash value growth and the life insurance growth.
It has to be with a company that has something called non-direct recognition. So when you take out that loan, they don’t recognize that loan and crediting your account interest and dividends.
Some companies when you take out a loan against your life policy, they’ll stop the interest or dividend, so it interrupts the growth of the policy. And then other companies like the ones we use they’re mutually owned, non-direct recognition companies, so they don’t recognize that loan and crediting your account and that’s what you want.
It’s very similar to the real estate model, right? Where if you have a real estate property, let’s just say you owned it without a mortgage, the properties, where the market value of the properties worth half a million dollars, and then you go to a bank and then you take out a loan, let’s just say you took out a hundred thousand loan and you tell the bank, I’m gonna have this house as collateral.
That loan that you took out doesn’t interrupt the market value of the property, nor does it interrupt the appreciation, the property keeps appreciating. It keeps growing even with that outstanding bank loan. The same thing with whole life insurance, you’re taking that against an asset that you own, and this is really like, you probably seen this more than me, a lot of wealthy people, especially ultra wealthy people.
They have a lot of debt, but they also have a lot of assets and the assets they own. The hope is that the assets they own outpace and outgrow the debt they have. So there’s an arbitrage. They have millions of dollars in real estate. They also have millions of dollars in debt, but the real estate and the assets are growing.
They’re outpacing what they’re spending on interest and their overall debt. So they’re coming out ahead. Even Trump is one of the biggest borrowers of banks, so it’s not something where when you borrow, it’s not so much of you need the money, it could be definitely a wealth creating tool as well as an asset protection tool. Of course, when you have a lot of things with debt. So that kind of mentality is where whole life insurance comes in, is you have an asset that grows and then when you borrow against it, it keeps growing and then it even has an arbitrage. So the growth of the whole life policy outpaces what you paid to borrow that money.
Is that what Dave Ramsey was freaking out about? I didn’t really follow the conversation, but he was talking about mutual life insurance companies and then he called the other type something else I forgot. And I’m like, what is, I don’t, what is a big deal, now I get it.
I think what you’re saying is this certain type of company allow, the difference to the client in this particular scenario is when they take a loan out, the cash value’s still accruing. The other type of company won’t do that. Is that the difference?
Yeah, exactly. Yes. Yeah. Exactly. Yeah. Another thing too, he was saying was that when you borrow, he was saying like as if it was negative, like you have to put money in a whole life policy and then when you want money, you have to borrow, like he was saying a very negative tone. As if that’s a really bad thing.
When you go further into that, like why people do that and so that way they’re not interrupting the growth of it. Because anytime you buy something for with cash, you interrupt the growth of that cash. So this way that allows you to grow your money, borrow against it, buy the assets you wanna buy, or whatever it is that you wanna buy, and it keeps growing and then you pay it back on your own terms and then you end up coming out ahead. So you’re always preserving your cash and you’re always increasing your cash value.
Dave Ramsey has a dysfunctional relationship with debt. He’s very simple minded. Yeah. And his approach is debt is bad. Never have it. Yeah. Okay, so why do top investors and businesses understand the concept of leverage?
Yes. Which is, like leverage. He just doesn’t, that’s just too much for him to comprehend. Yeah. And I love it. Another thing I like about it is two things. Mm-hmm. , one, as I understand it, it doesn’t seem like Shannon in Family Leaders at the BoomX Academy, she’s only 35 years old. She’s the one that got me into it.
She asked me, what do you think? Well, I don’t know. I’ll look into it. Then I came back with thumbs up and then she said, good, because last year I bought a policy. She didn’t tell me that ahead of time cuz she didn’t want to influence my thinking on it. But she pointed out, she goes, what’s great is these guys unlike a bank or credit card company, every month, where’s our payment?
The bank seems to, or the life insurance company is, we’re gonna get it from you when you die. So we don’t really care, like every year she goes, once a year I get a statement that says, this is what it is, pay it or not, and you can just go on to the next. And so to me, that’s when the light bulb went off.
Oh my God. So, I can take money out and get some liquidity and it’s still accruing cash value. It’s not imploding the policy. And really, if I didn’t want to, it’ll just come out when I pass, life insurance companies’ fine and I had money to work with, now I can pay off the credit card bill.
That’s the thing that Dave Ramsey doesn’t get. His lack of sophistication really works against him because in a sense, this is his message, use money intelligently to pay off debt. If you used this policy to pay off your credit card bill cuz you went to Hawaii and got a little crazy.
Perfect. Right. I mean, just like there’s more money accruing at this percentage than would’ve been going out at the credit card company. The spread is the intelligent part and he just doesn’t get it. The other thing I like is privacy. Like it’s my bank as compared to, going to the bank and talking to those guys, it’s horrible.
Don’t you think? I have negative, I can remember taking out got a large cashier’s check and the teller goes, oh, you gonna buy a house ? And I’m like, I know you’re just making shit chat, but mind your own business. . Yeah. I think, yeah, I think they have to ask these questions like nonchalantly, because the banks are probably like if cases there’s a problem or something comes up. The banker could be like, oh yeah, I asked him what this large purchase was for. I get it. The good thing is with whole life insurance policies, I can, if I have the cash value in the policy, I can literally print out one form, sign it, say, I want, whatever, I don’t know, a hundred thousand dollars.
The insurance company’s not gonna call me and say, Hey, we’re on the way to sending you this hundred thousand dollars, but what do you need it for? Just, we’re just curious, I’ll never get that call as long as I have the cash value in the policy. There’s no credit checks, there’s no prescreening, none of that.
They send you the, they wire transfer the money to you or send you a check, and then when you get that money, you can pay it back whenever you want. You can pay back monthly payments, annual payments. You can pay interest only to the insurance company. You could, like you said, just wait until you die, and then they take it from the life insurance, yeah. So there’s definitely far more privacy and protection, right? So, you don’t have. They’re not gonna send a letter to a government agency saying this person took out a loan and the amount of this much like how a lot of banks are required to disclose certain information to the IRS and things like that.
So you’re really you’re preventing a lot of doors from opening, especially when you’re a real estate investor, you’re a business owner, you’re growing your wealth. It can grow inside the policy and you don’t have to give up. So a lot of people say yeah, but I like real estate a lot.
You don’t have to give up real estate. You can use the policy to amplify your real estate and grow your empire where you’re the banker, you have the real estate, and then instead of going to banks for properties, you can go to yourself for properties. Now what I recommend, like people always do that.
No, I think that still banks can still come in handy, right? For mortgages and usually like asset backed lines of credit, usually are favorable. But if you wanted to, if you wanted to completely exclude banks, you could do so if you wanted to. Got you. So tell me what resources you have on your end to help listeners understand and maybe even move in that direction.
Yeah, definitely. So you can check out our podcast, Thinking like a bank. It’s, you can find it at thinkinglikeabank.com. There’s an ebook you could download. There’s the book, Becoming Your Own Banker by Nelson Nash. It’s a really good book on the introduction to the concept. And then you could also check out the book, the Bank On Yourself Revolution by Pamela Yellen.
If you go to our website, you can find all these resources at that website, thinkinglikeabank.com. Thinkinglikeabank.com. I love it, very good. You know, I’m studying Spanish. I live in Puerto Rico, so I chose a place with the worst dialect, like the hardest dialect to learn. And I have no talent for language in Spanish.
And I is pronounced like a E. Yeah. And so I’m looking at your last name, pronounce it for me. Yeah. Ibrahim. Yeah. So it’s got that E, that Ibrahim. Do you pronounce the H? Yeah. Yeah. Ibrahim. Yeah. Yeah. So in Spanish, I think it would be Ibra-im. Yeah. So what is your ancestry? Yeah. Originally from the Middle East, from Palestine.
Right. Okay. You’re not telling me what part of the Middle East? Palestine, I gotcha. I grew up in the 80’s, and the PLO. And so back in those days you had to be careful when you said which side you were on. you know. I grew up in Washington, so it wasn’t that big a deal, but I can imagine in some communities. Definitely, yeah, for sure. It’d be a problem.
I wanna thank you so much for being on the show. I really learned a lot. I’m gonna check out your site and for the listeners out there, don’t worry because all of these references and resources that he mentioned will be in the episode notes. You can also go to boom x academy.com and listen to the art podcast again, and I’m gonna have more information on it.
We’ll definitely have the intelligent professional back on the show. Thank you so much for taking time with me today. Thanks, Darol. Yep. Bye.
