The Money Advantage Podcast

When planning for retirement, one of the biggest fears people face is outliving their money. What is a lifetime annuity? Simply put, it's a financial contract that guarantees you'll receive income payments for the rest of your life, regardless of how long you live. By popular demand, we will be continuing our conversations from last week on annuity strategies! This time, we are joined by special guest Joseph DeFazio! Joe is a seasoned financial educator and will bring a fresh perspective on lifetime annuity income and how annuities can benefit your financial life! https://www.youtube.com/watch?v=YtZbQx8qVXc If you're interested in guaranteed lifetime income, then this video is for you! We'll discuss the different types of annuities and explain the basics of lifetime annuity income. Annuities as a Form of Risk TransferHow to Structure Your AnnuityImmediate vs. Deferred StartPayment Structure OptionsSingle-Life vs. Joint-Life CoverageAdditional Guarantee OptionsReal-World Example: Single Retiree vs. CoupleWhat is a SPIA? (Single Premium Immediate Annuity)The Appeal of SimplicityWho Should Consider a SPIA?Who Should Consider Annuities?When Annuities Don't Make SenseLifetime Annuity IncomeReal-World Example: Kathy's AnnuityLifetime Income Annuity Pros and ConsThe UpsideThe DownsideLifetime Annuity Income — How Payments WorkHow a Lifetime Annuity Fits into Your Retirement PlanBook A Strategy Call Annuities as a Form of Risk Transfer [11:10] “An annuity is a private contract that completely transfers the risk of outliving your money to the insurance company in exchange for a premium payment. The insurance company uses bonds and [then] layers on actuarial calculations, actuarial science, that pools the risk so they can guarantee an income stream for as long as your contract specifies.” When you buy a lifetime annuity, you're basically handing over your biggest retirement worries to the insurance company. They take on the risk, and in return, they promise to pay you for life. In other words, an annuity is the inverse of whole life insurance, which transfers the risk of not living long enough to the insurance company (in exchange for a premium). Because insurance companies manage the risk of living too long AND not long enough, they’ve created balance. So what risks are you actually transferring when you purchase a lifetime annuity? There are three big ones that keep retirees up at night: Outliving retirement savings - What if you live to 95 and your 401(k) runs dry at 85? With a lifetime annuity, that's the insurance company's problem, not yours. Market volatility impacting income - Market crashes don't care if you're 75 and need your monthly income to pay for groceries. Your annuity payments stay the same regardless. Inflation erosion - This one's trickier with fixed annuities since your payments won't increase, but some annuity options do include inflation adjustments.  How to Structure Your Annuity There are two phases to an annuity: the accumulation phase and the annuitization phase. During the accumulation phase, you’re funding the annuity, and you can choose either a fixed rate or variable rate, both of which have their pros and cons. When you're looking at a life income annuity, you'll find there are several ways to set it up depending on your situation. Here are the main choices you'll face. Immediate vs. Deferred Start In the annuitization phase, one of the choices you must make is whether you want your benefit now or later. If you choose to start receiving your benefit within 13 months, that’s called an immediate annuity. Any time after that is considered a deferred annuity. Think of this as the "when" decision. Need income right away because you're already retired? An immediate annuity starts paying you within a year. Still working and want to let your money grow? A deferred annuity lets you wait and potentially get larger payments down the road. Payment Structure Options Then, you choose how you want to receive your benefit. You can get a level payment, and increasing payment, or even a variable payment stream that would be tied to an index. The choice will likely depend on how long you expect to take income, compared to how large your annuity is. Here's where you decide what your payments will look like: Fixed payments - Same amount every month, simple and predictable Inflation-adjusted payments - Payments that increase over time to help keep up with rising costs Variable payments - Tied to market performance, which can mean higher upside but less predictability Single-Life vs. Joint-Life Coverage And finally, you can choose what types of guarantees you want on that benefit. If you choose to have no guarantees, then the income benefit stops as soon as you pass on. You can also tie an annuity to someone else with a survivorship rider, which would continue to pay the income to a spouse or partner for the remainder of the annuity term. This is a big one if you're married. A single-life annuity pays higher monthly amounts but stops when you die. A joint-life annuity pays less each month but continues paying your spouse after you're gone. Additional Guarantee Options Another way to structure it is placing a guarantee on the term, like 10 years, where it pays to someone for that term no matter what. You can also choose to simply guarantee a return of premium, so if you pass on before you’ve earned back your initial premium, it will pay a beneficiary until that benchmark. Real-World Example: Single Retiree vs. Couple Let's say John, a 65-year-old single retiree, has $500,000 to put into an annuity. He might choose a single-life immediate annuity with level payments, getting around $2,500 per month for life. Now consider Bob and Mary, both 65, with the same $500,000. They might opt for a joint-life annuity that pays $2,200 per month while both are alive, then continues at $1,650 per month to the survivor. Less money each month, but protection for whoever lives longer. What is a SPIA? (Single Premium Immediate Annuity) [15:01] “A person’s idea of an annuity is often tied to a SPIA because this is the description that most people have of an annuity.” SPIA stands for a single premium immediate annuity. In other words, you pay for the annuity in one lump sum and begin receiving an income within the first 13 months. Since it has its own acronym, it’s what many people are familiar with when the topic of annuities comes up. The Appeal of Simplicity That being said, a SPIA isn’t for everyone. As you can see above, there are many ways to structure an annuity to work for your particular set of needs and goals. The main appeal of an SPIA is its simplicity. You know exactly what you're getting - no market risk, no investment decisions, no surprises. Once you buy it, you're done making choices. The insurance company handles everything, and your checks show up like clockwork. While the immediate nature of the SPIA may be beneficial to some, there are some things to consider. One of the major benefits of the SPIA is that you’re going to get a much higher rate of return on this than any other annuity. The Trade-Off: No Liquidity However, these annuities are designed to be more short-term, and any remainder goes to the life insurance company, not a beneficiary. But here's the trade-off: once you buy an SPIA, that money is locked up. Unlike other investments where you might be able to get some of your principal back, an SPIA is all-or-nothing. You can't change your mind or access a lump sum if you need it later. Who Should Consider a SPIA? Generally, the best candidate is someone who is running out of money, is over 85, and wants to create the best possible end-of-life income. It’s certainly not right for everyone, nor is it the only option when it comes to annuities.  Who Should Consider Annuities? Almost anyone can benefit from looking into annuities, even if they don’t choose to buy them. That’s because most people will find themselves wanting to protect against either longevity risk (living longer than your money) or sequence of returns risk (when you have to take an income, even in a bad market). Annuities can solve both issues by creating guaranteed income without the fear of loss. Additionally, if you have CDs or bond funds, you should consider annuities. This is because, with bond funds in particular, things can get a bit bumpy. As we’ve seen in the last few years, bonds have dipped as much as equities in some cases. Annuities won’t do this, because they’re designed to support your lifestyle. When Annuities Don't Make Sense But lifetime annuities aren't right for everyone.  If you need access to your money, annuities probably aren't for you. Once you hand over that lump sum, it's gone. You can't get it back if you need cash for an emergency or unexpected expense. Also, if you're still chasing high growth potential and willing to accept the ups and downs that come with it, the steady but modest returns of an annuity might feel too conservative. You're essentially trading potential upside for guaranteed income. Lifetime Annuity Income When you choose to purchase an annuity, one thing to remember is that there’s an account balance, and there’s a balance that the insurance company calculates the income on. This can get confusing. However, think of your account balance as your actual money. On the other hand, the income account value or benefit-based account value is a phantom number that the insurance company has calculated to guarantee you income off of.  If you choose to have a lifetime benefit income rider, then you really are guaranteed income for the remainder of your life, no matter what. So this phantom number the insurance companies create is based on actuarial science and your personal longevity.

Are you interested in knowing the truth about generating guaranteed cash flow with annuity strategies? Learn about the benefits and drawbacks of annuities, as well as some annuity strategies that will help you create guaranteed cash flow. Are annuities the unsung heroes of guaranteed retirement income flow, or are they just another intricate financial product that's more trouble than it's worth?  https://www.youtube.com/watch?v=gvmideJqIdQ Join us as we crack open the world of annuities. We'll be discussing how these financial tools, often misconstrued as a bad choice, can actually work in your favor to provide a stable income stream during your retirement. Hold on to your hats as we dissect the differences between variable, fixed, and fixed index annuities, revealing the various fees that come with each type.  Annuities can be a great way to secure your financial future – but make sure you understand the pros and cons of annuities (fixed annuities, deferred income annuities, single premium immediate annuities, and variable annuities) before signing up.  Tune in, whether you're an annuity advocate or skeptic, and let's debunk the myths together.  What is an Annuity?Immediate Annuities vs. Deferred AnnuitiesAnnuity Strategies for Guaranteed Cash FlowCons of Annuity StrategiesWhy Buy an Annuity? What is an Annuity? Annuities are a lesser-known insurance product that can provide cash flow in a way that’s guaranteed. These are typically intended for income later in life. To buy an annuity, you can pay a lump sum or in monthly premiums. That sum then earns interest and distributes an amount of monthly or annual income either for a specific term or for the rest of your life. This is why it’s generally a product for retirees.  In other words, you can give the insurance company money, which is guaranteed to grow as outlined in the contract. After that accumulation phase, the company then distributes your account as income to you over your specified time period.  This can be beneficial in a volatile market when you don’t want to lose money in your portfolio.  Immediate Annuities vs. Deferred Annuities When you purchase an annuity, you an either choose to receive income immediately, or you can defer that income to a later time. If you’re 75 and want an income stream now, you might choose an immediate annuity. However, a deferred annuity might be beneficial if you come into a windfall and don’t yet need an income. You can then specify at hat age you’d like to start receiving payouts. If you choose to go with a deferred annuity, the insurance company may incentivize you to keep your account with them by offering step-up credits. If your annuity is tied to an index and doesn’t increase that year, you may get a step-up credit if you don’t take any income that year. This is meant to encourage you to keep your annuity in place, rather than liquidating it and taking it elsewhere.  Annuity Strategies for Guaranteed Cash Flow [05:16] “Not only [can] having annuities enhance your equity portfolio, your investment portfolio, but it can also enhance the happiness of how a person spends their retirement.”  The advantage of an annuity is that you can sleep at night, knowing that you have a guaranteed income in retirement. There are, of course, many types of annuities with their own advantages and disadvantages. If you do choose to purchase an annuity, it’s important to have a grasp on what’s available that fits with your existing portfolio and income needs.  Below are just a few examples of annuities. Fixed Annuities The first type of annuity is a fixed annuity, which means it has a fixed interest rate upon purchase. It lasts for a designated time period, but it can be renewed. For example, if you buy a fixed annuity for $100,000 at a rate of 5.4%, you’re guaranteed to earn that rate for the stated period of time in your contract. This does compound, so you’re getting an increasing volume of interest each year. This rate won’t change unless the contract specifies that it may change under a certain period or circumstance.  Fixed Index Annuity This type of annuity is becoming increasingly popular right now, because it’s actually fixed to an index. Most commonly, it’s fixed to the S&P 500. With this type of annuity, you’re guaranteed not to lose money. So if the S&P or other index is positive over a given year, you’ll get a percentage of that. If the index is negative, nothing happens. The exact calculations are of course more complicated, yet you can count on not losing money with a fixed index annuity.  On the flip side, this also means your “upside” is limited. So you’re not going to make 20% if the index makes 20%. This is how the insurance companies are able to afford not to reduce your balance for a loss.  Cons of Annuity Strategies While there are many advantages to annuities, it’s important to be aware of the cons as well. One major con is that because the income you create with an annuity is designed to be paid over a specific time period, it’s not very liquid. If you want to pull more money than the insurance company has decided to give you, you can’t do that. The reason you can’t do that is because the insurance company either designates an income schedule based on the term you set, such as 10 years of income, or by actuarial calculations if you want “income for life.” So what happens if you buy an annuity and die? Well, that's one of the costs of an annuity. The insurance company generally gets the remaining balance (although there are some instances when they may pay some to heirs). While this can be a con, it's also the cost of doing business. And in most cases, the insurance company is calculating your income so that if you live, you pretty much get to use it all. If you have a Fixed-Index Annuity, another con is that you might not get the same returns as simply investing on your own. The problem is that you don’t know what the market is going to do, so it really is a gamble. You may find that your annuity is capped at 7%, and the market keeps earning 10%. Of course, things can always take a turn, and you might be glad you’ve got a 0% floor. Ultimately, it’s up to you and what you’re willing to risk. But if peace of mind is your goal, an annuity can be worth it.  Why Buy an Annuity? [36:01] “The emotional reason why people would do this is for the certainty of this. The reason they wouldn’t want to do it is because they are afraid that they would buy it, walk out of the insurance company’s office building, and then get hit by a bus so that nobody ever gets paid.”  Ultimately, an annuity, like a life insurance policy, is a trade-off between cost and risk. If you want the peace of mind that you’ll have an income stream for life, the trade-off is that you give up some liquidity. This can be really powerful, and allow you to structure and use your remaining assets in a more advantaged way.  Annuities won’t be for everyone, yet they can be a critical part of your distribution phase in retirement.  Book A Strategy Call Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We can help!  Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/, and find out how Privatized Banking, alternative investments, or cash flow strategies can help you accomplish your goals better and faster. That being said, if you want to find out more about how Privatized Banking gives you the most safety, liquidity, and growth… plus boosts your investment returns, and guarantees a legacy, go to https://privatizedbankingsecrets.com/freeguide to learn more.

Is it possible that you have areas of inefficiency in your business or cash flow that could be better used to fund IBC? It's time to discover some of the top inefficiencies in your business where you can recover excess money flowing out of your control. https://www.youtube.com/watch?v=58Ol_6iTLbc Many people have money paying for expenses that could instead build capital reserves, a warehouse of wealth, solvency and stability, access to cash, and even the funding for a buy-out or to weather an uncertain economic future ... and also still be used for the same expense. In other words, you can be more efficient with your money if you think differently. Discover the secrets to finding and freeing up money in your life and business to fund infinite banking premiums in today's insightful episode. We're sharing concrete examples, strategies, and tips that will help you save money, optimize your loans, and maximize the benefits of the Infinite Banking Concept. It's time to unlock your financial potential and run your life like a successful business! The Basics to Fund IBCHow Do You Find Money in Your Business?Structuring Loans for Increased CapitalWhat Should You Finance with a Policy?For Further Reading:Book A Strategy Call The Basics to Fund IBC If you’re a business owner and investor, you may have several streams of revenue and questions on how to use them. In this case, is there an ideal way to fund IBC policies? And how can you creatively manage your cash flows for maximum efficiency? These are important questions to be asking as you work to build your pool of capital and use it, too.  Foremost, building capital takes capital. In this case, your capital is your premiums and PUAs. When you pay them, you’re contributing directly to your cash value. If you don’t have the cash flow to fund your policy without taking on debt, you’re not in a position to start a policy. For example, if you wanted to use business assets to pay premiums, then use the cash value to pay back those assets, you’re actually doing things backward. What will happen is that you have to take a policy loan, so you’ll just be creating more and more debt that can get out of control, and adding interest on top. If you want to leverage your cash value, you want to leverage it for new assets that bring in cash value, not old assets. Otherwise, you’re just taking from yourself and reducing your reserves.  How Do You Find Money in Your Business? But what if you do have assets in your business that you can use and won’t require you to replenish those assets? That way, you can still use those first years as a growth phase, which will give you a stronger capitalization phase later on.  One way to find money in your business is to save money on taxes. You can do this, depending on the advice of your CPA, by choosing to have an S-Corp instead of an LLC, for example. This may help you to reduce your taxes, thereby giving you some extra capital to funnel into a policy. Of course, there are other tax reduction strategies that you can look into with your CPA with similar results.  [17:00] “You do need to pay the IRS what’s fair and square, but you don’t need to tip them. You don’t need to pay what’s more than necessary. So it’s about being strategic—it’s not finding loopholes, it’s using the tax code.” Another way to find money is to reduce expenses elsewhere. Many of your bills are likely negotiable, and it doesn’t hurt to try. If you have a brick-and-mortar business, many of your overhead expenses can likely be negotiated. In addition, you can raise your insurance deductibles to lower your monthly cost. You can then use the difference to accelerate your IBC savings. If an accident does occur, you’ve got capital in reserves. You can also increase your cash flow in ways that don’t have a significant cash investment, so you can use all additional cash flow for your life insurance policy. These are all ways to improve the cash flowing into your IBC policy.  Structuring Loans for Increased Capital Another way to increase the capital you have to contribute to your policy is structuring your loans to have low payments. For example, taking a 30-year mortgage over a 15-year mortgage can give you a significant monthly boost to your cash flow, which can be applied to growing your capital. The same can be said of car loans, personal loans, and anything else.  Naturally, you may be thinking, “What about all the extra interest?” To that, you have to remember that the money you’re saving is contributing to an ever-increasing pool of capital that is also earning interest and dividends. And the sooner you start, the more time you’ll have to grow that pool and increase our volume of interest. That money can eventually be used to partake in a new opportunity that brings you more cash flow in your business.  [31:28] “You’ve got to change the way you think when it comes to your business. It’s all about the cash flow of your business, not your [debt service], because that could be 15, 20 years out.” Don’t let your fear of debt or interest keep you from making choices that will ultimately improve your prospects in the long term of your business. You have to have capital. And the longer you wait to build your capital, the harder things are going to seem when you need that capital.  What Should You Finance with a Policy? Although a policy is the place to store your cash, you’re not going to see a dollar-for-dollar cash value in the first year. In the first 7-10 years, the cost of your insurance—what the company pulls for themselves—is going to eat into your cash value. However, around that 7-10 year mark, you’ll hit a break-even point, and your cash value will be more than the sum of all your premiums.  This means that if you want to contribute $100k to a policy and then take out $100k, you won’t be able to. You won’t have the cash value. You’ll still have a good store, but it won’t be dollar-for-dollar yet. And what you do have, you can’t pull out via a loan at 100%. The company will only allow you to leverage about 92% of that value. You don’t want to redline your policy.  In other words, you’ve got to be patient, and you can’t expect to leverage your policy from day one (although you can). You want to be strategic if this policy is meant to last you over your lifetime. Don’t be afraid to capitalize, but don’t do it at the expense of your long-term asset.  [46:43] “This all is leading toward this idea of [getting] started as soon as possible, but in a prudent way... You want to start a policy before you feel like everything’s under control and before you have enough money to fund all the policies you’ll ever fund. So start now, the sooner the better.” For Further Reading: Cash Flow Index: The Smartest Way to Pay Off Debt How to Pay Less in Taxes, Legally Why Debt Free Doesn’t Make You Financially Free Book A Strategy Call Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We can help!  Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/, and find out how Privatized Banking, alternative investments, or cash flow strategies can help you accomplish your goals better and faster. That being said, if you want to find out more about how Privatized Banking gives you the most safety, liquidity, and growth… plus boosts your investment returns, and guarantees a legacy, go to https://privatizedbankingsecrets.com/freeguide to learn more.

Learn about the importance of financial habits and the 'use it or lose it' principle in the world of finance. Discover how to make Infinite Banking more automatic and maximize financial control. Dive into the necessity of continuously managing your money flow and capitalizing on the Infinite Banking Concept.

Explore the inner workings and reliability of life insurance dividends in a bad economy. Learn how dividends are calculated in life insurance and the factors that affect their amount. Understand the correlation between dividends and the 10-year treasury constant maturity rate. Compare the investment portfolios and policy loans of insurance companies. Discover the potential impact of a bad economy on dividends and gain insights on leveraging insurance when needed.

Explore the Arrival Syndrome and growth mindset in wealth building. Learn about Infinite Banking Concept, fixed versus growth mindsets, and strategies to defeat Arrival Syndrome. Challenge your beliefs, embrace continuous learning, and create a tailored financial plan with The Money Advantage.

You've decided that you want an Infinite Banking (IBC) policy. You've done the research, and you want a better place to store cash that has the benefits of safety, liquidity, and growth on cash storage. https://www.youtube.com/watch?v=1qJ8xIj5W4A What's next? What should you expect as you go through the purchase process?   In this episode, we take a deep dive into the Infinite Banking Concept (IBC) and explore the intricacies of illustrations, underwriting, and loans. Join us as we navigate the complexities of IBC and help you make informed decisions about your financial future. Insurance is a ContractDirect Recognition vs. Non-Direct Recognition Life InsuranceYour Finances Impact Your ChoicesThe IBC Underwriting ProcessPossible Insurance Rating ClassesAccelerated UnderwritingIBC Death BenefitBook A Strategy Call Insurance is a Contract [4:28] “Contracts are the backbone of any society.” Nelson Nash said this and furthermore believed that if contracts were breached, that would mean the collapse of society. This is why you can rely on your whole life insurance policy–anything that is in your contract and part of your policy design will remain true for the entire length of your policy.  Even as tax law changes and the IRS modifies what’s possible with a life insurance contract, this only affects future contracts. For example, in 1988 the IRS introduced something called a MEC limit. MEC stands for a modified endowment contract and is what a life insurance policy becomes if it’s over-funded. When you have a MEC, your policy loses all tax advantages.  This happened because people were putting so much money into their insurance and accessing that money tax-free, and the IRS wanted a slice of the action. However, thanks to contract law, MEC limits (the maximum premium you can contribute without turning your policy into a MEC) only applied to new policies. To this day, Bruce has policies from the 80s that were never subject to MEC limits.  This is an incentive to start a policy as soon as possible. You don’t know what the future holds, or how the IRS might modify the rules. You do know that you have a need for capital and a need for insurance. By locking it in today, you have more time to build capital, and you lock in all the current benefits of a life insurance contract. Those benefits cannot and will not be changed once the contract is signed.  Direct Recognition vs. Non-Direct Recognition Life Insurance If you’re ready to buy a policy, it’s worth considering whether you want to work with a direct recognition or non-direct recognition company. This determines how dividends are applied to your cash value when you have an outstanding loan.  Direct recognition companies “directly recognize” when you have an outstanding loan, and apply the dividend differently to any cash value with a lien on it. Non-direct recognition companies apply the dividend equally across your cash value, even if you have a lien on some of it. While this may make non-direct recognition seem better, there are no deals in the life insurance industry. In other words, everything is a trade-off. Direct recognition doesn’t automatically mean that cash value with a lien on it will earn less. It really means that it will be applied proportionately to the loan interest rate. And if the interest rate is much higher than the declared dividend, that portion of your cash value may actually earn a bit more. But if you intend to use your cash value often, non-direct recognition may be your best bet. The important takeaway here is that one is not leagues better than the other. After all, interest rates and dividends are unpredictable. Companies will ebb and flow. So don’t get too hung up on the little things, especially if it holds you back from making a choice. Go with your instinct, and don’t sweat the decision too much. You can always have multiple policies with different constructions.  Your Finances Impact Your Choices Before you make any choice, it’s crucial that the team you’re working with takes your full financial picture into consideration. There’s no single “best” policy design. While there are some guidelines, your specific policy will depend on what you already have, and what your goals for the future are. This will even change over your lifetime, so as you grow, you may find yourself with a portfolio of very different policies.  [19:36] “A full financial picture means they need to know what your income is in the household. They need to know what your expenses are in the household. They need to know not only what your assets are, but where they’re laying.” While insurance producers are not legally considered fiduciaries, we believe that this is a fiduciary responsibility your team has to you. Your personal economy matters. It’s going to impact your base premium to PUA ratio, the amount of death benefit you need and how to get it (such as blending term insurance and whole life insurance), whether you’re going to prioritize early cash value or not, and much more.  Other red flags to consider: Your agent doesn’t give you a full illustration (if it says there are 19 pages, you should receive 19 pages) The person selling you insurance isn’t licensed or at least not in your state. You can ask your agent for their license number to reference The IBC Underwriting Process Before you can get approved for a whole life insurance product, you’ve got to go through some underwriting. Underwriting is when an insurance company determines how risky it is to insure you. And since whole life insurance is a permanent product, the insurance companies have to be more thorough. To put it bluntly, they want to ensure that you won’t die tomorrow.  This means the company will look into your current health and health history. Fortunately for you, this happens on the insurance company’s dime, not yours. You’ll complete a questionnaire about your health, as well as your personal life. They want to know if you smoke, if you engage in dangerous behavior (like regular sky-diving), and other habits or facts that may indicate risk. It’s crucial to be honest since it’s all a part of your legally-binding contract.  You’ll also have to get a health exam, at no cost to you. Oftentimes, you can have a nurse come right to your house. Usually, this consists of a blood draw, a urine sample, and a few simple measurements.  While having a dangerous hobby or being a smoker won’t automatically make you ineligible for insurance, you may get a lower rating. Your rating indicates your risk to the company. The better your rating, the more death benefit you can get for the same premium. To put that another way, the better your rating, the lower your premium for a given death benefit. Unfortunately, you may not be eligible for a policy at all if you don’t meet certain health requirements. Regardless of your rating, this does not impact your ability to conduct an Infinite Banking strategy. It won’t affect your cash value or how that works.  Possible Insurance Rating Classes If the company determines that you are eligible for whole life insurance, there are several ratings that you can get. As mentioned, this affects how much your premium will be relative to the death benefit that you want.  The possible ratings are:  Preferred Plus. This is the highest possible rating and is extremely uncommon. People in this class have no negative health history, don’t take medications, have the ideal height/weight ratio, and have a clean family history.  Preferred. If you have excellent health, but are otherwise within height and weight guidelines, or have an issue that’s easily managed, you may be able to get a preferred rating. Standard Plus. This is a rating for people who are in good health but may be slightly outside of the ideal height/weight ratio, or have some minor health issues.  Standard. This is the lowest eligible rating, and also the most common. About 75% of policyholders get a Standard rating. This may mean you’ve got average health and health history, maybe you take some medications, and your height/weight ratio does not meet the guidelines.  There’s also a smoker/non-smoker designation. Non-smokers get a slightly better premium for their death benefit. Note that marijuana is now treated like tobacco, and gets a smoker rating. They’ll determine this from your fluids, regardless of how you consume the marijuana/tobacco.  Accelerated Underwriting Accelerated underwriting is an expedited way to get approved for life insurance. If you’re young and in good health based on some information gathered, you can actually forgo the health exam. You’ll get an offer for a policy, and can actually get approved in a 24-hour window.  IBC Death Benefit Last, but certainly not least, there's the death benefit to consider. This is also what we call the "face amount" of the policy. This is what you're purchasing with your premiums. While your death benefit can actually increase over time with PUAs, the face amount you choose is your baseline. When you die, the death benefit is paid to your heirs. This could be your spouse, your children, your parents, or anyone else you love. You can also change these beneficiaries at any time, by contacting the insurance company. For example, if you get a divorce with no kids, you may choose to take your ex off the list. If you do have kids, maybe you still want to list your ex as a beneficiary, at least until the kids reach adulthood. It all depends on your dynamics, just remember to make changes promptly. Once you determine beneficiaries, be sure to have conversations with your family about money, money management, and good stewardship. You want your loved ones to be prepared for a windfall, even if it happens 50 years from now. Choosing the amount of your death benefit all comes back to your personal economy and goals.

Explore the importance of ethical capitalism and the 'Golden Rule', critique on immediate gratification culture, discuss the power of controlling capital for financial decisions, emphasize citizen vigilance in maintaining a capitalist society, and empower through valuing savings and infinite banking philosophy.

In this episode of the Money Advantage podcast, we explore how to avoid the pitfalls of leaving an inheritance and ensure you leave a positive impact on future generations through intentional wealth management and legacy planning. https://www.youtube.com/watch?v=ZXFUVVoT_6s Inheritance, a transfer of wealth from one generation to another, can be a double-edged sword. On one hand, it can provide financial security and opportunities for the next generation. On the other hand, if mishandled, it can lead to family conflicts, spoiled children, and the squandering of hard-earned fortune. We explore the insights of Dr. Lee Hausner, a renowned consultant to high-net-worth families, family businesses, and family offices, on how to avoid the pitfalls of leaving an inheritance and ensuring a positive impact on future generations. We delve into the importance of understanding the power of money, the various types of wealth present in society, and the significance of instilling the right values in the next generation of wealth holders. Avoiding the Pitfalls of Leaving an InheritanceWealth Transfer and Legacy PlanningStrategic Planning for Family LegacyCreating Successful and Prosperous FamiliesSibling Competition and Social CompetencyAbout Dr. Lee HausnerBook a Strategy Call Avoiding the Pitfalls of Leaving an Inheritance Dr. Lee Hausner's background as a psychologist in the Beverly Hills school district exposed her to the effects of different types of wealth on families. She observed first-generation entrepreneurial wealth, trust fund wealth, and industry wealth, each with its unique set of challenges and expectations. This experience, coupled with her expertise as a consultant to high-net-worth families, has given her valuable insight into the potential pitfalls of leaving an inheritance. One of the key challenges in wealth transfer is finding the right balance between providing financial security and ensuring that the next generation does not become complacent or entitled. Overindulgence and a lack of understanding of the value of money can lead to destructive behaviors and a squandering of family wealth. Dr. Hausner emphasizes the importance of raising children who are competent and self-confident, regardless of their financial situation. This foundation will help them navigate the complexities of wealth management and inheritance, ultimately leading to more successful and prosperous families. Wealth Transfer and Legacy Planning A successful wealth transfer and legacy plan requires intentional and strategic planning. Dr. Hausner suggests that families think of themselves as a business, applying the same strategic planning techniques to their family life as they would to their professional endeavors. This includes setting goals and strategies, holding family meetings, and fostering a culture of open communication and collaboration. In addition to teaching children about the fundamentals of money management, it is crucial to instill the right values and work ethic in them. This can be achieved through a combination of education, experience, and mentorship. Dr. Hausner also highlights the importance of being strategic about when and how much to pass on to the next generation. A well-planned wealth transfer will take into consideration the needs and abilities of each family member, ensuring that the resources are used productively and effectively. Strategic Planning for Family Legacy Creating a successful family legacy requires a clear vision and a strategic approach to wealth management. Dr. Hausner recommends reverse-engineering the desired family outcome and breaking it down into achievable goals and milestones. This process should involve open and collaborative discussions among family members, ensuring that everyone's needs and aspirations are considered. One of the perennial concerns in wealth distribution is the issue of equality. Dr. Hausner suggests that families should focus on giving recipients what is beneficial, rather than simply striving for equal distribution. This approach ensures that each family member receives the resources and support necessary for their individual success, without fostering resentment or rivalry. Additionally, selecting the right trustees and advisors is critical in ensuring a smooth wealth transfer and effective management of family assets. The next generation must be equipped with the knowledge and skills to take on the responsibility of managing the family's wealth and continuing its legacy. Creating Successful and Prosperous Families Dr. Lee Hausner's wealth of wisdom on family business succession and legacy planning highlights the importance of creating a strong family culture and helping the next generation become competent and self-confident. Being intentional in the business of the family, setting goals and strategies, and holding regular family meetings are crucial to ensuring the success of the family and its legacy. Legal documents and estate plans can provide a framework for wealth management, but they cannot guarantee the success of a family's legacy. The family culture, values, and relationships are ultimately more important than a perfect estate plan. Dr. Hausner encourages families to prioritize these aspects of their legacy and to reach out to professionals if they need guidance and support. Sibling Competition and Social Competency Helping children develop their own unique strengths and interests, rather than pitting them against one another in competition, is an essential aspect of fostering strong family relationships and a successful wealth transfer. Dr. Hausner shares her experiences of helping siblings find their individual paths and avoid unnecessary rivalry. Encouraging children to participate in different extracurricular activities and providing opportunities for collaboration and support can help foster strong connections between siblings, ensuring a lasting family legacy. About Dr. Lee Hausner Dr. Lee Hausner is an internationally recognized psychologist, business consultant, seminar leader and keynote speaker. Dr. Hausner served 17 years as the senior psychologist for the Beverly Hills Unified School District during which time she authored the seminal work regarding wealth and the family, Children of Paradise: Successful Parenting for Prosperous Families. She has co-authored with Douglas K. Freeman, J.D. Legacy Families: The Definitive Guide to Creating a Successful Multi-generational Family and an A Founders Guide to the Family Foundation. Most recently she contributed chapters to the resource books, Wealth of Wisdom, the top 50 questions wealthy families ask and More Wealth of Wisdom. Dr Hausner co-founded IFF Advisors a consulting practice providing services for high net-worth families, family businesses and family offices. She incorporated a unique six-step transition model for effective succession of family businesses in her critically acclaimed family business resource book, Hats Off to You: Balancing Roles and Creating Success in Family Business Succession. A frequent guest on national media, a quoted expert in national publications, a keynote speaker for high-net-worth private client conferences for the major financial institutions domestically and internationally, she is also a highly rated resource to YPO, WPO, CEO, EO, Tiger 21 and was a presenter at the Davos conference in Switzerland. Book a Strategy Call Book a Strategy Call Navigating the pitfalls of leaving an inheritance, complexities of wealth transfer, and family legacies can be challenging, but with the right approach and guidance, it is possible to create successful and prosperous families. By understanding the power of money, instilling the right values in the next generation, and adopting intentional and strategic planning, families can ensure a lasting and positive impact on future generations. Would you like guidance for creating a meaningful and impactful family legacy? Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? Start with my book, Seven Generations Legacy. It’s packed with actionable insights and strategies to help you build a strong foundation for your family’s future. Once you’ve explored the principles, let’s take the next step together. You can book a call with me at Seven Generations Legacy®, where we’ll work to create a personalized plan tailored to your family’s unique goals and vision. Let’s start building your legacy today!

Financial expert Nelson Na joins us for part 8 of "Becoming Your Own Banker" series. We explore how to save taxes with the Infinite Banking Concept using dividend-paying whole life insurance. Topics include legal plunder, taxation, triple tax advantage, and modeling successful behaviors. Join us as we unpack Nelson Nash's wisdom and learn together.