You Have 1 year to Live...
BY THE LEGACY PROJECT TEAM
What was your first thought? What would you do with your time remaining? How would you fund any treatments not covered by your private medical insurance AND make the most of your time left? What if this was happening to your spouse or loved one instead of you? What would you do? How much money do you have access to? I’m serious, think about it. My uncle lived this tragic reality when doctors diagnosed my aunt with Stage 4 pancreatic cancer. The doctors gave her a survival rate less than one percent that year. My aunt attempted chemotherapy, but she eventually decided to quit treatment and spend her remaining months traveling, enjoying life and leaving behind happy memories.
Fortunately, my uncle was a successful businessman who was able to step away from work and be present with his wife in the final year of her life. What a blessing! But consider this: he had the resources to not only NOT work, but also had the capital available to be with her in the final year of her life. He is considered by financial professionals to be in the top 5% of people who are financially secure at retirement. 5%!?! That means 95% of the population will not be financially secure at retirement. This needs to change!
What about you? If this was your life (or your spouse’s life), what would you do and how would you afford it? What if this happened before your retirement age (~59.5 yrs)? Below are some common solutions:
Take off from work and spend from your savings.
Refinance a property or pull a HELOC.
Sell valuable items (e.g. car(s), guns, jewelry, etc.).
Leverage lines of credit.
Cash out qualified accounts (e.g. 401(k), Roth).
Create a GoFundMe.
Borrow from friends and family.
While all of these are viable options, most of these possibilities are going to take TIME to liquidate or borrow against, only adding stress to tragedy. Furthermore, some of those options require you to part from them forever. Cashing out your qualified accounts is a great option, even if you are taking a 25% hit on it for taxes and the 10% penalty. Once you do though, that’s gone forever until you start anew. That diamond ring that’s been in your family for generations is gone forever. Fortunately, as practitioners of the infinite banking concept (IBC) our policies provide us with liquid options we control that don’t require us to take massive tax penalties or part ways with our family’s wealth. We can preserve our LEGACY. It is important to understand this, so read the following carefully.
Option 1: Customized Riders:
Because whole life insurance is the vehicle we use to practice IBC, there is a unique ability to attached some specific “riders” to these policies that grant early access to your death benefit while living. A “rider” is an additional feature, or provision that covers something not already included, or inadequately covered in the standard policy. Think of it as added benefits, specific to what you need. For this scenario with someone who has a terminal illness, there are several riders that would highly benefit the policy owner. 1) Chronic Illness: This rider allows policyholders to access a portion of their death benefit in advance if they are diagnosed with a chronic illness. The funds can be used to cover medical expenses or other costs associated with the illness. The amount available under this rider is typically limited to a percentage of the policy’s death benefit. 2) Specified Medical Condition: This rider provides coverage for specific medical conditions that are listed in the policy, such as cancer, heart attack, or stroke. If the policyholder is diagnosed with one of the covered conditions, they can receive a lump sum payment from the policy. 3) Accelerated Death Benefit: This rider allows policyholders to receive a portion of their death benefit in advance if they are diagnosed with a terminal illness. The funds can be used to cover medical expenses or other costs associated with the illness. The amount available under the rider is typically limited to a percentage of the policy’s death benefit. As the policy owner, benefits are paid to those with a chronic illness, terminal illness or someone who needs long-term care. While terrible situations would only permit the access to your death benefit while living, there is peace of mind knowing these opportunities are available in addition to all the others reasons we decided to become our own banker.
Option 2: Leveraging Your Own Privatized Bank:
The greatest vehicle for the last 100 years to either absorb or disperse “windfalls of money” is the oldest and original insurance policy in America, the Dividend Paying Whole-Life Insurance Policy (or as I like to call it, a “Banking Policy”). This is the only way to spend money while simultaneously save money. Simply put, as the policy owner you are borrowing money against your death benefit. While you’re not exactly borrowing directly from your death benefit per-se, your death benefit is collateral from the money you borrow from the insurance company. This is how and why your money is able to continue to grow with uninterrupted compound interest (not to include dividends which we’ll discuss later). Specially designed whole life policies from a mutually-owned life insurance company is the ONLY way to do this correctly. Yes, a whole-life policy will pay you a death benefit, but it can also advantage you while you are still alive! Think of it like the equity of your house: you can live in your house and borrow against the equity inside of it. In the same way, if you have $2M of death benefit, use that to your advantage now!! In the scenario discussed above, you can use this money to pay for medical bills, pay for travel, pay for experiences, pay to cover travel costs for family members, pay for whatever you want.
As we just discussed, the basis of IBC is the death benefit. You take a loan, and the surrender value of the policy serves as collateral. Period. If you read the insurance paperwork, this is your legal right. So long as you have cash value, you can take policy loans. The value of life insurance isn’t only realized when you die, it is supposed to be used while you’re alive. Furthermore, this function will not go away with any changes to the IRC/IRS. It operates outside of it tax- free. Insurance companies cannot operate on a fractional reserve basis like banks. They cannot freeze your accounts. They cannot change the rules once you have a policy. In light of the recent banking crisis in America, it’s refreshing to see what happened comparatively the last time this happened in U.S. history: the 1920’s. Check out the article HERE to read about how mutually-owned life insurance companies performed while banks were closing left and right.
Conclusion:
So back to the original prompt: my wife is dying of cancer in a year. For me, I’m pulling money from my personal bank, my Banking Policy! I’m taking advantage of my customized riders and probably also taking a policy loan to fulfill that need now. It’s there for me to use, why wouldn’t I? The best part? I’ll pay it back whenever I’m able. If I can’t for a few years, fine. We’ll publish another newsletter discussing why you should pay back policy loans, and also why you don’t have to pay back your loans . Why personalized banking is not common knowledge to the general population, especially with what is going on in the market today, is beyond me. We at The Legacy Project are trying to change that.
Notes
We preach for everyone to read Nelson Nash’s book "Becoming Your Own Banker" at least once a year to truly study and understand all the benefits of leveraging this process. We also want to be a continuous and valuable resource for you and your family both in good times and bad. If you find these monthly newsletters helpful, please share this information; you never know whose life you may be changing.
Have a great rest of the month and be on the lookout for all the events our team is hosting across the country. CLICK HERE to see when we will be in your city.
Comments