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Austrian Economics: Update 2/09/14 - Take Profits Tax-free - Pass It On Tax -free - Contractually Guaranteed Annual Income

UPDATE: Bank On Yourself for Seniors
Download a transcript of video here http://www.bankonyourself.com/wp-content/uploads/Bank-On-You...



Definition of 'Mutual Company'
A private company whose ownership base is made of its clients or policyholders. The defining feature of a mutual company is since its customers are also its owners, they are entitled to receive profits or income generated by the mutual company. Such distribution of profits may typically be in the form of dividends made on a pro rata basis, based on the amount of business each customer conducts with the mutual company. Also referred to as a "cooperative."
Investopedia Says
Investopedia explains 'Mutual Company'
The mutual company structure is commonly found in the insurance industry, as well as in savings and loans associations. In addition, many banking trusts and community banks in the U.S., and credit unions in Canada, are also structured as mutual companies.

The term "mutual" is believed to arise from the fact that in an insurance mutual company, for instance, a policyholder is both the insured party (as the company's customer) and the insurer (as part owner).

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More than 500,000 American’s are using the Bank On Yourself method to achieve financial security and independence. Just like these folks…,
Dr. Thomas Hesch
“I learned the hard way most agents don’t know how to do this properly.”

-Dr. Thomas Hesch, Albq, NM

“I’ve used the Bank On Yourself method since 2004 and now have six policies. We’ve used them to finance our RV, home renovations, vacations and unexpected expenses. In the process, we’re growing wealth safely and securely for retirement that we can access when and how we want – no taxes due on it.”
Mr. & Mrs. Bowling
“Eliminated $81,000 in yearly payments and interest to banks.”

-Mr. & Mrs. Bowling, Amarillo, TX
Air Traffic Controller/Dry Cleaner

“Bank On Yourself helped us create a retirement plan and a way to pay for college for our two children. In addition, almost $7,000 per month we were paying to banks is now going into our Bank On Yourself plan.”

Read more about the Bowling’s »http://www.bankonyourself.com/bank-on-yourself-client-profile-shay-and-christi-bowling

Norman Robert Griffin
“Banks and Wall Street do NOT want the public to know about this.”

-Norman Robert Griffin, Galway, NY
Elementary School Principal

“It’s basically my own bank and we can write a check to ourselves any time. We’re using it to pay our children’s way through college, so they don’t have to take out student loans. Also, our policy will be saving us thousands of dollars on our mortgage alone!”

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I'm looking to set this up

Thanks for this post. I got Nash's book and am looking to set something like this up.

My income is low right now, I'm part time self-employed. But I have around $20k in savings that I'd like to see getting better than 0.5% interest, but still remain liquid (for use in future business investments or land purchase), safe and away from the greedy governments reach or frivolous suits. And of course provide financial protection for my family in the event of my death. This looks like the it the ideal vehicle to do so.

I'm looking for the right local "Practitioner" to help set this up. I know Nash has some listed on his site.

I also came across this: http://jlmwealthstrategies.com/infinite-banking-concept
What do you know about them?

And Pamela Yellen seems quite popular with her site www.bankonyourself.com where she also has her list of advisors. Although her approach is a bit to infomercially for my liking.

The one thing that I've read about this that makes me hesitant to put $20,000 in is that you have to wait a few years after setting this up before being able to access any of it. Is this just talking about being able to get to the cash value? Can loans still be made to free up capital before then?

Ah...a roach motel...where

Ah...a roach motel...where you can check in, but you might not be able to check out.

How long before the insurance companies go belly up? You think companies like AIG will get the massive bailouts next time when the quadrillion in derivatives start crashing the system?

Anyone trusting ANY type of paper vehicles to build or protect your wealth is a dreamer.

My .02.

“Let it not be said that no one cared, that no one objected once it’s realized that our liberties and wealth are in jeopardy.”
― Ron Paul

Please let those of us who

Please let those of us who are 40 what you've learned that you wish you would have known.

Short answer first...

Finally to answer your question...
Self discipline. Be coach-able. Save money. Put savings to work.
Don't stop exercising. Don't listen to other peoples' chatter. And follow your path. Oh and listen to people who know a few things about a few things... Like me.

Long answer...
In my life I have worked in a variety of careers, all successfully.
At 19 I earned a real estate sales license.
At 21 went to work in a private boarding school as a dorm supervisor.
At 23 they promoted me to Language Arts teacher.
I also coached cross country running.
Became a school administrator at the private school.
At 25 bought my own preschool and farm (for my own 3 kids).
At 33 sold the school, went to work for a master craftsman and learned how to build houses.
At 35 started my own contracting and restoration business.
At 39 became a prison guard just to try it for a year.
At 40 developed a prison, pre-release training program for people coming out.
At 41 got a management job with Home Depot.
At 42 became New England regional sales rep for a German skylight company. And got my series 7 stock broker's license.
At 49 became D.C. regional sales manager for a commercial lending company.
At 53 took a year off and trained myself to day trade.
Now I'm studying ways to navigate criminal global governments and minimize losses to the state.
Finally to answer your question...
Self discipline. Be coach-able. Save money. Put savings to work.
Don't stop exercising. Don't listen to other peoples' chatter. And follow your path. Oh and listen to people who know a few things about a few things... Like me.

Dave Ramsey Busted Pushing Term Insurance

~ Dave would be right if was thinking of life insurance purely as protection against death.
~ That's not what dividend paying, mutually held, life policies are about.
~ They're about growing wealth and sheltering that wealth from taxes.
~ The life insurance is just icing on the cake.

~ Dave would be right if was thinking of life insurance purely as protection against death.
~ That's not what dividend paying, mutually held, life policies are about.
~ They're about growing wealth and sheltering that wealth from taxes.
~ The life insurance is just icing on the cake.
~ Here is an example of fees paid over 40 years;
* Life insurance fees paid = $49,575
* Mutual fund fees paid = $397,336
* Life insurance account value = $2,017,154
* Mutual fund account value = $1,298,721
* Are you getting the picture?
~ Dave is a good man and there is some truth to what he says.
~ But he's not a life insurance expert.
~ He's wrong on the costs vs. benefits of mutual funds & a properly structured life insurance policy. Huge difference in taxes and fees. Huge.
~ Don't take my word for it.
~ Why do bankers use dividend paying life insurance policies to grow their money?
~ Look at the chart: http://files.csinvesting.com/files/orphan/ifl-obj-2.html
~ To really get the picture I recommend; http://www.liveyourlifeinsurance.com/
~ Dave doesn't even address the tax issues of accumulating wealth.
~ He also doesn't address the tax issues of transferring wealth to his heirs..
~ Government Tax traps like 401-k's and IRA's are IRS theft and control devices.
~ Learn before you burn.

Answer this question:

If you had enough money to go out and buy a new car cash, why would you borrow money from your life insurance policy and pay interest to that company?

A: Because you are a mutual owner of the Life Insurance company.
"You're either the owner of the bank or you're a customer of the bank."
Your interest paid goes into your company, not a bank -
and that interest is paid back to you -
tax free -
in the form of an annual dividend.
As you leave your dividends in the policy your policy value increases at a much higher rate than a savings account.
And you never pay income tax on the dividend.
And when you want money for any purpose including retirement income later on, you borrow it, tax free, because it's a loan.

In this film, you will

In this film, you will learn:
-How the Federal Reserve and Commercial banks are destroying the value of the dollar.
-Why a tax-qualified retirement plans are really just an I.O.U to the I.R.S.
-What the Infinite Banking Concept is, and how anyone can use it to win the financial game by default.


R. Nelson Nash
Nelson Nash is the creator of The Infinite Banking Concept™ and the author of Becoming Your Own Banker. Nash remains a popular teacher and lecturer on the Infinite Banking Concept™ through dividend-paying whole life insurance, speaking more than fifty times per year across the country.

Robert P. Murphy is the author of How Privatized Banking Really Works and The Politically Incorrect Guide to Capitalism, and has written for Mises.org, LewRockwell.com, and EconLib. He has taught at Hillsdale College and is currently a Senior Economist for the Institute for Energy Research.

Paul A. Cleveland serves as Senior Research Fellow at the Institute for Faith, Work, and Economics. He is a Professor of Economics and Finance at Birmingham-Southern College. He serves as an adjunct scholar for the Alabama Policy Institute, and as a part-time scholar for the Apologetics Resource Center.

Carlos Lara is the Author of How Privatized Banking Really Works, and is CEO of United Services and Trust Corporation, a consulting firm specializing in corporate trust services, business consulting and debtor-creditor relations. He lectures on the topics of the Federal Reserve and Austrian Economics.

"A Life Insurance Policy Is A Pre-Engineered Trust Agreement"

Banking With Life: R. Nelson Nash compares Whole Life Insurance to a Trust

Banking With Life is a documentary that covers a lot of material in under an hour. Featuring financial experts and economists, as well as testimonies of actual clients, Banking With Life is the definitive primer on what the The Infinite Banking Concept™ is, and how anyone can use it to build wealth and experience financial freedom.

This video features R. Nelson Nash, the creator of the Infinite Banking Concept and the author of Becoming Your Own Banker. He discusses the similarities between using an whole life policy for banking purposes, and a trust.

doggydogworld, Don't spread ignorance

by parroting those who are mis-informed.

The only article you posted that is close to accurate is "Bank on Yourself: Using Life Insurance as a Source of Liquidity"

The rest are full of errors, lacking in understanding and agenda driven.

I tried to find permanent life, insurance agents who knew how to write this kind of policy and I was shocked at how uninformed they all were. All of them were advising high net worth clients and yet they didn't have a clue.

Bottom line is A.) Only a few insurance companies do it properly. It takes a well trained agent to write the policy correctly.
B.) It's for two kinds of people; Those who are disciplined and those who are prosperous/productive. It's not for "get rich quickers".
C.)One point that the detractors all use is the fact that "you have to buy life insurance". They're so dumb that they don't recognize that IRA's, 401k's and savings account don't provide a death benefit! How stupid!
D.) They also are oblivious to the tax raping you get if you want to draw out of one of the government, tax trap, retirement accounts like IRA's and 401k's.

Why it works

There are two concepts at the heart of the Bank on Yourself concept, the LEAP concept, Be Your Own Banker, Infinite Banking, or any of the other systems. The first is the concept of the mutually-owned life insurance company. This means that it’s policyholders who own the company, rather than corporate shareholders. The ‘co-op’ ownership structure means that profits go to policyholders – boosting the returns in cash value policies – and subsidizing the cost of term policies.

Under current tax law, dividends paid to life insurance policyholders are tax-free, which means the after-tax returns on policies participating in the profits of the insurance company.

The second engine driving the concept, again, is a concept little understood outside of insurance circles. The concept is direct recognition – or more precisely, the lack of it. Here’s how it works:

When a life insurance company practices direct recognition, they only pay dividends on the cash value left in a policy after any loans are taken out. If you have $100,000 in the cash value, and you borrow $50,000 against the policy to buy a car, the insurance company will only pay the guaranteed crediting rate and dividends on the $50,000 left over.

But that’s not the only way to skin a cat. Some insurers do not practice direct recognition. They charge interest on the loan, yes – but they do not stop paying the crediting rate and dividends on the money you borrowed against.

That difference is key: When you borrow money against a life insurance policy, you are not really borrowing your own money. You are borrowing from the general fund of the life insurance company – and using the cash value in your policy to secure the loan. This is the logic behind the policy of not practicing direct recognition.

Arbitrage Opportunity

A policy that does not practice direct recognition allows you to arbitrage the difference between the minimum crediting rate on cash values, plus dividends on one hand, and the interest rate the insurance company charges on loans, on the other, to create a source of very cheap credit. It’s probably not free money – unless dividends that year are unusually high. But it does mean that if the dividend rate is 5 percent and the interest rate is 6 percent, your cost of capital is now 1 percent. This doesn’t happen with companies that practice direct recognition. But with non-direct recognition companies, it does. It just takes a while to get to that point.

And there’s the heart of the infinite banking concept, right there: A cheap source of liquidity or finance, available without a credit application and no paperwork. You don’t have to pledge your home, and you never have to pay back the loan. The insurance company pays itself out of the death benefit, if need be, plus interest.

However, it works better if you do pay off the loan, so you can take advantage of the cheap financing again and again. Eventually, you can draw down your cash values to supplement your other sources of retirement income. The whole kit-and-kaboodle is treated by the IRS similarly to a Roth IRA: Funded with after tax dollars, but growth and income taken from the policy is tax free (provided you didn’t blow it by contributing more than the maximum allowable premium for the death benefit – turning the policy into a modified endowment contract.

The Downsides

The concept works very well for some people, but it’s not a magic wand. Even with dividends, which aren’t guaranteed, the internal rate of returns available on these policies is very modest – especially in a low-interest rate environment.

It’s not for people who don’t need or want a permanent death benefit.
It’s not for people who can’t afford a term premium to protect their families.
Expenses are front-loaded. The agent and insurance company can eat up half of the first year’s premium
It’s not for people with an unstable source of income.

Situations Where Such A Strategy May Be Appropriate

Banking on yourself could be the select strategy for people in a variety of circumstances, such as:

People who believe income tax rates will be higher in the future than they are now.
People who are concerned they may be the target of lawsuits: Life insurance cash value often receives substantial protection from creditors, depending on your state.
People who want to save money for college while preserving their child’s or children’s eligibility for financial aid under the federal method of calculating a family’s expected contribution.
People who want a portion of their portfolio allocated to modest but guaranteed growth.
People who like the features of a Roth IRA and who would contribute large amounts of money to one if they could.
You don’t want to have to wait until you’re 59 ½ to be able to access the money.
You want assets to bypass probate at death.
You expect to have an estate tax liability at death, or at the death of your spouse, if he or she survives you.

I invest in bullshit spreaders like Barracuda Trader


Don't feed the pandas. Ever.

cudnoski, Sometimes you can be such a

I promise I'll fill in the

I promise I'll fill in the blanks

When you do, could you come at it from the perspective...

of a cooperatively-owned 3D printing factory, like shapeways.com ?

I'm trying to work out a business plan for 3D printing in my small town for various industries which might want to, or already are using 3D printing alongside their CAD departments, with the possibility of renting out time on their machines to retail customers. Of course there are many types of machines and materials, both of which are easier to obtain and retain than the 'talent'. A cooperative model seems like it could be a fit for such an enterprise...

Don't feed the pandas. Ever.


The instrument outlined in the OP will fuel and facilitate your entrepreneurial vision.

TwelveOhOne's picture

From the headline, I thought this would be

"How to make your own Federal Reserve". (I clicked on it from a "Most Viewed" link.)

They take profits tax-free; they distribute them tax-free; and they have a contractually guaranteed 6% annual income.

However, personally I would rather produce something, than co-opt others in my own financial scheme.

I am also interested in learning more about how this can be applied to other types of business.

I love you. I'm sorry. Please forgive me. Thank you.
http://fija.org - Fully Informed Jury Association
http://jsjinc.net - Jin Shin Jyutsu (energy healing)

"How to make your own Federal Reserve" is pretty close

That's what I've accomplished by adding my day trading income (money printing) to the money growth and management outlined in the instrument above in the OP.

Bump for discussion

I think this is very interesting but would like to understand it a bit better. Thanks for sharing this with us.

Prepare & Share the Message of Freedom through Positive-Peaceful-Activism.

The best thing you can do is to get hold of

an agent in your state. It's a very comfortable and exciting educational process.
While the whole thing is very user friendly, there are so many hidden benefits it's like having a jet and only knowing a few of it's capabilities.
i.e. Where can you put your money, borrow it, yet still be paid interest on it, and if you die there's still a full death benefit for your survivors or heirs?
And because you only borrow against the value vs. take a distribution from a retirement account, THERE'S NEVER ANY INCOME TAX OR PENALTIES FOR WITHDRAWALS! Loan proceeds are never taxed.
I love having these policies. And my heirs DON'T PAY ANY INHERITANCE TAX! Death benefits are not taxable.

Sounds great, but vague

How, for example, do you ensure the policy is written "right"?

How do you specifically find an agent who knows how to write such a policy?

Do you have to buy the "bank on yourself" DVD or manual after you get the initial "free" information to find out more?

Great Questions, Spirit of '76!

"How, for example, do you ensure the policy is written "right"?"
By using a certified BOY agent.

"How do you specifically find an agent who knows how to write such a policy?"
Easy. Just follow the steps http://www.bankonyourself.com/report-2?wp_src=BOYWEBreport2
I also like the Person who taught Pamela Yellen, R. Nelson Nash, The Infinite Banking Concept https://www.infinitebanking.org/

"Do you have to buy the "bank on yourself" DVD or manual after you get the initial "free" information to find out more?"
The agent is well paid, out of your premium, to teach you.
There are no extra's that you need to buy.
I did purchase the book "Bank on Yourself" by Pamela Yellen.
But I remember so little of it I would recommend just reading the reports, watching the free online videos AND GETTING THE FREE ANALYSIS FROM A QUALIFIED AGENT.
BOY refers you to an agent in your state.
And also look at the original program The Infinite Banking Concept https://www.infinitebanking.org/

Is it worth beginning if you're over 40?

I mean after 39 1/2 (over 40), wont 200K of whole cost $300/month?

I didn't start until I was

I didn't start until I was 57.
I put in a lump sums in several policies, so I never experienced a monthly figure.
If I were you I would just do the free analysis and find out what the monthly premium would be for the level of insurance you can afford.
And don't forget to ask about the "growth rider" that makes the cash value grow exponentially.

MAN!If I was 40 again?WOO!

If I was 40 again?
Update: If I was 40 and knew what I know now.