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I am asking for your advice and opinions on Nelson Nash’s Infinite Banking Concept/ Pamela Yellen’s Bank On Yourself Concept. Please only comment if you are familiar with these concepts. I started this dividend paying, whole life policy with these concepts in mind in April of 2010 (@23 years old). Now in a long-term relationship I want to make sure that this money is going to the right place with our best interests in mind. Now 26 years old, marriage, travel, being a new homeowner, and kids appear to be in my future. And the financial stress is starting to weigh in.
The idea of having this policy is to help finance mostly cars, and maybe travels and have cash on hand for burdens should they occur. And from what Nelson says in his book there will be money to pull from to help pay for retirement. However, this will not be my sole retirement plan.

Basic Amount of Insurance: $187,951 Life Paid-Up At 95
Interest Rate for Basis of Values for:
Reserves 4.00%
Cash Values 4.50%
Net Single Premiums 4.50%

Gross Premium is $286.23
Cost of Insurance is $129.65 (?)
Riders Included:
*Accelerated Benefit Rider
*Level Premium Paid-Up Additions Rider
*Ten Year Term Rider

Current Dividends are used to buy Paid-Up Additions

Currently the totals are:
Total Death Benefit: $437,775.29
Available Loan Value: $4,838.67
Net Cash Surrender Value: $5,317.83

Monthly Premium $286.23 x 32 months =$9,159.36

So as you can see my available loan value is about $4,000 less than what I have paid in. Ouch. I knew that this would be a long-term “investment” going into this, but this becomes a hard sell to the significant other. So it will be a few more years before I would break even. So the question is: Is this worth my time and money and should I stay on the long path –or- Should I end it now, take the loss and find something else that is a better investment?

*I would attach the Table of Guaranteed Values, but it doesn't account for the riders and Paid-Up additions. For example, I'm almost to end of year 3 and it says Guaranteed Cash Value $0, but I'm already at $4,838.67

I appreciate your feedback! Thank You!

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Also, I always like to argue about the term "self insurance". You won't be "self insured". Rather, you simply won't ne... (more)

BrodyInsurance (Jun. 24, 2013 @ 3:09p) |

Additionally such people are likely to be paying monthly which has higher costs and higher lapse/surrender rates then th... (more)

dhodson (Jun. 24, 2013 @ 4:15p) |

Without doing the math, you'd be better off paying extra toward your mortgage. As dshibb pointed out, your return is ne... (more)

JTausTX (Jun. 26, 2013 @ 11:06p) |

From a shill, nope, you can't make someone this dumb if you tried.The $20,000 is new money, you produce it with your work to pay to the bank or to your insurance company, the difference is the $20,000 yo give to the bank you never see again, the $20,000 you pay to your policy you are able to use again and again.
The reason you go to the bank for the money is because they took the time to build the bank, go through capitalization, requested the charter, lobbied, advertised, whatever. They put the work, they profit from financing you.
When you capitalize in your policy, you put the work, you can benefit from using your money while the insurance company also pays you the dividends and the interest. I know this is hard to understand because of all the conventional education out there. I have already spent too much time and I see we are not going anywhere. Good luck with your speculation and high risk investments, I am happy knowing that whenever I need any money to finance my needs or projects I do not have to go through hoops and beg for money, the market fluctuations do not ruin my sleep. And anybody that genuinely wants to learn how this work and want to protect themselves and their families I gladly will share.
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Congratulations, your insurance rep is a good salesman.

In general, whole life is not hugely in favor here, as there are often (far) better ways to invest your money. What are your significant others's concerns? Why throw good money after bad?

I am not familiar with this concept. Having said that it looks really stupid. There is no reason to complicate things unless you are rich enough to need an accountant. Then you can have your accountant complicate things for you as necessary.

So is this an investment (and if so, it is doing terrible so far) or simply an insurance policy? Sort that out first.

It seems like you aren't even sure if it is an investment or something else.

It's not really meant to be an investment. The concept is to start your own banking system in that your money is gaining interest and dividends, all while you can take loans out on yourself and pay it back saving you the money that you would otherwise spend on interest. See this video to help you understand what I mean. http://www.youtube.com/watch?v=5GcMDSNRJwI&feature=youtu.be

Starting a new banking system? That has get to be the stupidest marketing bullcrap I heard all year.

Any time someone comes up with bullshit to sell you something ---- run!

This "Bank on yourself" stuff is just equivalent to having a pool of money around that you can draw on to pay unexpected bills (instead of taking out a loan). Given how badly your investment is doing, you would have been better off paying into a savings account.

They try to make the concept complex because they're selling you something that isn't really favorable to you.

You are a 26 year old female presumably in good health --- if you need life insurance get 30 year term policy and then invest the rest in no load mutual fund or leave it in the bank until rates come back

Germanpope, as I stated please refrain from commenting unless you have looked at the concept and read up on it yourself. This concept needs an open mind. Rich people do not become rich from following the norm. I am looking for facts to back up whether this concept is either good or bad and how it relates to my personal scenario. Thanks for understanding.

msphat said:   Germanpope, as I stated please refrain from commenting unless you have looked at the concept and read up on it yourself. This concept needs an open mind. Rich people do not become rich from following the norm. I am looking for facts to back up whether this concept is either good or bad and how it relates to my personal scenario. Thanks for understanding.

This bullshit has been in the forum before. Part of the wisdom of these threads is participants waste no time nipping nonsense in the bud.

"You finance everything you buy. You either pay interest to someone else or you give up the interest you could have earned otherwise." - Nelson Nash

This is about financing not investing.

Your loan value will not be equal to your payments, especially after only a few years.

You have bought into the concept - the concept is not a *scam* but there are other (possibly better) ways to meet your goals.
Do you still believe in the concept?
Do you really have the need to borrow against your policies to finance purchases over your lifetime?
Will you have enough lending power from your policy to actually finance what you need?

If you live another 50 years you will have paid in ~$175K with a payout of $437K. It is whole life policy at the least...

Go back to your agent and review the policy against your projected financing over the next 10-15 years and compare your savings to alternate investment opportunities.

Please don't come to these forums looking for approval of past mistakes.

This sounds very much like a "money merge", aka, United First Financial, scheme.

http://www.fatwallet.com/forums/finance/741118/

Couple thing for OP to keep in mind:

- There's no 'free lunch'

- The program only comes out ahead if you ignore opportunity cost.

disclaimer: I have not research in detail. A cliff note of this "program" would be helpful.

msphat said:   Germanpope, as I stated please refrain from commenting unless you have looked at the concept and read up on it yourself. This concept needs an open mind. Rich people do not become rich from following the norm. I am looking for facts to back up whether this concept is either good or bad and how it relates to my personal scenario. Thanks for understanding.

No, he's right. Whole life insurance is almost always a bad idea, and he people for whom it isn't a bad idea are a tiny, rich, subset of society.

They're not calling it whole life insurance, but that's what it is. It's just a crappy whole life insurance investment. If you had bought a term life policy and put your savings in the bank, you'd have had a larger pool of money you could have drawn down on, plus insurance.

Any time someone tries to sell you on a complex investment, they are scamming you.

Junkmap, yes I would agree that money into a savings account may have played out better in the short term. But I am looking at this for long term solution as I said before. However, once you pull money out of a savings account it is no longer drawing interest or dividends. This is the case for the dividend paying whole life insurance policy.

msphat said:   Germanpope, as I stated please refrain from commenting unless you have looked at the concept and read up on it yourself. This concept needs an open mind. Rich people do not become rich from following the norm. I am looking for facts to back up whether this concept is either good or bad and how it relates to my personal scenario. Thanks for understanding.

red flag comment. you could post this in the Invado thread and you'd fit right in. Your Scam-Life policy is no better in the short term nor the long term. I am sorry if you are making serious post, but it looks to me like you're here to spam. If not, then I think the advice will reach an obvious conensus: dump the "concept" and your policy and actually invest your money.

Monthly Premium $286.23 x 32 months =$9,159.36
Total Death Benefit: $437,775.29
Net Cash Surrender Value: $5,317.83

Let's keep it simple
At your age, a $1M term life insurance policy would probably be $250 a year (or less). But let's call it $1000
For simplicity, let's say you have paid $9K for 3 years. (Actually more for less)

You have a $5500 surrender value, loan value less than that. If you had gone the term insurance route and banked the difference, you would have had (more than) $8K in the bank (being your own bank). More than $3500 greater than your loan / surrender value

This is an extraordinarily inappropriate choice for you. The insurance is too small for any reasonable need and the returns are abysmal

ETA: Work this out for any time frame you choose. The answer does not change

For you, switch to term, terminate the policy and invest the difference

Well, after reading through 5 pages of B.S. sales pitch from insurance sales drones on google. I say this is yet another fool the ignorant scam. Almost the same word for word sales pitch by the same crowd as UFF.

Try and separate activities. If you want to invest, do that. If you want to borrow money for a car, do that separately. You don't need to borrow from yourself.

My thoughts? Don't finance a car. And don't take vacations until your loans are paid off. Vacation trips are a luxury item.

Buckle down on your expenses so that things aren't even tighter once kids come around. Their clothes, food, daycare, etc. will all add up really quickly.

msphat said:   I am asking for your advice and opinions on Nelson Nash’s Infinite Banking Concept/ Pamela Yellen’s Bank On Yourself Concept. Please only comment if you are familiar with these concepts. I started this dividend paying, whole life policy with these concepts in mind in April of 2010 (@23 years old). Now in a long-term relationship I want to make sure that this money is going to the right place with our best interests in mind. Now 26 years old, marriage, travel, being a new homeowner, and kids appear to be in my future. And the financial stress is starting to weigh in.
The idea of having this policy is to help finance mostly cars, and maybe travels and have cash on hand for burdens should they occur. And from what Nelson says in his book there will be money to pull from to help pay for retirement. However, this will not be my sole retirement plan.

Basic Amount of Insurance: $187,951 Life Paid-Up At 95
Interest Rate for Basis of Values for:
Reserves 4.00%
Cash Values 4.50%
Net Single Premiums 4.50%

Gross Premium is $286.23
Cost of Insurance is $129.65 (?)
Riders Included:
*Accelerated Benefit Rider
*Level Premium Paid-Up Additions Rider
*Ten Year Term Rider

Current Dividends are used to buy Paid-Up Additions

Currently the totals are:
Total Death Benefit: $437,775.29
Available Loan Value: $4,838.67
Net Cash Surrender Value: $5,317.83

Monthly Premium $286.23 x 32 months =$9,159.36

So as you can see my available loan value is about $4,000 less than what I have paid in. Ouch. I knew that this would be a long-term “investment” going into this, but this becomes a hard sell to the significant other. So it will be a few more years before I would break even. So the question is: Is this worth my time and money and should I stay on the long path –or- Should I end it now, take the loss and find something else that is a better investment?

*I would attach the Table of Guaranteed Values, but it doesn't account for the riders and Paid-Up additions. For example, I'm almost to end of year 3 and it says Guaranteed Cash Value $0, but I'm already at $4,838.67

I appreciate your feedback! Thank You!

Thank you BenH for your response. Financing definitely the term that I needed. Not "investing", but "financing".

Yes I believe in the concept, but I wish there was a Table that is available to project the dividends, etc. That would be an easier sell. It's hard for me to explain all of this to my significant other. I wish he would just read the whole damn book.

Financing will definitely be needed in my lifetime. I am not rich and this is to help save money on interest otherwise spent to banks and other financial lenders.

Projected financing will definitely be difficult as we are also looking at getting involved with becoming landlords. But yes doing projected financing is a good idea! Thank You!

msphat said:    This concept needs an open mind. Rich people do not become rich from following the norm.
Exactly - the rich get rich by convincing others to follow them instead of the norm. The followers don't get rich in either scenario.

msphat said:   
Financing will definitely be needed in my lifetime. I am not rich and this is to help save money on interest otherwise spent to banks and other financial lenders.
The scam is when they sold this product to you.

You avoid high interest (associated with personal or car loan) by NOT buying crap and car you can't afford, period.

msphat said:   Thank you BenH for your response. Financing definitely the term that I needed. Not "investing", but "financing".

Yes I believe in the concept, but I wish there was a Table that is available to project the dividends, etc. That would be an easier sell. It's hard for me to explain all of this to my significant other. I wish he would just read the whole damn book.

Financing will definitely be needed in my lifetime. I am not rich and this is to help save money on interest otherwise spent to banks and other financial lenders.

Projected financing will definitely be difficult as we are also looking at getting involved with becoming landlords. But yes doing projected financing is a good idea! Thank You!
Interesting that your "open mind" only is interested in responses that agree with you. Your SO should come here, not just read the book

Or won't you tell him about this thread?

msphat said:   Yes I believe in the concept, but I wish there was a Table that is available to project the dividends, etc. That would be an easier sell. It's hard for me to explain all of this to my significant other. I wish he would just read the whole damn book.
You develop a much deeper understanding about a concept you believe you know when you have to explain that to someone else. I am glad this process of explaining this to your SO might open your eyes.

msphat said:   Thank you BenH for your response. Financing definitely the term that I needed. Not "investing", but "financing".

Yes I believe in the concept, but I wish there was a Table that is available to project the dividends, etc. That would be an easier sell. It's hard for me to explain all of this to my significant other. I wish he would just read the whole damn book.

Financing will definitely be needed in my lifetime. I am not rich and this is to help save money on interest otherwise spent to banks and other financial lenders.

Projected financing will definitely be difficult as we are also looking at getting involved with becoming landlords. But yes doing projected financing is a good idea! Thank You!


You should carefully read ellory's post.

Their projections will look good because they are salesmen--they are selling you something, and the selling method they have chosen is to sell you on a concept.

Think of it this way: the insurance company has to make money off you, and to make money off you they have to sell you something for more than it costs them. They will take your money and stick it in the market, and they have to earn their profit, so they will charge you their trading costs plus a markup. They can try to hide the fact that they are making a profit off you by using fancy language, but you are ultimately giving them money. If you invested in the market directly, through something like a Vanguard index fund, you don't have to fund the "Bank on Yourself" salespeople, and you will end up with more money at the end of the day.

Sure, Vanguard will charge you, but their fees are transparent and are something like 0.05% a year. This whole insurance is probably costing you 1% a year, but they're hiding the cost from you through complex calculations.

msphat said:   Thank you BenH for your response. Financing definitely the term that I needed. Not "investing", but "financing".

Yes I believe in the concept, but I wish there was a Table that is available to project the dividends, etc. That would be an easier sell. It's hard for me to explain all of this to my significant other. I wish he would just read the whole damn book.

Financing will definitely be needed in my lifetime. I am not rich and this is to help save money on interest otherwise spent to banks and other financial lenders.

Projected financing will definitely be difficult as we are also looking at getting involved with becoming landlords. But yes doing projected financing is a good idea! Thank You!

Giving someone your money so they can later lend it to you isn't exactly a groundbreaking concept. You could simply put the money in a savings account and self-finance as quickly as this policy will be able to finance anything for you...

The only thing now is that you may have incurred enough sunk costs that continuing the policy might be beneficial. But getting into in the first place was defiantly a mistake.

msphat said:   Thank you BenH for your response.........

You should thank everyone.

Glitch99 said:   

The only thing now is that you may have incurred enough sunk costs that continuing the policy might be beneficial. But getting into in the first place was defiantly a mistake.
Sunk costs are small compared to the benefit. She is less than 3 years into this, and can recover $5,317.83 in surrender value. Which is already greater than her loan value

On top of that she can buy a $1M term at a yearly cost at less than a month cost of this

She breaks even by month 2, and is ahead after that. That's how bad this concept is

Sounds like your sales guy did well for himself. You will not come out ahead no matter how you try to explain it to yourself, common sense will tell you that, there is no magic borrowing from yourself.

What was the reason you came here ? If you hope people will support your claims you went to the wrong site. If you want to learn how to not get taken for a ride by snake oil sales guys people will help you. Its up to you, so move on if you don't want to listen or educate yourself.

I have no inclination or time to read those books but here is a short summary from CBS. Just run the numbers yourself with all details and you should come to the same conclusion. Also telling in this CBS news piece that the agent did not even call back when confronted with the real numbers.

http://www.cbsnews.com/8301-505144_162-57391839/bestselling-book...

OP, we're looking forward to you explaining (in 3 short sentences) why ellory and the rest of FWF is wrong.

ellory said:   Glitch99 said:   


On top of that she can buy a $1M term at a yearly cost at less than a month cost of this

She breaks even by month 2, and is ahead after that. That's how bad this concept is


I wasn't exactly using this for insurance. I already own term insurance too and yes it is cheaper for this. I am using this for financing. I like that the money earns interest and dividends while using a savings account would not. I would invest money, but that is something that I have not yet done and don't understand. I am just trying to understand this all. I think that in the long term the IBC does a better job than just putting money into a savings account, but I'm not so sure what the differences would be if I were to take the same money and invest it into the market.

I think the concept you are looking for is a credit union. Credit unions use members savings to finance the lending that the credit union does to other members. As a result often the savings accounts pay slightly higher and the loans are slightly lower. However YMMV.
What you are talking about is a scammy way to pay more and get less but still have a similar concept to a awful version of a credit union.

OP, I just want to add that this forum is full of smart people who understand finance better than you and I do. The forum sees "systems" and "concepts" just like this one that exist to get people to invest money in them based on being obtuse, confusing, and misleading. They are always worse than simpler options.

Please consider that the people in this thread are trying to help you. Imagine if you knew a friend was being scammed, but wouldn't admit it. The more you try to explain to them, they more firm they get and the worse off they are. This is exactly what happens here. This leads to a lot of frustration as you can detect.

The best thing you can do here is listen to the advice given, admit that you got suckered into a bad investment, and find your way out as quickly as possible. People here have already give you some advice about that. Do not try to sell your friends and family on this, you will just be perpetuating the bad investment even further.

msphat said:   I would invest money, but that is something that I have not yet done and don't understand. I am just trying to understand this all. I think that in the long term the IBC does a better job than just putting money into a savings account, but I'm not so sure what the differences would be if I were to take the same money and invest it into the market.
Trust me; investing can be much simpler than figuring out the ins and outs of a dividend paying WL policy for financing a purchase.
Keep it simple silly!

GermanExpat said:   SouI have no inclination or time to read those books but here is a short summary from CBS. Just run the numbers yourself with all details and you should come to the same conclusion. Also telling in this CBS news piece that the agent did not even call back when confronted with the real numbers.

http://www.cbsnews.com/8301-505144_162-57391839/bestselling-book...


Great, great cite; I hope the OP reads it. Bottom line; I'm sorry, but you got scammed. (99% of the people who buy whole life insurance are gtetting scammed, so you're in good company)

You've been paying into this plan for 3 years, so I can't say whether you should keep it up or not at this point. The author of that piece is Allan Roth, who's fairly well-known in the investing community; he occasionally posts at the Boglehead forums, so you might want to try asking there if it's worth keeping or not.

OP - I'm assuming that's me. I don't know what that stands for and I apologize I should.

I am sorry if some of you feel like this is scammy, but it's not. I am just here trying to figure this all out. I guess what I wanted to hear was from someone who has actually read the book or understands the concept. There has been only one person here who knew what I was talking about when I mentioned the Infinite Banking Concept.

I knew that I was going to lose money going into this and that it would pay off later in life. Reading the book makes sense to me, but trying to explain it to someone else is difficult. Needless to say, I will be talking with my agent.

msphat said:   Thank you BenH for your response. Financing definitely the term that I needed. Not "investing", but "financing".

Yes I believe in the concept, but I wish there was a Table that is available to project the dividends, etc. That would be an easier sell. It's hard for me to explain all of this to my significant other. I wish he would just read the whole damn book.

Financing will definitely be needed in my lifetime. I am not rich and this is to help save money on interest otherwise spent to banks and other financial lenders.

Projected financing will definitely be difficult as we are also looking at getting involved with becoming landlords. But yes doing projected financing is a good idea! Thank You!


I was not condoning your methods. I personally don't believe they are a scam - but also have not looked at them enough to legitimately say that these methods are preferable to other strategies (some already mentioned in this thread).

I can only assume that your broker showed you a detailed breakdown of how this would all work out and be profitable to you when you bought into this. If you didn't use a broker I can only assume you did all the math yourself and saw how it worked out. In either case, you should have a breakdown - there should be no surprises assuming that you were diligent and that your broker didn't lie. Numbers are numbers.

So, being that you had that information - what now has changed? Are the numbers not matching up to what you had? If so - why not? Go back to your broker and have him work through them with you (or redo them yourself).

Then look at the numbers and run them against numbers from other strategies (like term life and actual investing of money to build wealth so you don't need to finance).

If you still feel the numbers are attractive to you then continue with your strategy.

Long story short - you are unlikely to find people here who share your enthusiasm and belief in this strategy. However if you provide a long term and detailed analysis of your plan and how you feel it will help your financial situation there are plenty of people here willing and able to pick it apart. They may be wrong or right in their critiques, but at least you will see some alternatives to your decision. Short of that, no one here can look at the numbers at the same level you can - so you need to do the math yourself to see if it is worthwhile.

Skipping 508 Messages...
herringauto said:   Another thought I'm having. If I can spare $1000 per month extra, what would happen if I put it toward the principal balance on my house payment. I am at a 30 year fixed at 5.25%. I got the loan 3 years ago and am now paying bi-weekly (for the one extra payment per year) along with an extra $50 per payment towards principal. Would I save more money in the long run putting the extra $1000 per month toward the house than a WL policy?

Without doing the math, you'd be better off paying extra toward your mortgage. As dshibb pointed out, your return is negative for at least 8 years and, at 4% at 30 years, isn't hot later on, either. Money going toward principle on your mortgage has an immediate positive return, especially if you are able to get to 20% equity and can stop paying PMI.

You should definitely look into refinancing, btw. Rates aren't as good now as they were last year or maybe even a few months ago, but you can easily do better than 5.25 assuming you have decent credit.



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