The Dirty Little Secret of


It was around 5:30 AM on June 27, 2009 that the Lotus, a 13-story housing complex built in the Minghai district of Shanghai, China, came crashing down

I don’t mean that it slowly crumbled, or that it cracked or sank. It literally tipped over

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When pictures of the incident hit the internet, people probably surfed quickly over to hoax-busting websites like snopes.com, assuming that the images had been doctored.

But the fall of the Lotus Riverside really happened. The unfathomable had occurred: Like a 167-foot-tall domino, the apartment complex simply tipped over.

In the days following, investigators concluded that the Lotus disaster was caused, in large measure, by problems with its foundation. 

The concrete pilings, hollow and shallow, proved unable to sustain the weight of a mere 15 feet of excess soil which (stashed from an underground garage excavation) was leaning against the side of the building. 

When weather conditions turned adverse, the whole thing fell over.

What was underground – the substructure intended to give the building strength – couldn’t stand up. And a basic truth known to general contractors going back to the beginning of time was proven once again – if the foundation isn’t strong, the building doesn’t stand a chance.

Foundations become evident in times of crisis.Your foundation is a refection of your strength.

“Financially speaking, this is the exact situation the majority of Americans find themselves in.  They have no solid foundation in their financial house.” 

P.B.D.

The size and stability of your wealth is determined by the depth and strength of your financial foundation.And most Americans have very weak foundations in their financial lives. Creating financial stability and freedom without having a proper foundation is like building your financial house on sinking sand.

The foundation of any properly built financial house is proper income protection.

“There are three parts you must have in place to create a solid financial foundation, kind of like a three-legged stool” explained P.B.D.  

Three-Legged Financial Foundation?

Balancing on one or two points isn’t easy. Just ask anyone learning to ride a pogo stick or a bike!

But balancing on three or more points is quite different. The three legs of a simple wooden stool give it a very stable foundation. And that’s what you want financially, a very stable foundation.

The first “leg” in your three-legged financial foundation is created with a tool that dates back to the Ancient Roman era.

It’s a tool that has become a lifeline and a source of stability and control for those who’ve known how to yield it’s power.

It has literally saved and rescued tens of thousands of families, businesses, and individuals from financial ruin and annihilation.

Most importantly, it has stood the test of time and become a champion and a surefire protector against crooks and criminals willing to do anything to take your money.

Its a tool that empowers you to be your own banker – look after your money like the bankers look after theirs—and find methods of hanging on to the money that you earn, spend, and otherwise invest in a flawed system.

There are ten reasons why I love this tool so much and when you learn of them I’m sure you’re going to love it too…

  1. It’s Government Approved (USA, Canada, Australia, Europe)
  2. Money grows tax deferred (Like a 401k)
  3. Money can be accessed Tax Free (like a Roth!)
  4. Money grows completely safe (It’s not in the Markets)
  5. Money is accessible prior to age 59.5 (unlike 401K,IRA. Etc.)
  6. Historical Returns between 7-9% net of costs 35+ years and counting
  7. Real gains are locked in, never to be at risk and out beating inflation
  8. Can be used for Health Challenges without diminishing in value
  9. Blossoms into maximum value when transferred to heirs TAX FREE!
  10. Chances are you haven’t heard/seen this before

I refer to it as an I.B.R.P.

When you compare the IBRP to traditional brokerage accounts and qualified plans, it’s like comparing taking a road trip on a skateboard or a bicycle to traveling in a private jet! 

I mean, really is there any comparison?

Matter of fact…

The Wall Street Journal reported that, According to Federal Reserve survey data, 22% of this type of investment was held by the wealthiest 1% of U.S. families. More broadly, 55% of the assets in such IBRP Plans were held by the wealthiest 10% of families.

So the question worth asking is what do the wealthiest 10% know that you don’t?

IBRP simply stands for Insurance Based Retirement Plan. And in most instances the plans are referring to permanent life insurance plans that provide cash value to the owner. 40 years ago when someone heard the word “life insurance” they thought of safety and security.

Today, with the deregulation of Wall Street and the rock star attitude of the financial advisor sector, many associate life insurance with slow growth or expensive premiums.

The reality is, nothing could be further from the truth.

Before We Continue…
I want to be clear. I’m not talking about the “garbage” peddled by most insurance agents.
Rather, I’m talking about a highly efficient, supercharged savings vehicle designed for stockpiling wealth. I’m talking about a vehicle designed by the wealthy to virtually guarantee financial success and amass tremendous amounts of wealth.

This is a product so powerful that earlier versions of it literally “bailed out” and became the foundation for the massive success of many well-known companies and institutions such as:

1893, Stanford University – Following the death of it’s founder in 1893, the fledgling university’s financial support became uncertain. Intent on preserving the university and avoiding a “temporary” closure, Jane Stanford used her husband’s life insurance policy proceeds to help fund operations and pay faculty, allowing Stanford University to weather a dangerous six-year period of financial distress.

1929, J.C. Penney – James Cash Penney used the cash value in his life insurance policies to meet the payroll and day-to-day expenses of his department store, JCPenney. This allowed the company to ultimately rebound from the Great Depression. Today, the company has an annual revenue of $18 billion.

1939, Foster Farms – Max and Verda Foster borrowed $1,000 against their life insurance policy to invest in an 80-acre chicken farm. Today their products are sold all over the world.

1955, Disneyland – Unable to secure a large enough bank loan, Walt Disney borrowed against the cash value from his life insurance policy to help finance the creation of his new theme park, Disneyland.

1961, McDonalds – When Ray Kroc bought out his partners (the McDonald brothers) he used cash value from his two life insurance policies to cover the salaries of key employees. He also used the funds to pay for the marketing campaign for his new mascot, Ronald McDonald.

1980, Pampered Chef – Doris Christopher used a policy loan of $3,000 to start her new kitchenware company. The company was later purchased by Warren Buffet’s Berkshire Hathaway for $1.5 Billion.

There are countless other stories of famous entrepreneurs who have essentially used the cash value in their life insurance policies to help start their business,grow their business or save their business.

“But businesses aren’t the only ones who are massively leveraging the power of life insurance for benefit and profit…” P.B.D. added 

Don’t Do What Banks Say…
Instead Do What They Do!

“You know that banks use your deposits to buy and invest in permanent life insurance, right?” P.B.D asked with a short smirk on his face.

The traditional way for banks to earn profits is by borrowing and lending. Banks take deposits from customers (essentially borrowing that money from account holders), and they lend it out to other customers.

When banks lend your money to other customers, the bank essentially “invests” those funds. But banks don’t just invest by making loans to their customer base. Some banks invest extensively in different types of assets, cash value life insurance being a major one.

You can find the financial details of almost every major bank by simply doing a search on the FDIC website. When you look at what some of the major banks such as Citi, JP Morgan Chase, US Bank, Bank of America and PNC have in assets, you’ll discover something very interesting.  

The following table represents the exact amount of cash value that each of those banks have specifically in life insurance. They call them Bank Owned Life Insurance (BOLI):

“Banks are not throwing their money in retirement programs, mutual funds, or Wall Street. In fact, they CAN’T put their money there because it’s too risky in the regulators’ eyes … so why is it not too risky for you?”

P.B.D.

Don’t just skim over this incredibly revealing fact. 

It’s no small thing that banks are placing billions of dollars inside of life insurance.  

Banks are in the money business. 

They have an army of accountants, advisors, analysts and other brilliant people that know what they’re doing in order to maximize their profits and use of their assets.

Them placing so much money into this powerful asset is a direct reflection of the value they place on it.

To truly make a point that this is too big of a deal to ignore with banks, these assets are considered Tier 1 capital by the FDIC. Tier 1 capital is considered to be the core measure of a bank’s financial strength. In other words: It’s foundation. 

Life Insurance provides banks with the ultimate foundation in safety, stability, and growth.

Highest Paid Coach via I.B.R.P.?

“And it doesn’t stop at businesses and banks. Many professionals are using I.B.R.P’s to protect and grow their income tax free” explained P.B.D.

In August 2016, the University of Michigan announced that it had amended its contract with head football coach Jim Harbaugh to include a creative deferred compensation alternative involving cash value life insurance.

The arrangement makes Harbaugh currently the highest paid college football coach in the country, according to Sports Illustrated and other news outlets.

What most people don’t know, however, is that the compensation strategy was designed to provide Harbaugh with millions of dollars of tax-free cash during retirement, and it’s one that can also be incredibly effective on a much smaller scale.

These types of policies generate high cash value which is completely liquid, have contractual guarantees, consistent returns, and many tax benefits (these are the exact reasons that banks place large amounts of their cash into BOLI).

Jake’s Case Study

Jerry learned about the power of leveraging life insurance beyond it’s death benefit from his mentor, Jake.   

Jake showed Jerry a concept he could use that allows everyday people to earn gains on the same money twice. 

Just like banks use fractional reserve lending to earn interest on money they have already lent out, this strategy allowed Jake to do something similar and over time build a $5 million dollar per year business.

In 2008, when the markets took the worst nosedive since the Great Depression, and while everyone was in a frantic panic, Jake had most of his money safely growing inside Insurance Based Retirement Plans, completely sheltered from all the market changes.

As more people struggled staying above the losses, more opportunities showed up for Jake to take advantage of like:

  • Distressed real estate
  • Apartment complexes
  • Cash flowing businesses  
  • Other valuable assets. 

Jake, instead of doing what most people would do and lock up all of his cash getting some of these deals, he used O.P.M. (other people’s money) to make big profits just like the banks and big businesses do.

Jake used the Wash Loan provision in his I.B.R.P’s to get the capital needed to do the deals.  This is one of the most ingenious creations in the history of finance. Jake used it to his full advantage because he was able to understand how it works.

In these plans, the amount of the loan comes from the general account of the insurance company collateralized by the cash value of your policy. 

The insurance company loans him money (O.P.M.) that was earmarked for policy owner loans, investing in bonds, investing in real estate, or investing in other investment grade securities.

The cash in his policy continues to earn guaranteed interest and potential dividends, even though he took out a loan against his life insurance cash value. That means his cash value is continuing to grow via compound interest, even though he’s using it as collateral to purchase other income producing assets!

In other words,  your money is doing double duty for you: purchasing something you need and earning compound interest, all at the same time.

Jake borrowed from his cash value policies and paid for the assets. He was able to get most of them for the same price they sold for in 1984, nearly 25 years earlier.

Within seven years, Jake built a portfolio of cash flow producing assets to the tune of $5 million per year. Those assets keep growing for him til this day.

Many More Benefits To Be Had

“That’s incredibly powerful!” shouted a lady from the back of the room.  “Are there any other benefits to these plans?” she asked.

“Plenty of them” replied P.B.D. “But there’s one in particular that I want you to truly understand and pay attention to.” he said, as he leaned forward in his chair as to reveal some deep dark secret.

“Let me ask you a question. When does the death benefit payout in a traditional life insurance policy”? he asked.

“Umm, when you die.” said Tim, a young entrepreneur sitting next to me.    

“That’s correct, Tim. But what if I told you that you don’t have to die to tap into your death benefit anymore? What if you could access some of that death benefit, tax free, while you’re alive?”    

“That would be amazing!” replied Tim. 

“You are correct again, Tim. I think most people would agree with you too.”  

The Death Benefit of a life insurance policy is the amount your loved ones (or others you designate) will receive from the insurance company upon your death. Some people think of life insurance only in terms of its death benefit, but there’s a flip side to some types of life insurance that’s fascinating…

The Living Benefits of life insurance allow the policy owner to access a portion of the death benefit while still living. And living benefits are much needed today by most.

Here’s why: 

95% of Americans are either employees or they are self employed. This means that most of America works in a linear income model that requires them to trade time for pay.

So what happens when a linear income worker loses their ability to work…how do they pay their bills? 

They have to either get into debt, tap into savings (that is usually earmarked for other future needs like retirement, college, etc) or…

They have to go beg church, charity, government or family for financial help.

When you are on the left side of the quadrant, you are the most important (and usually the only) income producing asset you have. 

If you lose your ability to produce cash flow due to an illness, injury or death, and you or your family doesn’t have any cash flow producing assets, you have no leverage and you’ll find yourself in a world of financial trouble and stress.

So how do preserve your income and protect it against these cash flow killing threats?

You use a Life Insurance policy with Living Benefits. 

In a recent Wall Street Journal article, it was referred to as Health Care’s Killer app.  

Evelyn’s Case Study

“Let me tell you about Evelyn.” said P.B.D.

Evelyn is a 37 year old mom of two kids who managed to climb the corporate ladder and became one of the top Account Executives at her advertising firm.  

Evelyn was bringing home about $7k per month from her job. 

She loved motorcycles since she was a little girl, when her dad would take her on a sight seeing cruise almost every weekend.  As an adult, she kept the tradition going.

One day as Evelyn went on a motorcycle ride, a car veered in front of her causing her to lose control and she got caught between two cars, crushing her right thigh. 

She broke her right leg in three places. 

Doctors ended up putting three metal rods and seven screws in her leg. For over nine months Evelyn was out of commission, not able to work her job.  

After 14 days, her short term disability at her job kicked in, however, she only received 50% of her weekly salary. 

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And even then, she only received the benefit for the first three months that she was unable to work. 

But Evelyn had a Life Insurance policy with Living Benefits. 

She was able to accelerate $10,000 per month from her death benefit and could do so for up to 50 months if she needed to. 

On her 10th month of being out of work, her job terminated her since she was not able to come back to work due to still needing 3 months of therapy.  

She took 13 months to heal and recover and another 5 months to find the right replacement job for her. 

In spite of her losing her job, her family didn’t skip a beat financially during the 18 months that she was off work. 

“But If This Is So Good…”

As P.B.D. shared the details of the stories, some one in the crowd mentioned:

“This all sounds fantastic P.B.D. But if this is so good, why haven’t we heard more about these plans, and why aren’t more people talking about and using these plans?”

Someone else chimed in saying “My brother in law, who’s a Financial Advisor was talking to us about these plans not too long ago…but not in a favorable way. He said they are too expensive and that you shouldn’t use insurance as an investment”. 

“First off, just because you haven’t heard of them doesn’t mean that people aren’t using and greatly benefiting from them. As the examples I shared earlier revealed, many people have used these plans to protect their hard earned assets for decades.”

“But there are a few reasons why you are not hearing much about these plans, and why some people ignorantly (or with ulterior motives) crap all over them” he added. 

Here are just a few he mentioned…

 1. The Transition From Safety to Stock Market Risk: 

It’s estimated that at the turn of the 20th century,  over 50% of savings went into cash value life insurance plans.

After World War II the life insurance industry entered a Golden Age of growth and stability.  Economic prosperity from the post-war baby boom raised the overall demand for life insurance products.

The banking failures of the Great Depression were fresh in people’s minds and as a result they turned to the security of life insurers as a safe haven.

Then came the unprecedented economic event of an interest rate spike leading up to the 1980s where the prime rate climbed up to 20% in the span of about 5 years peaking in 1981.

This caused a disruption of the industry and forced many carriers to develop new ways to think about their business.  This is when the financial strategy known as “buy term and invest the difference” began, caused by the sky high interest rate environment.

Around the same time the 401(k) was born.

The 401(k) name comes from a section of the IRS code. This section was added in 1978 but for 2 years no one paid much attention to it. A creative interpretation of that provision by a smart consultant gave birth to first 401(k) savings plan.

By 1983, nearly half of all large firms offered, or considered offering, a 401(k) plan. Companies liked the option because it was cheaper and more predictable to fund than pensions. Employees were attracted to a new savings vehicle that, they were told, could put them in a better position to retire.

Two bull-market runs in the 1980s and 1990s pushed 401(k) accounts higher. Then, two recessions in the 2000s erased those gains and prompted second thoughts from some early 401(k) champions.

By transitioning money from the safety and guarantees of a cash value life insurance policy to risk in the stock market, Wall Street firms stood to gain a lot.

Today, 401(k) plans hold more than $4.8 trillion in assets.

This was a huge gain for Wall Street firms and advisors, but a huge loss for Americans.

You see investment firms were a big part of the origination of these plans. They positioned themselves to be the managers of the funds that ultimately made their way to these plans.

What’s worse is these companies don’t participate in the same theories they pitch you and I everyday.

2. “Financial Advisors” almost NEVER talk about them:

You’d think that professionals, who’s job is to help people create and increase their wealth, would tell you about such a wonderful and powerful tool like this one, but they rarely do.

Why is that, you ask? Simple math really.

Only Licensed INSURANCE Agents can legally setup an IBRP account.

And most Licensed Money Managers & Brokers AREN’T licensed to sell Insurance

In other words: The guy who sells you your IRA, or manages a 401(k) can’t by law sell you an Insurance Based Retirement Plan and if he can’t sell it, he cant make any money on it.

End of story.

Your Financial Planner’s motivation is to get you signed up for an IRA or 401(k) and then make money on you for life as your investment grows.

They don’t care about your future tax burden.

Why should they?

I mean seriously: call your investment advisor right now and ask about an IBRP. Chances are 99% that he or she has never even heard of it.

And if they have, they have ZERO working knowledge of how or why it works. How would they know – they don’t know insurance products.

They like to THINK they have a corner on the market of helping people save money for retirement, but they don’t.

3. Improper Structure Of The Plans by Ignorant Rookies

“Often times these plans get a “black eye” from financial professionals as well as consumers not because they are bad products or it’s a bad strategy but simply because the licensed agent that set it up for them doesn’t know what the heck they’re doing!” explained P.B.D 

“Most insurance agents are not competent when it comes to the complexity of IBRPs, but would be more than happy to try to sell you one,” he continued. 

“Once you find an insurance professional claiming to be a IBRP specialist, you should ask about their ongoing management services, compensation structure, experience, designations and education. Make sure they are willing to provide multiple quotes or illustrations for your IBRP from multiple highly rated insurance companies.”

The Ideal I.B.R.P.

This section is already too long to have a lengthy discussion about the perfect IBRP. And it’s also true that there isn’t any one size fits all retirement plan. 

Having said that, I can give some guidelines for an IBRP that fits with most individuals needs and desires.

First of all the ideal IBRP will be with a reputable mutual insurance company. A mutual insurance company is owned by the policyholders and has no shareholders.

Therefore, the company’s allegiance is to the policyholders, rather than trying to maximize profits for shareholders, that can sometime lead to potential conflicts.

Second, the ideal IBRP will be with a company that has a proven track record of performance. Not all companies have great returns year after year. P.B.D. recommends choosing companies that have a history of excellent dividends and interest paid out to policy holders.

Third, the ideal IBRP will be with a company that is top rated, flexible and allows for a variety of options. You never know what the future holds, and therefore having an IBRP with a company that provides financial security and policy flexibility is a huge bonus.

If built, maintained, and managed properly, IBRPs can provide amazing benefits to individuals seeking safety, liquidity, growth and tax-free sources of retirement income.

However, if an IBRP is poorly built, unmaintained or mismanaged, it can be an amazing source of heartache, stress and loss of value.

“That’s why you must work with the right agent and the right company to truly maximize it’s tremendous benefits” encouraged P.B.D.

Can you understand why at the beginning of this letter I was so excited to share this information with you? 

Now, I do want to say here: don’t just take my word for it.  

All of us are taught from an early age to doubt something that is too good to be true. And generally that is sound advice.

God knows It has saved me from many mistakes in the past.

But there are times when something really is that good, and this is one of those times. 

Again, don’t just take my word for it, let the numbers speak for themselves. 

And the best way to do that is to have a personal consultation with a qualified, knowledgeable financial consultant who understands exactly how this product and strategy works – very likely the person who invited you to read this letter. 

“If all of those benefits that you shared are true, my question to you is not should I do this, but rather, how much and how soon.” said Tim, the young guy sitting next to me.

“That’s the right question to ask, Tim” said P.B.D. as he smiled.  

He then added “And if you combine this with the next two strategies that I’m going to share with you, you’ll create a very powerful and positive financial revolution for yourself and your family.” 

Let’s go build the second leg in our three legged stool…  

 


Let’s Continue…