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Hi Sarbloh I don't get why the daily growth cash value of $8 can be seen as a gain. Isn't the cash value coming from the premium I deposit and the cash value is just a difference name for my premium that I deposit into WL insurance? Can you please help to understand it?
When it comes to capital gains, the tax implications can vary depending on the country and specific tax regulations. In Canada, for example, only 50% of the capital gain is taxable. This means that if you have an $8 capital gain, only $4 of that gain would be subject to tax. The taxable amount is then added to your income for the year and taxed at your marginal tax rate.
Why are you borrowing just 60% of the 20,000. Doest affect you if you policy allows you to use let's say 85% or 90%? I mean as long as you pay the loan in a year it shouldn't matter right? Or can you please tell me what are the cons if you are a person that is very confident that you can pay it back.
When you first start a policy some amount of the money you first put in is used for start-up administration fees and for the commission so your insurance broker can make a living. That value is deducted from your first initial payments. My understanding is that this is a fixed number and so the faster you capitalize your system, the faster you pay off that commission, the faster your own policy can start growing, and the sooner you can take out the full 90%.
When I said “first initial payments” I assumed yearly contributions rather than monthly. In my policy it isn’t until year 5 that my cash-values equal the amount of money I put in. I can always borrow 90% of the cash-value in my policy but my cash-value does not equal my contributions in the policy until year 5. Hope that helps (also I’m not a practitioner so I reserve the right to be wrong though I’m 99% sure I’m correct).
Hi there thank you for sharing this among many other amazing videos. I also totally understand the long term thinking and the many other benefits but wondering if you can give more incites to: what if you actually compare the same time vs already putting $20,000 into the policy starting a year ago. If you put $20,000 into that same investment a year ago you’d have $24,000 (minus tax) to put in now so say $22,000x20% = $4,400 gained plus the last year gain of $4,000= $8,400 minus taxes vs the $4,576.
Hi @Richie Hughes. Great question. Anything we do financially will be enhanced by implementing the process of Becoming Your Own Banker. Becoming Your Own Banker is not about this is better than that/ do this OR that. Becoming Your Own Banker is an AND process. You can do both rather that one or the other. It's all about who is getting the money, who has control and who that money is being put to work for. However to expand on your question, my suggestion is to reach out to our team and set up a time to chat with one of our amazing coaches. Have you read Nelson Nash's book Becoming Your Own Banker? That is a great resource if you haven't added it to your library. Contact Ascendant financial info@ascendantfinancial.ca or 780-809-4599. I hope that helps.
Richie, let's forget about the taxes for simplicity. The Individual 1 will need to pay more capital gain tax anyways. The $4,576 is only the 1st year result based on $12,000 invested from a policy loan. The next year the policy owner will have more money to invest, because he is putting $20,000 annually into his policy. So he can easily match the other investor's number and put in $22,000 so his profit from the investment at 20% will be the same - $4,400 and his policy would be growing at around $9 (at the minimum!) It comes to $9 * 365 = 3,285 less the policy loan interest of $1,364 = $1,921 net growth in the policy. All together the profit from the investment of $22,000 is $1,921 + portfolio income of $4,400= $6,321 The total capital growth of the policy owner in 2 years is $4,576 + $6,321 = $10,897 - and only a smart portion of this money is subject to capital gain. Compare at the taxable gain profit of $8,400 invested with cash. So the bottom line will be even better every year for the policy owner vs. the investor with cash. Does this make sense?
@@romanpushkar4620 Totally makes sense but what I wanted to highlight was a same time comparison. Your example here would actually be year 3 with IBC vs year 1 of a direct investment in the 20% opportunity(also investing 20k/year). The reason I wanted to look into this more is even outside of the many more advantages to IBC if you compare exact same time of having $20,000 say today (and $20,000 each year) and investing it immeditately in a 20% return vs into IBC and being able to invest it next year into the 20% opportuntiy it's advantageous in the long run. I ran some finacial models I created with the best assumptions I could and if all remained equal in year 7 ROI from the IBC cash portion and borrowed money being invested is greater than the standard investment and of course on top of that are all the other benefits and the actual overall policy growth. Overall I really like IBC
Hi, the example is good, and clear. One question I have though is the $8/day growth on your policy is 14.6% return on your $20k. If that's the case, that is amazing yet seems high - is this really the rate that can be currently expected? Also, what about premiums cost of insurance, doesn't that get taken off of the $20k?
Hi Sunny, thank you for sharing your thoughts - 1) the policy is an acturial product and not an investment - the growth in policy is not measured in rate of return - the cash values in the policy are growing because of insurance companies contracutal guratee which is : by age 100 Total Cash value must match total death benefit. My cash values grow every day as I age - because i get one day closer to age 100 every day:). The daily cash growth in the policy becomes exponentially better in time. 2) My total premium per year is 20k - which is what i decided to put into this policy . Hope this helps.
@@Tobarja Thank you for the great question. The example Sarbloh is showing is based on 20K annual premium for a male, non-smoker, 35yo. If you would like to have Sarbloh elaborate on this, let's schedule a time in his calendar and see where you have discrepancy with your numbers. Please call or text his office 587-813-6226.
@sarblohgill5030 the total 20000 annual premium goes into cash value? How about the cost of insurance, insurer expenses, commissions, and insurer remuneration?
Hi Ken, great question - the whole idea is to build system to a point where it starts to meet our needs for financing - typically i would advise everyone to plan to deposit premiums in to policy for atleast 10 years - after which the policy itself can cover the premuims. Once you understand the power of this tool as "Becoming Your Own Banker" you would never stop putting premiums into the policy. Hope this helps answer your question.
Hi guys! Love the content! I know IBC is much more about the concept than it is about numbers on a spreadsheet but videos like this also help demonstrate the value it brings. It would be helpful to understand how the $8/day increase was calculated on the policy that Sarbloh was referencing. I have an IBC policy that started in 2020 in the US and I know it’s earning something besides the dividend, but since the costs are weighted to the early years, it isn’t easy to see in the cash value. Maybe a future video idea?
you don't have to be the life insured, and it doesn't take years to use the money. you can access most of the first years premium right away. You can also get it set up and teach your kids and loved ones about it so they can start doing it. This will set them up and give them the opportunities and advantages that you may not have had just learning about this now.
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
Thank you.
Hi Sarbloh
I don't get why the daily growth cash value of $8 can be seen as a gain.
Isn't the cash value coming from the premium I deposit and the cash value is just a difference name for my premium that I deposit into WL insurance? Can you please help to understand it?
This is my fav video!
Thanks for sharing Khin!
Is the premium for this policy 20K per year? or is there a different premium that is paid for the Policy?
What about the tax man on the $8 capital gain?
When it comes to capital gains, the tax implications can vary depending on the country and specific tax regulations. In Canada, for example, only 50% of the capital gain is taxable. This means that if you have an $8 capital gain, only $4 of that gain would be subject to tax. The taxable amount is then added to your income for the year and taxed at your marginal tax rate.
Why are you borrowing just 60% of the 20,000. Doest affect you if you policy allows you to use let's say 85% or 90%? I mean as long as you pay the loan in a year it shouldn't matter right? Or can you please tell me what are the cons if you are a person that is very confident that you can pay it back.
When you first start a policy some amount of the money you first put in is used for start-up administration fees and for the commission so your insurance broker can make a living. That value is deducted from your first initial payments. My understanding is that this is a fixed number and so the faster you capitalize your system, the faster you pay off that commission, the faster your own policy can start growing, and the sooner you can take out the full 90%.
When I said “first initial payments” I assumed yearly contributions rather than monthly. In my policy it isn’t until year 5 that my cash-values equal the amount of money I put in. I can always borrow 90% of the cash-value in my policy but my cash-value does not equal my contributions in the policy until year 5. Hope that helps (also I’m not a practitioner so I reserve the right to be wrong though I’m 99% sure I’m correct).
Hi there thank you for sharing this among many other amazing videos. I also totally understand the long term thinking and the many other benefits but wondering if you can give more incites to: what if you actually compare the same time vs already putting $20,000 into the policy starting a year ago. If you put $20,000 into that same investment a year ago you’d have $24,000 (minus tax) to put in now so say $22,000x20% = $4,400 gained plus the last year gain of $4,000= $8,400 minus taxes vs the $4,576.
Hi @Richie Hughes. Great question. Anything we do financially will be enhanced by implementing the process of Becoming Your Own Banker. Becoming Your Own Banker is not about this is better than that/ do this OR that. Becoming Your Own Banker is an AND process. You can do both rather that one or the other. It's all about who is getting the money, who has control and who that money is being put to work for. However to expand on your question, my suggestion is to reach out to our team and set up a time to chat with one of our amazing coaches. Have you read Nelson Nash's book Becoming Your Own Banker? That is a great resource if you haven't added it to your library. Contact Ascendant financial info@ascendantfinancial.ca or 780-809-4599. I hope that helps.
Richie, let's forget about the taxes for simplicity. The Individual 1 will need to pay more capital gain tax anyways.
The $4,576 is only the 1st year result based on $12,000 invested from a policy loan.
The next year the policy owner will have more money to invest, because he is putting $20,000 annually into his policy.
So he can easily match the other investor's number and put in $22,000 so his profit from the investment at 20% will be the same - $4,400
and his policy would be growing at around $9 (at the minimum!)
It comes to $9 * 365 = 3,285 less the policy loan interest of $1,364 = $1,921 net growth in the policy.
All together the profit from the investment of $22,000 is $1,921 + portfolio income of $4,400= $6,321
The total capital growth of the policy owner in 2 years is $4,576 + $6,321 = $10,897 - and only a smart portion of this money is subject to capital gain.
Compare at the taxable gain profit of $8,400 invested with cash.
So the bottom line will be even better every year for the policy owner vs. the investor with cash.
Does this make sense?
@@romanpushkar4620 Totally makes sense but what I wanted to highlight was a same time comparison. Your example here would actually be year 3 with IBC vs year 1 of a direct investment in the 20% opportunity(also investing 20k/year). The reason I wanted to look into this more is even outside of the many more advantages to IBC if you compare exact same time of having $20,000 say today (and $20,000 each year) and investing it immeditately in a 20% return vs into IBC and being able to invest it next year into the 20% opportuntiy it's advantageous in the long run. I ran some finacial models I created with the best assumptions I could and if all remained equal in year 7 ROI from the IBC cash portion and borrowed money being invested is greater than the standard investment and of course on top of that are all the other benefits and the actual overall policy growth. Overall I really like IBC
Hi, the example is good, and clear.
One question I have though is the $8/day growth on your policy is 14.6% return on your $20k. If that's the case, that is amazing yet seems high - is this really the rate that can be currently expected? Also, what about premiums cost of insurance, doesn't that get taken off of the $20k?
Hi Sunny, thank you for sharing your thoughts - 1) the policy is an acturial product and not an investment - the growth in policy is not measured in rate of return - the cash values in the policy are growing because of insurance companies contracutal guratee which is : by age 100 Total Cash value must match total death benefit. My cash values grow every day as I age - because i get one day closer to age 100 every day:). The daily cash growth in the policy becomes exponentially better in time. 2) My total premium per year is 20k - which is what i decided to put into this policy . Hope this helps.
@@sarblohgill5030 The $8/day number doesn't make sense. My 9k cash value grows at just over $1 per day. Would love to see an illustration of this.
@@Tobarja Thank you for the great question. The example Sarbloh is showing is based on 20K annual premium for a male, non-smoker, 35yo. If you would like to have Sarbloh elaborate on this, let's schedule a time in his calendar and see where you have discrepancy with your numbers. Please call or text his office 587-813-6226.
@sarblohgill5030 the total 20000 annual premium goes into cash value? How about the cost of insurance, insurer expenses, commissions, and insurer remuneration?
What about people who are too old to have life insurance it's too unaffordable
Nice video from now on I would like to pay higher interest on my loan lol 😂 because it work for me helping my own bank growing Thanks
Great example. With the policy, don't you have an obligation in this example to keep depositing $20,000 into the policy each year?
Hi Ken, great question - the whole idea is to build system to a point where it starts to meet our needs for financing - typically i would advise everyone to plan to deposit premiums in to policy for atleast 10 years - after which the policy itself can cover the premuims. Once you understand the power of this tool as "Becoming Your Own Banker" you would never stop putting premiums into the policy. Hope this helps answer your question.
@@sarblohgill2439 my wife was asking the same question. Now I know and she knows great thanks
Hi guys! Love the content! I know IBC is much more about the concept than it is about numbers on a spreadsheet but videos like this also help demonstrate the value it brings.
It would be helpful to understand how the $8/day increase was calculated on the policy that Sarbloh was referencing. I have an IBC policy that started in 2020 in the US and I know it’s earning something besides the dividend, but since the costs are weighted to the early years, it isn’t easy to see in the cash value. Maybe a future video idea?
I found the right section on my policy webpage and now I can see the loan amount available increasing every day. Thanks for the tip!
@@garyj2424 you are welcome
Well since I am 70 now and you have to wait a few years to use the money it isn't for me. I will give the info to someone else.
you don't have to be the life insured, and it doesn't take years to use the money. you can access most of the first years premium right away. You can also get it set up and teach your kids and loved ones about it so they can start doing it. This will set them up and give them the opportunities and advantages that you may not have had just learning about this now.
where is he getting 20% return? lol. I'll cash out my RRSP and TSFA tomorrow if he thinks he can get 20% , hilarious