Infinite Banking – The Broken Banking System and What You Can Do About It
December 23rd, 2011
Recently our friends at The Real Estate Guys interviewed on their radio program economists Robert Murphy and Carlos Lara, authors of the book How Privatized Banking Really Works. They discussed the current state of the banking system and how it has changed.
“Today’s banking system is a far cry from George Bailey’s Bailey Building and Loan in the classic film “It’s a Wonderful Life”.
Back then, savers put money in local institutions where local bankers lent it out to local borrowers. It was very community focused.
Today, everything funnels through Wall Street and the Federal Reserve, and the last few years have shown that when deals get made too far away from Main Street, weird stuff happens - like meltdowns and bailouts.”
“But before you just park all that cash in a broken banking system, listen to Robert Murphy and Carlos Lara explain an alternative which provides direct current benefits to you, while circumventing the fractional reserve system that they say contributes to the problems the current system causes. VERY interesting stuff!”
You can read the blog post on their website www.realestateguysradio.com/blog or listen to the show: Infinite Banking – The Broken Banking System and What You Can Do About It
You can find out more information about Robert Murphy and Carlos Lara and their book How Privatized Banking Really Works by visiting their website – www.usatrustonline.com.
To learn more about the Real Estate Guys Radio and the insight they provide regarding real estate markets, the economy, and much more, visit their website www.realestateguysradio.com.
Every year The Real Estate Guys put on a great event called: Investor Summit at Sea. This year they are having their 10th annual event which includes Robert and Kim Kiyosaki from the Rich Dad organization. To learn more about this great educational event visit their Investor Summit at Sea page.
For more information about Paradigm Life and Infinite Banking, download our article or contact us at info@paradigmlife.net or by phone at 1-800-870-8670.
Cash Value and Whole Life Insurance
October 26th, 2011
Cash value of a whole life insurance policy is the contractual dollar amount the insurance company will exchange with a policy owner in the event the insurance policy is cancelled. This same cash value is the basis by which the insurance company will loan to the policy owner. The loan is collateralized by the cash value. The insurance company will not lend the policy owner more than the total cash value.
Cash value is also accessible by the policy owner through a partial surrender which is a physical withdrawal of the cash value.It is important to understand what cash value is, how it grows and how it can be utilized.
Cash Value Growth
Whole life insurance is a unilateral contract between the insurance company and the policy owner. In this contract there are guarantees and benefits to the policy holder(s), one of which is guaranteed cash value growth. Cash value grows tax free. When the cash value is withdrawn for income or otherwise, it is also tax free until the withdrawals exceed the basis of the policy. The basis is the amount of premiums that have been paid over time by the policy owner. At this point the withdrawals are taxed at ordinary income tax rates.
Cash value also grows if the policy owner elects to have his dividends buy paid up additions. Dividends are declared every year by the Mutual Insurance Company. In the subsequent year they are divided amongst policy owners on the anniversary date of their policy. The anniversary date is the month and day the policy was originated. Although dividends are not guaranteed mutual insurance companies have a long track record of paying dividends. Some companies have paid for over 100 years.
Loans against Cash Value
Through the policy loan provision, a policy holder can access the value of his cash value without incurring taxes. This is because policy loans are treated as debt, which is not a taxable distribution. A similar financial transaction is a Real Estate cash out refinance. No taxes are paid on the refinance proceeds. Although policy loans are not required to be paid back, it is recommended. The Insurance company charges interest on the outstanding policy loan but do not require payments to be made. However, an outstanding policy loan will reduce the overall available cash value and if death were to occur with an outstanding policy loan, the loan would be paid back via the death benefit proceeds.
Whole life insurance is a unique financial product because of the guarantees, tax benefits and historical positive performance. For more information about how whole life insurance can play a part in your financial situation contact us at 1-800-870-8670 or by email at info@paradigmlife.net
To learn more about Infinite Banking and the guaranteed benefits found within permanent life insurance download our free article.
Deciding Whether Infinite Banking is for You
September 23rd, 2011
When deciding whether or not Infinite Banking is for you, it is important to understand exactly what Infinite Banking is and how it can be applied to your specific situation. “Infinite Banking” is the popularized system that utilizes whole life insurance structured in a way that it maximizes its living benefits in conjunction with the death benefit.
Keeping it Simple
Fundamentally, Infinite banking is a very basic concept based on banking principles so as to reduce costs associated with financing and borrowing (don’t forget the added benefits Infinite Banking can have – Liquidity, Safety, Growth and Tax Benefits). With Infinite Banking the policy owner can take the position of lender and borrower (or just lender) and in essence remove the added expense of 3rd party lenders or potentially be the 3rd party lender. The result is potentially more money in your pocket. Although the concept is basic on the surface, there is much to understand when learning about and considering Infinite Banking. Structuring an Infinite Banking policy takes expertise and understanding of how to appropriately set up the policy to meet your individual needs, wants and goals.
Things to consider:
- Why Infinite Banking?
- Utilization
- Immediate needs
- How can it fit into other activities (IE Real Estate, etc)?
- Long-term contributions and growth
- Death Benefit
- Future tax implications
In structuring a policy there is no cookie cutter way to accomplish and meet the goals of every client. There are many tools and techniques that are put into practice when building a policy for the specific needs of a client. When considering a professional for Infinite Banking seek out one that will explain how and why the properly structured policy will meet your goals. You should also consider this relationship to be long-term. When considering Infinite Banking you will want to seek out someone you can rely on and who has the experience and expertise to offer Infinite Banking advice and an open ear.
Lastly, do your research. A great starting point is to read the book Nelson Nash wrote that coined the term “Infinite Banking” and popularized the concept – Becoming Your Own Banker. At Paradigm Life we will be the first to admit that Infinite Banking isn’t for everyone, but it is something that everyone should learn about and consider.
For more Information about Infinite Banking download our free article. You can also contact us at 1-800-870-8670 or by e-mail at info@paradigmlife.net.
The “Infinite” in Infinite Banking
September 12th, 2011
Flexibility and the ability to use money as you best determine is priceless; our current economic situation has shown us this. For the last three to four years we have experienced a very difficult environment with regards to lending, spending and saving. But where there is bad there is good, and the economic upheaval has created opportunities we can take advantage of.
Infinite Banking got its name because of the limitless possibilities in which you can use a properly structured life insurance policy. A properly structured policy is one that is built on a whole life chassis and with the appropriate paid-up additions rider(s). These elements allow for the least amount of risk and the most guarantees, which is the best foundation in which to structure and utilize the Infinite Banking system.
“Infinite” Banking
As the name implies, “Infinite” Banking is a system which can be used for anything. Many of our clients utilize the system for personal and business uses. In utilizing the Infinite Banking system they are practicing the basic principles found within the banking industry and can hold the positions of the “lender” and “borrower” simultaneously, but they could also just be the “lender” while someone else is the “borrower”.
Businesses and Infinite Banking
These same benefits and utilization of Infinite Banking can be brought into the business realm. In fact the Infinite Banking concept has been used by large banks and corporations for quite some time now, but it goes by a different name: COLI – Corporate-Owned Life Insurance and BOLI – Bank-Owned Life Insurance. Below you will find a portion of the most recent ledger from Wells Fargo (notice the figures are in Thousands) which is the cash value of the life insurance (BOLI) they own – $19,334,000,000.
Why do they have this and what are the uses? They own the life insurance because it helps protect them from the loss of key employees (Death Benefit) , but allows them to utilize the dollars for multiple things such as tier 1 capital requirements and employee benefits (Living Benefits), just to name a few.
Click to Enlarge: Wells Fargo FDIC Ledger with Cash Value Totals Shown - In Thousands
Infinite Uses
The power of Infinite Banking is found within the four main attributes that it can carry – Liquidity, Safety, Rate of Return and Tax Benefits not to mention the death benefit. Infinite Banking is a system that allows the owner to participate in these attributes, creating infinite possibilities (your dollar doing multiple things – death benefit and utilization). See if Infinite Banking is right for you – do some research on how these policies are structured and how it would benefit you. Don’t pass up on the opportunity of taking advantage of one of the most powerful financial tools today.
If you would like to learn more about Infinite Banking call us at 1-800-870-8670 or e-mail us at info@paradigmlife.net.
Paid-Up Additions Riders (PUAR)
August 25th, 2011
The Paid-Up Additions Rider is an important component to maximizing cash-value within whole life insurance and is a vital component when structuring an Infinite Banking policy. As a result of its importance, the PUA Rider must be properly added to a policy as well as explained by an experienced professional that fully understands its benefits and limitations. Let’s first define what the Paid-Up Addition Rider is and the variations that exist within this insurance rider family.
Paid-Up Additions Rider
The Paid-Up Additions Rider is added to a whole life insurance policy that purchases “Paid-Up Insurance”. Paid-up insurance is insurance that is fully paid and requires no new premiums. The PUA Rider creates immediate cash value in the policy.
Annual Paid-Up Additions Rider (APUAR)
The Annual Paid-Up Additions Rider allows for annual payments into the PUA rider. It is often referred to as a scheduled PUA.
Single Paid-Up Additions Rider (SPUAR)
The Single Paid-Up Additions Rider allows for a one-time payment into a PUA rider and is often referred to as an unscheduled PUA. This traditionally occurs when a policy is initiated but can also occur while the policy is in force.
Vital Piece of the Puzzle
The utilization of the Paid-Up Additions Rider with traditional whole life insurance creates more flexible terms and immediate cash value. It also accentuates whole life insurance’s century-long track record of guaranteed growth and living benefits.
The PUA Rider is a vital component of a properly designed Infinite Banking policy. The understanding of this rider is paramount. Due to the effect the PUA Rider has on the death and living benefits of a whole life policy, it is vital the insurance professional understand how PUA Riders work and how to properly use them.
In large part to Nelson Nash’s book “Becoming Your Own Banker” and many others written thereafter, Infinite Banking is becoming well known. As our economy continues to exude uncertainty, alternative ways to save money is on the mind of many, as traditional vehicles have become too risky.
If you are contemplating the use of the Infinite Banking Concept in your personal finances and are searching for a competent advisor and company to educate and support you, keep in mind that in order for the Infinite Banking Concept to work properly, the insurance policy must be set up with the proper use of the PUA Rider.
To learn more about Infinite Banking and PUA Riders contact us at 1-800-870-8670 or by e-mail at info@paradigmlife.net.
Infinite Banking – For Real Estate Investors
June 28th, 2011
Our friends at The Real Estate Guys Radio Show, Robert Helms and Russell Grey, decided it was time to get further insight and expertise on how Infinite Banking could be utilized with real estate. As the real estate market tries to make an effort to rebound, many investors are finding it hard cope with the changing real estate market.
In this interview Patrick discusses how Infinite Banking could help create more stability and control with your real estate dealings. This is accomplished because of some unique attributes found within a correctly structured Infinite Banking policy. In the Real Estate Guys Radio Show blog they made an interesting correlation between a HELOC and a properly structured Infinite Banking policy.
“It works kind of like a line of credit secured by a property. Remember those? You could borrow against your equity at a low rate, use the money for whatever you wanted, then put it back whenever you wanted. And then you could take it back out again, anytime you wanted, without prior approval. Ahhh, those were the good old days! (hint: it’s not a mortgage).
But as much as we liked those old HELOC (Home Equity Lines of Credit), they had some pesky side effects we just thought we had to live with:
- You had to qualify to get them set up. If you had bad credit and no income, you couldn’t get one. How unfair.
- The credit line could be shut off at any time for any reason. Even if something minor happened, (you know, like the market crashing and all the equity disappearing), the bank would simply reduce or completely cancel the line of credit. How rude!
- You had to make payments. What?! That’s so inconvenient.
- If you didn’t make the payments, the lender might actually foreclose on your property – even if you were still living in it. Now that’s REALLY inconvenient. And rude.
Enough about those old crappy HELOCS. Who needs them anyway?” – www.realestateguysradio.com
You can listen to the full interview over at The Real Estate Guys Radio: Be Your Bank – Cash Management Strategies for Real Estate Investors or check out their most recent blog post detailing the topics covered. For more information about The Real Estate Guys visit their website. It is full of useful information and tips regarding the ever changing real estate market.
The Real Estate Guys Radio Show: www.RealEstateGuysRadio.com
Real Estate Guys Radio Podcast
Don’t forget to check out the 2012 Real Estate Guys 11th Annual Investor Summit at Sea
Listen to the Real Estate Guys Radio Show Interview with Patrick Donohoe of Paradigm Life
To learn more about Paradigm Life and Infinite Banking contact us at info@paradigmlife.net or by phone at 1-800-870-8607.
How Well Do You Know Your 401(k)?
June 10th, 2011
Since the time which major corporations shifted away from defined benefit plans (pension plans) the responsibility and risk for retirement accumulation moved to the employee. 401(k)’s and other qualified plans or defined contribution plans have been the predominant vehicle for retirement accumulation for most Americans over the last 30 years.
In a recent article published by Forbes, these defined contribution plans, specifically the 401(k), were called into question regarding the fees that are charged to the account owner by third party service providers.
The article goes on to reference a new study by AARP that illustrates how in the dark most American are in regards to their 401(k) plans and the fees charged.
“7 in 10 participants reported that they did not pay any fees in their 401(k)… and 62% said they are unaware of how much they are paying in fees for their plans.” – AARP: 401(k) Participants’ Awareness and Understanding of Fees
“The government has expressed concern that this widespread ignorance is causing significant financial damage. High fees and hidden conflicts of interest are the culprits in causing 401(k) plans to under perform professionally managed traditional pension plans…, a U.S. Government Accountability Office report declared in January.” – Forbes
As a significant portion of the American population moves towards retirement it is all the more important to understand the vehicle in which you are relying on to sustain you in the later years of life. Don’t fall prey to ignorance or complacency…educate yourself today.
Resources and References: AARP – Study of 401(k) Participants’ Awareness and Understanding of Fees U.S. GOA – 401(k) Plans, Improved Regulation Could Better Protect Participants From Conflicts of Interest BrightScope – Look Up a Company 401(k) – www.brightscope.com Forbes.com - Find the Fees
Real Estate Guys Radio 9th Annual Investor Summit at Sea
April 22nd, 2011
Recently Patrick Donohoe of Paradigm Life was able to join The Real Estate Guys Radio as a faculty member on their 9th Annual Investors Summit at Sea. After more than a week of learning about and discussing real estate, the hosts of The Real Estate Guys Radio show ( Robert Helms, Russell Grey and Bob Helms) did a live show that included a round table of all of the faculty members on the cruise ship.
More than education, the Summit is about relationships, enthusiasm, focus and family. Because of the unique environment created on a cruise ship, faculty and students often bring their families. It’s proven to be a great opportunity to unite families around their pursuit of financial independence and prosperity. After one week of focused education, networking and outrageous fun, each faculty member shared their most important takeaways.
Round Table Members include:
- Your host, Robert Helms
- Co-host, Russell Gray
- The Godfather of Real Estate, Bob Helms
- Robert Kiyosaki’s Rich Dad Real Estate Advisors, Ken McElroy and Wayne Palmer
- International Real Estate Developer, Beth Clifford
- Attorney, Mauricio Rauld
- Real estate investor, developer and author, David Campbell
- Financial strategist, Patrick Donohoe
Over two-thirds of the 2011 attendees, including the complete faculty and their families immediately signed up to come back in 2012 to celebrate the 10th annual Investor Summit at Sea™. It’s hard to describe the Summit experience, as several surveys described the event as “life changing”, “incredible”, “awesome” and “over the top”. To learn more about the upcoming “10th Annual Investor Summit at Sea” head over to The Real Estate Guys Radio site and sign up for their “Advanced Notice List” to get the details and have a chance to sign up before they roll it out to the world.
Atlas Shrugged Part 1
April 6th, 2011
The Movie – Atlas Shrugged Part 1
Atlas Shrugged is a novel that has generated inspiration and controversy since its publication in 1957.
As in our podcast Atlas Shrugged Part 1 will hit limited theaters on April 15th 2011 (Tax Day), find out here if it is showing in your area. Get Atlas Shrugged the movie shown in your town! Demand it here!
“Its theme is the role of individual achievement in society and its goal is to demonstrate what can happen when individual achievement is undervalued, suppressed and demonized. Complex characters embody heroism and evil, in a plot that combines drama, mystery, romance, and science fiction – the result is ultimately inspirational, not apocalyptic.” atlasshruggedpart1.com
Paradigm Life Podcast
Check out our most recent podcast in which Patrick Donohoe had the pleasure to sit down with Edward L. Hudgins, Ph.D., Director of Advocacy and Senior Scholar for The Atlas Society and discuss Objectivism and the upcoming film Atlas Shrugged Part 1.
Learn more about the Atlas Society and Atlas Shrugged
Buy the book Atlas Shrugged
Special Guest – Edward L. Hudgins, Ph.D., of The Atlas Society
April 5th, 2011
Special Special Guest Edward L. Hudgins, Ph.D., Director of Advocacy and Senior Scholar for The Atlas Society discusses with Patrick Donohoe a variety of topics from the goals and purpose of The Atlas Society to the upcoming film – Atlas Shrugged Part 1.
Bio:
Edward L. Hudgins, PH.D.
Director of Advocacy and Senior Scholar for The Atlas Society
Dr. Hudgins is director of advocacy and senior scholar at The Atlas Society. He is a prolific write and popular speaker on cultural, political, and philosophical matters from an Objectivist perspective. His most recent collection of essays is entitled An Objectivist Secular Reader.
He is the formerly director of regulatory studies for the Cato Institute, editor of Regulation magazine and of Freedom to Trade: Refuting the New Protectionism, Space: The FreeMarket Frontier, and two books on postal service privatization.
Hudgins served as a senior economist for the Joint Economic Committee of the U.S. Congress and was both deputy director for economic policy studies and director of the Center for International Economic Growth at the Heritage Foundation. He has testified on many occasions before Congress.
His opinion pieces have been published in the Wall Street Journal, USA Today, and other major outlets. He has appeared on Fox News Channel, CNN, MSNBC, CSPAN, and the History Channel.
Hudgins has a bachelor’s degree from the University of Maryland, a master’s from American University, and a doctorate from Catholic University in political philosophy. He has taught at universities in the United States and in Germany.
The Movie – Atlas Shrugged Part 1
Atlas Shrugged is a novel that has generated inspiration and controversy since its publication in 1957.
As mentioned above and in the podcast Atlas Shrugged Part 1 will hit limited theaters on April 15th 2011 (Tax Day), find out here if it is showing in your area. Get Atlas Shrugged the movie shown in your town! Demand it here!
“Its theme is the role of individual achievement in society and its goal is to demonstrate what can happen when individual achievement is undervalued, suppressed and demonized. Complex characters embody heroism and evil, in a plot that combines drama, mystery, romance, and science fiction – the result is ultimately inspirational, not apocalyptic.” atlasshruggedpart1.com
Learn more about the Atlas Society and Atlas Shrugged
Buy the book Atlas Shrugged
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