KGCI: Real Estate on Air - Journey from Despair to Financial Freedom.

Episode Date: May 21, 2024

Good evening, everyone. My name is Neiji Adewale, a host of the Akaba Home Financial Freedom Mastermind Group. And I'm excited to be joined by John Ensley today, who is a leading a financial planning revolution that's going to help you take back control of your money, your lifestyle, and your retirement. And John is a story that has come from a lot of loss in life and generated into success. After losing almost everything during the Great Recession, he became obsessed with finding safe, predictable ways to create wealth and protect it from the chaos and corruption that is the world we live in. And so now John dedicated a lot of his life to helping others achieve this type of control and control their finances and find their own ways to reach

financial freedom. John, thank you for joining us. Hey, thanks for having me. I'm so looking forward to this. Absolutely. Absolutely. And I want to take it back to the beginning, John, because I know you have a wealth of knowledge. that you share with individuals now, but I believe you made it through not only the 08 Great Recession, but even before that, some of the dot com, you kind of went through that piece as well, right? I did. I did. And it's, you know, it's interesting. I remember vividly, I was in the, in the army. When I got out of high school, went into the, to the U.S. Army. And I had just graduated from airborne school at Fort Benning, Georgia. And I was walking down the street. And I remember reading a

headline in October of 1987 when the, you know, the, the Black Friday, I think they called it event in 1987 when the market had a historic one day crash and triggered a few other things. But at the time, I was 18 years old. It didn't mean anything to me. But I remember seeing the headline and, you know, understanding there was some rigamarrow. So it's kind of interesting. There, you know, there's only been three big events, 87. and then the dot-com crash and then the 08 crash and COVID crash.

And, you know, so it's almost like I just happened to have been born at this time when, when there's this crazy chaos in the financial world at various times. So yeah, it's kind of interesting. So I got out of the Army in 1992 and went to work for a company that happened to be a contractor, a government contractor that was collecting defaulted student loans for the U.S. Department of Education. And so that was my first civilian job out of the military. And that was the buildup to the dot com era there as that bubble was expanding was kind of an exciting time to be with a corporation. We were going to do an IPO and we were all going to be just wildly wealthy as a result of it.

And by the time 2000 rolled around, of course, that IPO never happened. Everything started deflating and going the other way. And I ended up moving on from that company. And I did leave there with some money in an employee stock ownership plan. And back then, I did some calculating. And I realized that I didn't like the tax exposure that I would likely have later in life if I left that money there. So I decided to do something different with it. And real estate was where I thought, you know, I should go for a lot of good reasons.

So I had some property in Southwest Washington that I bought. and I subdivided a small five-lot subdivision of my plan was to build spec homes. And of course, by now we're into, let's say, 2004, and when I started dividing this property. And so by 2008, I was about halfway through building my first spec home on this property when everything started tanking in the 2008 crash. So, you know, it was a part of it was the economics, right, that pushed that, you know, the housing bubble and kind of going over the cliff there that took it over the edge. And part of it was just my inexperience and not really knowing what I was doing.

And that's kind of how I am. I just jumped in with both feet and figured I could figure it out. And maybe if the economics hadn't kicked in, I probably would have figured it out. But as it turned out, that project imploded spectacularly. And so, but, you know, those were kind of dark days for me. I read around that time, of course, I had a marriage that fell apart and teenage kids that were starting to have typical teenage kid problems. And just a lot of stuff going on.

I worked in my day job, right? This was my investment life. My day job, I was in commissioned sales in the industrial world. And, of course, with the 2008 recession, all my customers basically stopped buying. So my regular income also took a dive by about 50%. And so I was looking around and kind of, wow, what is going on? How was all this possible? I thought it was doing the right things.

And that was, so it was a real wake-up call for me. And it got me to start, to start digging into what didn't I understand. And so I just went on this, what I call now a journey of self-discovery. I started reading everything I could get my hands on, you know, books, blogs, just anything. And started just learning all I could, mostly about finance, but also about life. And just this journey of self-discovery. And so I was on a webinar one night in this process. And this advisor was talking about a couple and some home equity in their home.

And he was talking about their retirement plans. And then he started talking about a cash value life insurance policy that was building up equity. And he was mapping that out. And I was kind of taken aback by that. At the time, I had sort of this terrible attitude about life insurance. Why would I want to be worth more dead than alive? And so this was my first exposure to the idea that there could be something to life insurance that I didn't understand, something more than just a death benefit. And so sometime during that presentation, he uttered the words infinite banking.

And that led me to the Becoming Your Own Banker book by our Nelson Nash. And from there to bank on yourself, the book written by Pamela Yellen. And I began learning about that concept and ended up setting some policies up for myself. and starting to use them. And I realized, you know, after all these years, I had been to many financial advisors and no one had ever shared this concept with me before. And with the work I was doing in the real estate investment and so forth, that seemed like somebody should have clued me in when I was meeting with these advisors.

And so what I realize is the way that traditional or the conventional financial planning model is built, it's not likely that conventional planners are ever going to share this with people. It's just not in their wheelhouse. And so I was ready for a career change and got licensed in Washington State for life insurance and then completed some training out in Manhattan for the Infinite Banking concept and some more training for the Bank on Yourself concept and launched my practice in 2012, specifically to help people understand this concept, understand that there are alternatives to the conventional approach that are extremely effective.

and if it's a fit, help them implement it in their lives the way I did it mine and the way I'm now helping clients do it in theirs. And John, that is incredible, right? To be able to make it through not one, but two of the biggest crashes that we've had in history and still be standing tall and now thriving and helping others is huge. And I want to dive into this infinite banking concept. But before we do that, I really want to dive into your mindset. I think that's a huge part of this to even start to seek out ways that you can grow your wealth, that you can start to depend on yourself and really take kind of your future into your hands. And so what was the mindset coming out of that real estate crash and how were you able to stay motivated and really find that next deal, which is the infinite banking, and learn about that piece? What was your mindset like coming out?

So it was a combination of, and I think what it is, you have good days and bad days, right? There's some days where your mindset is just like, oh, my goodness, how am I ever going to get out of this hole, right? That I've created for myself. And then other days, it's more, okay, we're going to find a way, right? So I think you have both, you have both the good days and the bad days. And I think one of the key components for me was all the books. I threw myself into education, just everything I can read. I was constantly in the midst of two, three, four books at a time.

And so one of the things, looking back on it is it really just bombarded my mind with positive messages and constructive messages and, you know, in learning. And so that helped keep keep my mind out of the doldrums. And the other thing is resilience. I think to to operate on this planet, you just have to be resilient. We live in a very chaotic universe and a very chaotic world, a lot of chaotic things going on and things are not going to go to plan. right that you're going to have setbacks and you have to be resilient you have to be able to bounce back and realize that it's never the end it's there's always a way forward absolutely absolutely 100% agree you've got to stay motivated you got to keep that hope factor up

and have that resilience as you mentioned to make it through a lot of stuff that we go through on earth but there was something we were talking about before we hit record where you were talking about whether you like it or not, you're in the banking business, right? What do you mean by that? So that was one of the things that I learned in that process. And that is there's what I now call the banking equation. And I refer to this as saving, borrowing, and investing, right? This is what we use, quote, unquote, banking for.

We save our money into banks. We use banks for loans. We borrow. We finance things. and then we make our investments, right, oftentimes with that financing. So we're saving, borrowing, and investing. And we've been taught to use this platform that is the modern banking system where we do that, right?

If you have money in a brokerage account or a retirement account, like a 401K or an IRA, those are banks. They're investment banks, right? If you have money in a savings account, you use your checking account, those are regular banks. And when we make our investments through these different types of vehicles, we're using the banking system, quote unquote. And so when I discovered this idea, this bank on yourself or infinite banking idea, essentially what it is now. Now I know how to explain it at the time I was still learning.

But now I know how to explain it. It's just a different system for saving, borrowing, and investing. We're using the unique features of that properly structured whole life insurance contract to create an alternate way to save, borrow, and invest. that's alongside but outside the conventional banking system. Okay. Okay. And you mentioned something that a lot of people do.

I worked in the W2 world for a long time, right? And the 401K and the RRA, it always felt safe, right? This is what everybody else is doing. They're going to match X percent. And so, you know, when we start talking about infinite banking and, hey, I'm going to try to depend on myself for that future, it could be a little bit scary. So how did you get over that fear factor? and what are the pros and cons compared to like a 401?

Great question. And isn't it interesting that it feels safe? I'm guessing there's quite a few people out there right now that aren't feeling so safe, right? Those accounts have taken some hits here recently. And of course, the 2001, 2000, 2001, the dot-com crash, you know, wiped out a lot of equity in these types of plans. And 2008 did the same thing, right? 30, 40, 50 percent. downturns. So safe is definitely relative when it, when it comes to these types of accounts.

The other factor with, um, with these types of accounts is they're sort of a, what I call money monsters, right? These are these, uh, wealth killing effects of things that are out there and taxes, fees, crashes and crises, which we're just talking about, um, inflation, which everyone kind of knows what that's all about now here in the last year and, uh, and debt interest, right? These are the things that while we're trying to build up wealth, these are the counter forces that are trying to siphon it off. And so one of the things, the first thing I would say is I don't ever compare a properly structured life insurance policy to an IRA or a 401K or a qualified plan. Right. They're two, they're, um, the, the life insurance policy is that is that vessel where I build up cash that I then go use to make.

investments. So I don't compare my life insurance policy to investing in real estate or to putting my money in a 401k. It's a different way of doing it. And the policy actually facilitates investing in other things. Lots of people use it for real estate, but you could use the cash values building in these policies to invest in whatever you're into. If you're crypto is your thing, then you could use it to invest in crypto or anything else. Just to use that as an example. So I think, you, you know, You know, these retirement accounts have their purpose in some cases. And it just, what I think happens is oftentimes we look at doing what seems mainstream because it feels safe, as you mentioned. But we don't always line up the right tools with our own objectives.

I meet with, I talk with people all the time who, for instance, want to invest in real estate. And if they're under 59 and a half, and they want to build up cash that they can use to invest in real estate, and they're trying to use an IRA or a 401k or a qualified retirement plan to do that that has penalties for accessing the money if you're under 59.59.5. Right. The tool doesn't line up with the objective. So we've got to make sure the tools we're using, the financial tools, are lined up with the objectives and the values that we have. Absolutely. 100% agree. And it's one of those where I was one that, you know, initially early in my career was like, hey, let me just do kind of what everybody else is doing for investing in the 401k in the IRA and kind of not doing anything else. And that quickly we realized like, hey, you know, 59.5 is a long way away. And touch any of this. And I see it

growing. But man, like you literally can't use this until, you know, way down the road. And so I started personally investing real estate and life insurance is something that I've heard about, but haven't dug as deep, right? And definitely not anywhere near the expert that you are being able to utilize it to continue to grow your wealth. So could you just define how this infinite banking kind of works? Yes, for sure. Be happy to. So what we're doing is we're taking a plain Jane whole life insurance contract, been around for almost 200 years. Whole life insurance is designed to cover someone for their whole life, their entire life. So this is a lifelong endeavor that we enter into when we do this.

And Whole Life has a unique feature in that as the premiums are paid over time and we move through the timeline of our life, the contract builds up a guaranteed cash value increase every year. So every single year, these policies are going to grow by a larger amount. every year. We call this cash value. And so within the policy, we, of course, we're buying death benefit, it's life insurance. And that death benefit translates into a certain amount of cash value increase every single year. And it's going to go up by a larger amount every year for the rest of your life. Right. So we're talking about compounding, something that never goes down and it goes up by a larger amount every single year for life. Right. That's compounding. And so we get

this compounding effect through our lifetime. Now, in addition to that, we work with companies that are mutual insurance companies when we set these up. And a mutual insurance company, when they perform better than expected, they pay a dividend back out to their policy owners. If they were a shareholder company, they would pay those dividends to the shareholders versus a mutual company. So that's what we want a mutual company. So we, the policy owners are getting those dividends. And so that's the other component of growth as those dividends come back in every single year. And those dividends and the growth when it's generated is actually buying more life insurance every year, which is creating more cash value and higher death benefit every single year. So we have this tool where we can put cash and it's going to build up by a larger amount every year, every year for life.

So it's, as I said, it's a lifelong thing. So, you know, if we put, let's just say we put $10,000 per year into the policy, right? It can be designed based on circumstances of whoever is wanting to do this. It can be designed anywhere from, let's say, you just want to put $400 or $500 a month into a policy, and I have clients who put hundreds of thousands of dollars into their policies every year. So it's everything in between, depending on the circumstances of each individual. So one of the things I like about it, it's customizable to your specific circumstances. And so let's say we put $10,000 in the policy.

What most people know of with Whole Life Insurance, and you hear some what I call financial celebrities out there that talk about Whole Life in a negative light, guys like Dave Ramsey, for instance. And they're referring to kind of the old school, like I mentioned, Plain Jane Whole Life, where it takes many, many, many years for that cash value to build up. What we're talking about are what I refer to as modernized whole life policies. So we're taking that plain Jane contract and we're adding a couple of riders to it. And by doing that, we had one particular writer called a paid up additions writer where that

causes the cash value to increase at a much faster pace than those old plain Jane policies. So in that $10,000 premium I might put in in the first year, let's say $8,000 of it is going to be available as cash value that I can access in the very first year. And then a larger amount every year after that. And so it builds up over time. One of the stories I like to tell is to kind of describe how the cash value builds up is I was in a, it goes like it's a tale, by the way. This is this is a fictional story. I was in an antique shop in Seattle and there was an old antique coffee machine.

It said magic coffee machine, $100. So I buy it. Sounds interesting. And I bring it home. And it turns out it's coin operated and you put a quarter in it and out comes a cup of coffee. That's pretty cool. and then I hear it clink. And I look over on the other side of the machine

and two dimes roll out. And I'm thinking, well, that's interesting. Okay. And so I put another quarter in when I'm ready for another cup of coffee and out comes another steaming cup of coffee and enters a clink. And then two dimes and two pennies come out. And I do it again and two dimes and three pennies come out.

And by the time I put the fourth one in, I put in the quarter, I hear the clink and a quarter came out. So by the time I got to my fourth cup of coffee, I got to put in the quarter, I get back a quarter. Okay. And by the time I get to the seventh, eighth cup of coffee, I realize I've put about $1.75 so far and quarters into this thing. And I add up all the dimes and pennies that came out the other side.

And I've gotten back $1.77. Right. So within a short period of time, I'm getting back the amount I put in. And just a little bit longer than that, I'm getting back all of the amount that I've put in since I started drinking coffee out of some. machine. Okay. So I'm getting a larger amount back every single time I put a quarter in and I'm getting a course a cup of coffee every time. Right. So if we think about that with it with how a life insurance policy works, that little parable, right? We put our premium in. Those are the quarters.

We get our coffee, which is the death benefit. And then we get back the dimes and pennies on the other side every time we put the quarter in. And within usually between three and five years, you reach a point where the premium you put in that year, you're getting an increase in cash value that year of at least that amount. And within probably six to eight years, it just depends on the design and the person and the individual circumstance, you're getting back in cash value all the premium you put in up to that point. And then from there, of course, you're now getting back more than you've put in every single year for the rest of your life. So that's kind of how it works, how the buildup works as far as the way this vehicle accumulates cash and builds it up over time.

And then we can talk about how you access that, which is where we get into policy loans and becoming your own source of financing and that concept. Yes. And this is pretty incredible. When you explain it like that and break it down, it makes a lot of sense. And the whole piece about it eventually eclipsing how much you're putting in, that has to do with the dividends, right, that are getting paid back to you, that piece kind of boosting the return.

It's both the dividends and the actuarial growth. And it's a very common way to think that the dividends are the most important piece, but they're actually not the most important piece. They're definitely a component without the dividends. It wouldn't grow nearly as well as it does. But I often show clients that when you get 10 years down the road, the guaranteed growth, the actuarial guaranteed growth in the base policy dwarfs the dividend. right? The real powerhouse of growth is the contract itself. It's the actuarial guaranteed growth in the contract is the real powerhouse over time. The dividends just boosts that. Okay. No, this is incredible and it's really open in my mind because I haven't been able to sit down with someone to talk through this in detail. And so you mentioned it earlier, but I mean, the next question is how you actually get the funds out and use that for investing and not get, you know,

you know, kind of hit over the head like you would with a 401K, things that nature. Yeah, exactly. And what you just said is so key. Sit down and go through it with an advisor that knows what they're doing that isn't going to pressure you or try to sell a product or push a product down your throat that's just really going to help you understand the concept. Because that's the only way you can determine where and how it fits and if it fits, right? I always like to kind of tongue in cheek say that this can work for anyone, but it's

certainly not for everyone. And so that is really, really important is to, you know, sit down and talk with someone knowledgeable. I'd be, of course, more than happy to talk with anybody. I actually offer a free 30-minute strategy session. We can talk about that before we're done here where you just, you know, spend 30 minutes, no pressure, just to find out if this is a fit or not, right? That's really what it's all about. And so accessing the money, right?

Now we're going to talk about policy loans. And there's a very unique thing that has to be a fit or not. happens with whole life insurance and policy loans. So I'll start with insurance companies are highly regulated, right? They're regulated at the state level with the National Insurance Association, commissioner association. And they are highly regulated about what they can invest in. So they're required by the regulators to take the premiums that policy owners are paying and invest those premiums in very safe vehicles that will ensure they can meet their future obligations, meet those death benefits and so forth.

And one of the investments that an insurance company can make is to make policy loans available to their own policy owners. And so what the insurance company is really doing is for their policy owners that want to take advantage of this, they're saying, okay, you have a policy and we will loan you money using that policy as collateral. So they're going to take the cash value in that policy is the limit of what they'll loan you. and the death benefit in that policy is the actual collateral. And this creates a very unique situation for us as the policy owner. So the insurance company knows that if you never pay the loan back, eventually, right, you're probably going to die.

Right? We're all eventually that's going to happen. So they know that when that death benefit gets paid out at some point down the road, the loan's going to get offset from that death benefit before the rest of it goes to your beneficiaries. Right. So the insurance company is secure. sure. So what that does is it puts you or me, the policy owner, in complete control. We can pay that loan back any way we want to over any period of time. We're in complete

control of the terms, right? So it's a no qualifying loan. We don't have to provide any income source or verification. We don't fill out an application. There's no, no review, really. We just fill out a form, check a box, and the insurance company is going to direct deposit those loan proceeds into our account within about a week. So it's super easy to do. There's no qualifying process. There are no recourse loans. So let's say I borrow against my policy and I go buy a car.

I hold title to the car, right? The car is not not collateralized by that loan like it would be if I borrowed it from a bank. But because the policy is the only collateral. So I can do that. And then I can pay it back anytime or on any, any time frame that I want to. The advice I give clients is pay it back in a reasonable amount of time. But it is entirely up to you. So I have clients, for instance, who are flippers. They flip property. And they may not make any payments against a policy loan until they sell the property. So they borrow the

money, buy the property, do the rehab, get it back on the market. And it might be six, seven, eight, nine months later, they've sell the property. And then they pay the loan off. Perfectly fine. They can do that. They could pay it monthly if they wanted to. You could start paying monthly and then stop paying for a while. Right, you're in complete control. You can repay this however you want to. And that flexibility from an investment standpoint is huge.

To be able to access financing this way and be in complete control over the repayment gives you a lot of flexibility to make your investment work. So the other factor are interest rates, which are the way this works out. The interest rates are extremely competitive, extremely low. So the insurance companies will charge an interest rate. Currently, most of them are around 5%. There's a few. They're a little under that and a few.

They're a little over that. And they charge 5%, but it's a simple interest rate. And they charge it once a year on the anniversary date of the policy. And so what they do is they take the interest at the anniversary date and they apply a simple interest calculation to the loan balance on that date and they capitalize it into the loan balance for the next year. So when you're making payments, you're reducing the principal dollar for dollar. 100% of your payment is going to principal.

And then the interest is calculated once a year, et cetera. So the way that works out, let's say the interest rate is 5%. If I pay that loan off in two to four years, my effective rate on an annual basis because of how it's applied is probably going to work out to be somewhere around 1.8 to 2.2%. If I stretch that out to 5 or 6 years, it might be two to two and a half percent. And then, you know, the longer I go, the larger that effective rate actually turns out to be. So it's, let's just say your rate is anywhere between

two and five percent depending on how long you take to take the loan back. And John, I'm going to state this back to you because my mind is blown right now, right? So I currently, I mentioned before, I'm doing mostly real estate investing and I do invest in flips and things that nature. But the way I've done it is with helocks in the past. And when I first got my heloc in 2021, the interest rate was 5%. But it follows the Fed prime rate. So now it's about 10%, right? Maybe a little bit more. I looked at it because I don't want to cry. And so now when you're lending out that money for a flip, it's significantly more expensive. If I'm hearing you correctly, you could essentially take out money on your anniversary date. And if you paid it back in 11 months, would that be an interest free loan?

It would not. And that is another common misconception. What's going to happen is there's going to be a proration for that partial year based upon the daily breakdown of that simple rate. So they're going to take 5% divided by 365 days and that'll essentially be how they would charge a partial year. So there will be a proration. So it will not be interest free. There would be a proration on it. But still your effective rate in less than a year is going to be.

on an annual, annualized basis is going to be very, very low. Yeah, compared to where we are right now. And for the competitive rate, you said about 5% right now, does that go down with kind of the market, things at nature? Does that control anything? It could go down or up, right, depending on the market. Most of the, most of the companies out there that I work with have stayed pretty steady. You know, maybe they were at five and they went up to 5.3 or something.

and then have gone back down to five. And, you know, so it's, it is a variable rate. However, they lock it in most of them on the anniversary date. So if the, if the rate is at 5.3 on the anniversary date, it's going to be 5.3 until the next anniversary date. And then there could be an adjustment up or down. Now, the other thing about that to be aware of is the other thing that's very closely tied to market interest rates are our dividends, right?

And so if the loan rates are increasing, then we would also, expect there's probably a delay of a year or two, but we would also expect to see our dividends scales also increase. And so there's kind of a tie in there. If you think about it, this is a kind of a very interesting system because we're a policy owner and we have this insurance policy and we borrow from it and the insurance company's charging us some interest, very modest interest. And we're paying the insurance company interest, which is contributing to their performance, and if they perform better than expected, they're paying us a dividend. So there's an interesting loop that's happening there that I like. I think it's kind of a

really cool system. Absolutely. Absolutely. And in a few minutes, we're going to open this up to the rest of the group that's on the line to ask questions either in the chat or to join live. But one other question I had for you, you mentioned that you offer a free consultation. and that individuals can reach out to have a conversation similar to what we're having to figure out, hey, will this work for my situation? How can we get in touch with you for that? Automatically. And so three 30-minute consultation, as you can tell, I'm pretty passionate about this concept.

So I love helping people understand it. And if it applies, if it fits, right? I'm not a pressure type professional, right? So if it's a fit, then I love to help people implement this and get all these benefits that we've been talking about because it's all for real. There's hundreds of thousands of people that are doing this today. Absolutely. We're going to drop that in the chat here shortly. It's also going to be added to the show notes of this podcast. But one last question for you before opening it up to the group. Is there any way that we can help you with any of your goals this year as a community? And if so, what is that way? You know, I think my whole business is spreading the word about the infinite banking concept, about bank on yourself and this approach to personal finance. So if that's it, spread the word, you know, tell people, hey, I heard about this concept

and get more people curious, more people involved. That's really, really what it comes down to. I think this is such a powerful concept, particularly for some of the, you know, younger generations coming into their peak earning and working and investing years. You know, a lot of the tools that our grandparents and our parents used are going to be less effective, I think, in future decades. And those younger generations really need something like this to set themselves up for success. 100% agree.

When you look at things like, you know, Social Security and is that going to be around by the time you kind of retire? what's it going to look like. Yeah. And when you look at things like, you know, kind of the pensions that used to be there, a lot of those have disappeared. So you got to kind of find your own path. So no, John, we truly appreciate you. Now we're going to open it up to the rest of the group. Please feel free to call in or drop questions in the chat. I actually have a question here for you from Kwame. And it's, what's the name of that writer that increases the value of whole life? And can you add this rider to a policy that's already in place?

So different companies are going to call it slightly different things, but it's called a paid-up additions rider, paid-up additional insurance. And unfortunately, no, you probably cannot add it to an existing policy. And I want to stress that, I mean, I would believe 99% of the life insurance agents out there are really not educated on how to structure a policy using a paid up additions rider to maximize the cash value accumulation. You want to work with someone, a bank on yourself authorized or a bank on yourself professional is my suggestion. That's something that I am. I'm one of 200 highly trained bank on yourself professionals in North America that know how to do this and do it the right way.

And so I think that's super important. But it's a paid up additions writer, paid up additional insurance. sometimes will be referred to something along those lines. Absolutely. Absolutely. Okay. The next one we have is, do you work with universal whole life? And if so, can you give an overview of it? So I'm, of course, being life insurance licensed, I'm very familiar with the different types of life insurance. And the answer to that question is, no, I do not work with universal index universal life insurance. for a number of reasons, there are some problems with that product as it applies to the way a bank of yourself policy is supposed to work. We use whole life primarily for the guarantees that it offers and for the flexibility that it offers.

And while universal life or index universal life is kind of pitched as a flexible product, it really doesn't have the flexibility that we're looking for. and it doesn't have the guarantees that we're looking for in order to really make this work. And, you know, I think it's, it's, you got to be careful because there's, there is some information out there where people are saying that, hey, it'll work just like infinite banking. We'll just use the, the IUL. And I'm not saying it can't work. I'm saying there's a, there's a pretty good probability for disappointment. And, you know, I'm, I'm, I'm an independent agent, right? I can work with any insurance company.

I can sell index universal life. I just don't. I choose not to because it doesn't align with what I think are most important about using these types of policies. True. True. And this is kind of a selfish question. So you gave the example of kind of putting the quarter in, getting 20 cents back,

and kind of getting your coffee, right? And so in practical terms, if we did do something like, you know, this infinite banking and started, you know, this year, when could you actually start pulling funds out? Is that year one that you really can start pulling funds out? Yeah, almost immediately, depending on how fast you put the funds in, right? So, so people commonly fund the policies over time. So they figure out how much they want or can put in a policy and they put it in monthly or annually over time. But you can also use lump sums to start the policy off with a significant amount up front. So, So one of my favorite stories about this is a guy that was a Marine Corps pilot.

He was overseas for quite some time and built up, saved quite a bit of money because he was overseas. And so when he came back, he did a couple of things. One is I met him and we set up an infinite banking policy. He also went and bought himself a new Tesla. And he financed the Tesla, right? And so we set up his policy. He put $100,000 lump sum in on the first, you know, right up front. And literally the day after that policy was issued, we submitted the paperwork for a loan for 80,000, and he paid off the Tesla.

And then, you know, paid himself the same payment he was making to the bank on the Tesla. He just paid back to the policy. And within several years, he paid the Tesla off through the policy, had the cash value back. And, of course, the cash value had continued to grow. So even though he put 100,000 in, took an 80,000 out, the policy grows the same as if the 80,000 was still, So by the time he paid the Tesla off, he not only had the original amount, but more than that because it had grown during the meantime. And he paid substantially less interest than he would have to the bank making the same payment. So it was all the way around.

And of course, this guy today is, this was quite a few years ago. This guy today is now using the policy to buy rental properties and flip real estate and so forth. John, I love it. And thank you for kind of making it practical. Are there any tax benefits to this as well? There are a whole host of tax benefits. The policies themselves come with some tax benefits. So these are after tax dollars that we're putting in a policy.

And so as it builds up, it is tax deferred. So you're not paying any tax on the growth in the policy. When we take policy loans out, they are also tax-free. So when we pull the money out in the form of a policy loan, that's going to be tax-free. All of this is based on today's tax laws, of course. The death benefit, if we were to die, that goes to our beneficiaries, to our errors, also typically passes income tax-free.

And so we have all these tax benefits that are built in. Now, with the other thing we kind of haven't gotten into yet is somewhere down the road, if we decide we want to convert the policy itself into a passive income stream. So we can use the policy throughout our whole lifetime to go out and invest things that create a passive income stream for us, right? Things like rental real estate or whatever the case may be. But then at some point when we, I don't like to use the word retire, right? Retire just means passive income enough that I don't have to do anything, right?

It just comes in. So now I want to convert the policy itself into a stream of passive income. So I can take this cash value that's built up over all these years and then convert that into a monthly or annual income stream that will last me the rest of my life. And under current tax law, I can make that. entire income stream, 20 or 30 years worth of income in some cases, completely tax-free. Yeah. No, I am, yeah, I'm definitely booking a session here, and I've dropped kind of the link for that, but this is pretty incredible. And I'm thinking just the longer term benefits, even those

flips I'm investing in, this makes a lot more sense paying, you know, 5%, maybe less, as opposed to the 10% and being able to have the timeline flexible, right? That's pretty incredible. Yeah, for sure. I mean, it was, it was pretty attractive even when rates were low, but now that rates have risen, the city has become very attractive. True, true. I see two more questions in the chat. If I add money, and this, I think you answered this a little bit before, but I'll bring it up again. If I add money to my policy, how quickly can I take that money up? really as soon as the policy is issued, you'll have access to. The number I threw out as a ballpark is about 80% of that first premium is probably available as cash value. That's going to vary a little depending on the exact circumstance and the exact design and the exact amount that goes in. But somewhere around 80% of it's available more or less immediately when the policy is issued.

And is that roughly what the withdrawal limit is to about that 80% in that first year? No, the withdrawal limit's going to be more like 90% of your overall cash value as it grows. So the reason I use 80% is, let's say, right, the dividends and the growth that gets credited to the policy is going to be a year later on the anniversary date. So on that first, you know, that first initial premium payment, 80% somewhere in that ballpark is what would be available because those dividends won't come in until the end of the year. Okay. Any other questions for John in the chat and or call in? John, we greatly appreciate you joining the Accoma Home Financial Freedom Mastermind Podcasts.

You're going to be getting a lot of requests coming in soon. And no, we really appreciate it. Thank you. And we wish you much luck in your continued growth of the business. Hey, thank you so much, Neve, for having me. This has been a fun conversation. And, you know, I hope some folks reach out. I would love to, as you can tell, I love talking about this.

So I would love to chat with them about it. Definitely. John, be safe. I will catch you a little bit later. And for everybody else, we will catch you next week. Thank you for joining the Akaba Home Financial Freedom Mastermind podcast. Hope this was helpful. We'll have all the links in the notes. And yeah, please go schedule some time with John. See you guys.