What do you believe is the biggest benefit you'll get from becoming your own banker? Comment below! Ready to get started? CLICK HERE 👉 www.ascendantfinancial.ca/start-here
A huge benefit of paying off debt through IBC is that you transfer control of the debt from a third party to yourself. Not only that, but most people think that they can start saving money AFTER they are done paying off their debt. In the example you just did, John not only paid off his third party debt and policy loan in 5 years but I’m guessing he also then had cash values worth $100k to $125k. He was both saving and paying off debt! So powerful!
One benefit here is John has accelerated the improvement of his credit score. As John moved his debt from his previous debtors (credit reporting institutions) to the insurance company, he instantly cleared the debt in the eyes of the credit reporting system. He essentially brought his debt into a non-credit-reporting system because he and his insurance company have a private contract. And he did all this while his cash values continue to grow - with a death benefit to boot!
This video was incredibly eye opening. It’s like a light was turned on. Everyone should’ve doing this, it should be taught in schools! I love it, thanks guys.
Thanks for your comment Mark and we agree. If the traditional approaches to finances were effective, there wouldn't be so many Canadians struggling to get ahead today. IBC should %100 be taught in schools! Until then, this TH-cam channel will provide clarity and answers! :)
Hello guys 🙋♀️ I learned a lot and you guys made me smile when realizing that the one gentilman was saying the wrong total loan amount hehe Hey sir at least you know everyone was following you and yes we're humans and sometimes we think of one thing but another comes out 🤷♀️🤦♀️
Good Idea 1 . When did John start the policy ? 2. Which policy gives u so much loan ? 3.How did he pay off the policy loan ? 4 . When did he start paying off the policy loan ? 5 . Who has so much of money to save on policy when they are on a debt ? Can u please answer this question?
Your reducing your own margin of safety by accelerating your debts beyond the monthly minimums. This is because the additional income allocated towards paying your debts off sooner leaves your personal finances more exposed to default when an emergency arrives such as a job loss or other unforeseen expenses. There is also the added loss of opportunities that allow one to acquire income producing assets that grow one’s net worth!
What I'm seeing is that he put up 50k for 5 years to pay off 200k of consumer debt, some of which was at 0%. There are obviously some benefits that counter the cost you added like better ratios, having a policy in place while health is good, etc., but you are overstating the extent to which he use a policy to pay off his debt. This method made the debt repayment slower, not faster.
it wasn't about speed, it was about efficiency. Paying the debt off this way allowed him to have a reservoir of capital and the death benefit at the end of the process instead of the bank ending up with all the money and John starting at 0$.
Where did John get $24,000 per year to put into His policy? He either had to borrow it, cash in some savings or work harder? I like the idea of having the asset at the end but let’s be realistic. The only way to accomplish this is to pump a massive amount of cash into a policy every year. ?
Hello, thanks for commenting and i am glad you liked the case study....the family already had some savings and they decided to move savings gradually into a policy over a period of time..now on another note - if they had no saved up capital - they could have started a policy on a monthly basis and waited a few months before initiaing policy loans - - this also would have been a great way to start. The other part to your question - which is "the only way to accomplish this is to pump a massive amount of cash into a policy every year. ? - the answer to that question is on page 65 of Nelson's book: "This is going to requier a change in priorities in life and recognizing that controlling the banking function personally is the most important thing that can be done in your financial word" - everyone is already spending all financial resources on what they think is best. There has got to be some honest introspection at this point and a commitment to "get out of financial prison must be a burning passion" - Hope this helps asnwer you question?
Hi @Yoan - thanks for your question, the interest from this particular insurance company was 7% when the policy wasstarted and now its under 6.25% - the interest was factored in the this example. The process of becoming your own banker and using it for Debt Recapture is not a function of interest rate - the essence of BYOB is who owns the debt, who controls loan repayment, who is getting the payment and how much of money can be reaccessed again once the payment is made. By moving the debt into the policy - the policy owner becomes a wealth builder vs a debtor, Check out this video : th-cam.com/video/qpjwQ2pEhxk/w-d-xo.html
@@sarblohgill5030 Thanks for the reply, I will take a look at the video. In this case the owner of the debt would be the insurance company. Aren't we getting paid the same amount of dividends rather we take out loans or not? What I'm struggling with is Banks will loan me the same amount I have access to within my policies at let's say 3% lower than the insurance company. Me using the other banks gives me an extra 3% of cashflow to continue capitalizing my policies. If your going to stock up your shelves full of cans of peas, would you rather pay 0.50$ for the can or 0.56$.
@@Mawgu you are right - policy loan does not impact the growth in cash values and share of profit which is dividend - but by paying the loan to the insurance company (P&I) - interest is profit for the insurance company that all par whole life policy owners co-own. Interest is profit for the busienss - the profit is paid via dividends - buy shopping for finacing needs at our business we make our business financially stronger - which means more dividends for us....2nd part to your question - if you are borrowing at 3% from bank and i borrow at 6% from insurance company - i profit on 6% - how much porfit you make on 3%?, i set the terms on repayment - not the insurance company - if money is borrowed from bank - bank controlls the repayment terms. I can strech out my amortization and can have the same monthly payment as yours. I will get to re-acess all the money that i pay back to the insurance company (P&I) without qualifying. Your loan from the bank - the only way to re-access again is by qualifying again. Hope this helps.
@@sarblohgill5030 I borrow at 3% get paid 6% in dividends by insurance company, other bank gets 3% I get the difference cashflow 3%. If you borrow from insurance at 6% and they pay you dividends at 6%, you have no extra cashflow. Why would I take a policy loan to pay off that debt if it reduces my cashflow? The insurance company takes cash out of investments to lend it to the shareholders because they contractually have to doesn't it? That money would of been put to work for you somewhere else and the insurance company charges you a premium to take into account opportunity cost. To your second point, It seams to me that we are paying a premium for that extra control or security. I've been struggling on making sense in using my policy loans when I can use my Interest only HELOC and pay myself back extra by funding my policies every year. Total control on repayment schedule at a lesser premium. Don't get me wrong, I see the benefit of owning that kind of product. Tax free growth is very powerful and I know I will be happy I have funded my policies when in the future if something happens and I can't qualify for a loan, or the bank calls back the HELOC, they will be there to save the day. Maybe I'm missing something here, I just don't see the benefit in the current low interest rate environment. I will schedule a call with Jayson see if I can get clarity on my issue.
In the above scenario, where is the interest that is charged on the policy loan by the insurance company accounted for? The insurance company doesn't loan for free so lets say the interest rate is 6.5 % how is this accounted for? Also, you fail to mention that payments are still being made monthly on the loans each person still has to cover, so those balances should also drop as you wait for the availability of the next policy loan, correct?
Hey Dale, the interest charged by the insurance company has been factored in to the calculation. The process of beomcing your own banker is not about the interest rate on loans - its about - who is getting the payment (in this case - its the insurance company) - for whom is the payment being put to work for (interest is profit for the insurance company - that profit is distributed to participating policy owners as dividends) - how much can the policy owner re-access again once the loan re-payment is made (policy owner is able to recpature the interest on policy loans - in the cash value growth of the policy - hence policy owner is able to re-access all the money again). This particular client not just paid off all his debt using this process - he re-directed all those payments back to his policy to pay back policy loans (money was leaving as payments into someone elses banking system - he is re-directing the money back to his system by controlling the process). He accomplished his objective and he also has a policy - asset - increasing in value every day and in addition to it he also has permanent life insurance. What he could have also done is - instead of using IBC to accomplish his objective - he could have taken all the premium money and used it to pay off all his debt - he would have on=btained his objectve - but all he would have had was debt paid off and all the money would have left him and his next generation to come forever. He didnt change his objective or his cash flow - he just changed the process to get to his objective. Hope this helps.
@@sarblohgill2439 Another Dale with good questions. Rate is part of time value of money, so it's important. I get the de-emphasis of % rate in defining IBC. The only recapture of interest exists IF insured accepts as being a policy owner, dividends (return of overcharged premium) equals loan interest. At best it would be 1:1, or 0. I like saying if you use policy funds to pay off car or harley, you own it free & clear & have a DMV title to prove it. Now what happened? You transferred the loan balance to inside the policy and u must pay whatever rate the insurance company sets. So make your 10% p&i payment + normal premium payment. Yes, Nelson encourages to pay higher interest back but that is for purposes of more capital (principal/equity) in policy, insurance still gets paid their interest charged for the loan. The uninterrupted capital growth inside a banking policy happens whether loan benefits are tapped. CV equaling DB happens whether loan benefits are tapped-actuarial science says so. Tell me why at age 80 any retiree would want to be making premium payments until death? A get legacy DB tax free stuff, uninterrupted growth, but still fuzzy on this debt recapture efficiency and who 2:1 payments to policy is better than cash or cash collateralized LOC, for specific financing purposes.
Typically, how may years are you continuing to pay premiums 5, 10 years, a lifetime? When or does it ever, become advantageous to stop paying a premium on the policy? Can you use one policy to help fund another policy opening? In what way do you recommend doing this in conjunction with loan reduction or debt elimination?
Hi Dale, great question - typically i would advise atleast putting the money into policy for 10 years - from the policy efficiency stand point - but when we understand the essence and importance of becoming our own banker - we would never stop putting money in - if we have the financial resources to do so continue to put premium in. The anwer to your 2nd part " Can you use one policy to help fund another policy opening? - I would not advise taking loans from one policy to start another - the process is not about leverage - its about how do we go about financing things and controlling the banking function. 3 steps in banking are - Deposit, Borrow and Replenish - don't want to steal the peas. Part 3 to your question: In what way do you recommend doing this in conjunction with loan reduction or debt elimination?" - this depends upon your goal and objective. Hope this helps
This example looks good in a video - but this client seemingly had a max credit card, two lines of credit nearly maxed, some type of likely debt consolidation loan. Yet magically are we expected to believe this person will have zero use of these consumer debts for 5 straight years just like the case worked perfectly in the video? The root of the debt is never addressed. Personal finances go beyond math most of the time! Was Parkinson's Law really able to be beaten?!!
What do you believe is the biggest benefit you'll get from becoming your own banker? Comment below!
Ready to get started?
CLICK HERE 👉 www.ascendantfinancial.ca/start-here
A huge benefit of paying off debt through IBC is that you transfer control of the debt from a third party to yourself. Not only that, but most people think that they can start saving money AFTER they are done paying off their debt. In the example you just did, John not only paid off his third party debt and policy loan in 5 years but I’m guessing he also then had cash values worth $100k to $125k. He was both saving and paying off debt! So powerful!
Great observation gary!
One benefit here is John has accelerated the improvement of his credit score.
As John moved his debt from his previous debtors (credit reporting institutions) to the insurance company, he instantly cleared the debt in the eyes of the credit reporting system.
He essentially brought his debt into a non-credit-reporting system because he and his insurance company have a private contract.
And he did all this while his cash values continue to grow - with a death benefit to boot!
Thank you for sharing this very valuable example of IBC at work. I am especially thankful that you kept the humourous bits in the video! A++
This video was incredibly eye opening. It’s like a light was turned on. Everyone should’ve doing this, it should be taught in schools! I love it, thanks guys.
Thanks for your comment Mark and we agree. If the traditional approaches to finances were effective, there wouldn't be so many Canadians struggling to get ahead today. IBC should %100 be taught in schools! Until then, this TH-cam channel will provide clarity and answers! :)
Hello guys 🙋♀️ I learned a lot and you guys made me smile when realizing that the one gentilman was saying the wrong total loan amount hehe Hey sir at least you know everyone was following you and yes we're humans and sometimes we think of one thing but another comes out 🤷♀️🤦♀️
Awesome video Sarbloh. I’m looking forward to learning more from you and spreading the message and helping others take control of their finances.
you still need to be paying off the bike the rv and the truck in the meantime
Good Idea
1 . When did John start the policy ?
2. Which policy gives u so much loan ?
3.How did he pay off the policy loan ?
4 . When did he start paying off the policy loan ?
5 . Who has so much of money to save on policy when they are on a debt ?
Can u please answer this question?
That was an awesome video, very inspiring!
Your reducing your own margin of safety by accelerating your debts beyond the monthly minimums. This is because the additional income allocated towards paying your debts off sooner leaves your personal finances more exposed to default when an emergency arrives such as a job loss or other unforeseen expenses. There is also the added loss of opportunities that allow one to acquire income producing assets that grow one’s net worth!
Thank you.
What I'm seeing is that he put up 50k for 5 years to pay off 200k of consumer debt, some of which was at 0%. There are obviously some benefits that counter the cost you added like better ratios, having a policy in place while health is good, etc., but you are overstating the extent to which he use a policy to pay off his debt. This method made the debt repayment slower, not faster.
it wasn't about speed, it was about efficiency. Paying the debt off this way allowed him to have a reservoir of capital and the death benefit at the end of the process instead of the bank ending up with all the money and John starting at 0$.
@@kent22441 they repaid everything slower. it only works if interest gained is way bigger than the interest from the policy loan
What about the interest accumulated on the loan trough the year?
Great example Sarbloh!
Where did John get $24,000 per year to put into His policy? He either had to borrow it, cash in some savings or work harder? I like the idea of having the asset at the end but let’s be realistic. The only way to accomplish this is to pump a massive amount of cash into a policy every year. ?
Hello, thanks for commenting and i am glad you liked the case study....the family already had some savings and they decided to move savings gradually into a policy over a period of time..now on another note - if they had no saved up capital - they could have started a policy on a monthly basis and waited a few months before initiaing policy loans - - this also would have been a great way to start. The other part to your question - which is "the only way to accomplish this is to pump a massive amount of cash into a policy every year. ? - the answer to that question is on page 65 of Nelson's book: "This is going to requier a change in priorities in life and recognizing that controlling the banking function personally is the most important thing that can be done in your financial word" - everyone is already spending all financial resources on what they think is best. There has got to be some honest introspection at this point and a commitment to "get out of financial prison must be a burning passion" - Hope this helps asnwer you question?
im not understanding the policy loan
Anywhere I can get a copy of this spreadsheet already made up? Or am I going to have to recreate it?
Asking for a friend. :-)
How much interest did they pay to the insurance company over that 1 year? don't we have to take that into account?
Hi @Yoan - thanks for your question, the interest from this particular insurance company was 7% when the policy wasstarted and now its under 6.25% - the interest was factored in the this example. The process of becoming your own banker and using it for Debt Recapture is not a function of interest rate - the essence of BYOB is who owns the debt, who controls loan repayment, who is getting the payment and how much of money can be reaccessed again once the payment is made. By moving the debt into the policy - the policy owner becomes a wealth builder vs a debtor, Check out this video : th-cam.com/video/qpjwQ2pEhxk/w-d-xo.html
@@sarblohgill5030 Thanks for the reply, I will take a look at the video. In this case the owner of the debt would be the insurance company. Aren't we getting paid the same amount of dividends rather we take out loans or not? What I'm struggling with is Banks will loan me the same amount I have access to within my policies at let's say 3% lower than the insurance company. Me using the other banks gives me an extra 3% of cashflow to continue capitalizing my policies. If your going to stock up your shelves full of cans of peas, would you rather pay 0.50$ for the can or 0.56$.
@@Mawgu you are right - policy loan does not impact the growth in cash values and share of profit which is dividend - but by paying the loan to the insurance company (P&I) - interest is profit for the insurance company that all par whole life policy owners co-own. Interest is profit for the busienss - the profit is paid via dividends - buy shopping for finacing needs at our business we make our business financially stronger - which means more dividends for us....2nd part to your question - if you are borrowing at 3% from bank and i borrow at 6% from insurance company - i profit on 6% - how much porfit you make on 3%?, i set the terms on repayment - not the insurance company - if money is borrowed from bank - bank controlls the repayment terms. I can strech out my amortization and can have the same monthly payment as yours. I will get to re-acess all the money that i pay back to the insurance company (P&I) without qualifying. Your loan from the bank - the only way to re-access again is by qualifying again. Hope this helps.
@@sarblohgill5030 I borrow at 3% get paid 6% in dividends by insurance company, other bank gets 3% I get the difference cashflow 3%. If you borrow from insurance at 6% and they pay you dividends at 6%, you have no extra cashflow. Why would I take a policy loan to pay off that debt if it reduces my cashflow?
The insurance company takes cash out of investments to lend it to the shareholders because they contractually have to doesn't it? That money would of been put to work for you somewhere else and the insurance company charges you a premium to take into account opportunity cost.
To your second point, It seams to me that we are paying a premium for that extra control or security. I've been struggling on making sense in using my policy loans when I can use my Interest only HELOC and pay myself back extra by funding my policies every year. Total control on repayment schedule at a lesser premium.
Don't get me wrong, I see the benefit of owning that kind of product. Tax free growth is very powerful and I know I will be happy I have funded my policies when in the future if something happens and I can't qualify for a loan, or the bank calls back the HELOC, they will be there to save the day. Maybe I'm missing something here, I just don't see the benefit in the current low interest rate environment.
I will schedule a call with Jayson see if I can get clarity on my issue.
@@Mawgu i agree schedule a one on one call to have an expanded discission. Thanks
In the above scenario, where is the interest that is charged on the policy loan by the insurance company accounted for? The insurance company doesn't loan for free so lets say the interest rate is 6.5 % how is this accounted for? Also, you fail to mention that payments are still being made monthly on the loans each person still has to cover, so those balances should also drop as you wait for the availability of the next policy loan, correct?
Hey Dale, the interest charged by the insurance company has been factored in to the calculation. The process of beomcing your own banker is not about the interest rate on loans - its about - who is getting the payment (in this case - its the insurance company) - for whom is the payment being put to work for (interest is profit for the insurance company - that profit is distributed to participating policy owners as dividends) - how much can the policy owner re-access again once the loan re-payment is made (policy owner is able to recpature the interest on policy loans - in the cash value growth of the policy - hence policy owner is able to re-access all the money again). This particular client not just paid off all his debt using this process - he re-directed all those payments back to his policy to pay back policy loans (money was leaving as payments into someone elses banking system - he is re-directing the money back to his system by controlling the process). He accomplished his objective and he also has a policy - asset - increasing in value every day and in addition to it he also has permanent life insurance. What he could have also done is - instead of using IBC to accomplish his objective - he could have taken all the premium money and used it to pay off all his debt - he would have on=btained his objectve - but all he would have had was debt paid off and all the money would have left him and his next generation to come forever. He didnt change his objective or his cash flow - he just changed the process to get to his objective. Hope this helps.
@@sarblohgill2439 Another Dale with good questions. Rate is part of time value of money, so it's important. I get the de-emphasis of % rate in defining IBC. The only recapture of interest exists IF insured accepts as being a policy owner, dividends (return of overcharged premium) equals loan interest. At best it would be 1:1, or 0. I like saying if you use policy funds to pay off car or harley, you own it free & clear & have a DMV title to prove it. Now what happened? You transferred the loan balance to inside the policy and u must pay whatever rate the insurance company sets. So make your 10% p&i payment + normal premium payment. Yes, Nelson encourages to pay higher interest back but that is for purposes of more capital (principal/equity) in policy, insurance still gets paid their interest charged for the loan. The uninterrupted capital growth inside a banking policy happens whether loan benefits are tapped. CV equaling DB happens whether loan benefits are tapped-actuarial science says so. Tell me why at age 80 any retiree would want to be making premium payments until death? A get legacy DB tax free stuff, uninterrupted growth, but still fuzzy on this debt recapture efficiency and who 2:1 payments to policy is better than cash or cash collateralized LOC, for specific financing purposes.
are they paying the minimum balance of those debts?
hello can i have a copy of the Spredsheet?
My mind is blown 😱🤯
what is the best way today off revenue Canaans?
Typically, how may years are you continuing to pay premiums 5, 10 years, a lifetime? When or does it ever, become advantageous to stop paying a premium on the policy? Can you use one policy to help fund another policy opening? In what way do you recommend doing this in conjunction with loan reduction or debt elimination?
Hi Dale, great question - typically i would advise atleast putting the money into policy for 10 years - from the policy efficiency stand point - but when we understand the essence and importance of becoming our own banker - we would never stop putting money in - if we have the financial resources to do so continue to put premium in. The anwer to your 2nd part " Can you use one policy to help fund another policy opening? - I would not advise taking loans from one policy to start another - the process is not about leverage - its about how do we go about financing things and controlling the banking function. 3 steps in banking are - Deposit, Borrow and Replenish - don't want to steal the peas. Part 3 to your question: In what way do you recommend doing this in conjunction with loan reduction or debt elimination?" - this depends upon your goal and objective. Hope this helps
canada
This example looks good in a video - but this client seemingly had a max credit card, two lines of credit nearly maxed, some type of likely debt consolidation loan. Yet magically are we expected to believe this person will have zero use of these consumer debts for 5 straight years just like the case worked perfectly in the video? The root of the debt is never addressed. Personal finances go beyond math most of the time! Was Parkinson's Law really able to be beaten?!!
Nevermind having all those cards maxed but having an excess income of $24k after tax each year.
This video just changed my ** life ** !