Josh Cantwell: Hey, welcome back to Accelerated Real Estate Investor. This is Josh Cantwell, your host. And today, we’re going to talk about one concept and one concept only, infinite banking with whole life insurance. You’re going to want to hear about all the benefits, tax benefits of this strategy with my guest, Chris Miles from Money Ripples. Here we go.

[INTERVIEW]

Josh Cantwell: So, hey, Chris, welcome back to Accelerated Investor. I’m excited to talk infinite banking today with you. You’re an expert on it. It’s part of the big strategy for a lot of people. So, welcome back to the show.

Chris Miles: Hey, I appreciate it being back here again.

Josh Cantwell: Yeah. After we left our last conversation you are on just a few weeks ago and we were talking, I just felt like there was so much more for us to talk about when it comes to making good financial decisions, creating financial independence. And you and I have this common theme of infinite banking that we both execute in our own financial life and part of our own portfolio. I thought it was really important to have you come back on and just talk about what that means, what it is, and how our audience can benefit from it. So, let’s just jump right in. What are your thoughts on infinite banking? Let’s first talk, what is infinite banking? Let’s define it first. Go ahead.

Chris Miles: Let’s start there, right?

Josh Cantwell: Right.

Chris Miles: I like to define it as this. I know there’s a lot of different people out there talking about infinite banking, and how I see infinite banking is different than how most see infinite banking. Here’s what it is simply, it’s a supercharged tax-free savings account. It’s an account you can use using whole life insurance, specifically not universal life, not even term insurance, because you can’t do anything with term insurance but die and then you get paid. It’s simply just using whole life insurance to then have this extra account beyond the death benefit. But it’s extra tax-free savings account that’s in there, kind of like a Roth IRA, but it doesn’t have all the stupid rules that go with it.

Does it have the 59.5 rule? Does it have the rule that you can’t make too much money or you can only put in $6,000 or $7,000 a year? Nothing like that. I mean, really, it gives you flexibility. I have people put in $5,000 a year. I have people putting in $500,000 or more a year into these policies. There’s a lot of flexibility, a lot of ways to use it.

But here’s the thing, most people will tell you, if you look up infinite banking on YouTube or whatever, they’re going to tell you things like, hey, you can buy your car with this or buy your house. And then you can be your own bank and you just pay yourself back interest. All that’s totally crap. It’s false. You do not pay yourself back interest, just so you know.

Here’s how it works. You have this cash-free, this cash value. This is really the tax-free savings account you have here. What you’re able to do is get a line of credit against it. The collateral is there. It’s just like if you went into your bank today, and you have a savings account that’s been sitting around and you asked your banker, you said, “Hey, can I get what’s called a secured line of credit against my savings account?” And the banker will say, “Well, yeah, because it’s there, we can walk it up. You can’t touch it until you pay down that loan.”

So, if you cash out, like I did this one time several years ago, $25,000 sitting in a savings account, got a line of credit against it with the bank. I pulled out all $25,000 from that line of credit. They locked up that $25,000 so I couldn’t access it. Just like a home equity line of credit, right? Now, as I pay down the loan, it freed up the cash, I could use again, I could pull it out again. But they knew that if I never made a payment or I didn’t keep my end of the bargain, they can always just take the money out of my savings account and pay off the loan. So, they give you a really good history for that.

Well, insurance companies do the same thing. They’re really just big banks. Insurance companies can do it. And there are even certain banks that specialize in this kind of loans. We’re able to get a lot of credit against this cash while you’re earning like 5%, 6% tax-free inside these accounts, but you’re getting a loan at like 4%. So, what’s happening is you get this loan, you make a spread of 2%, which is really more like a 33% rate of return on your money. And you can still invest in things like real estate investing or into your own business or wherever the heck you want making returns there.

So, what happens is you’re actually able to double dip, make money in two places at the same time. And that’s the magic. That’s the real magic behind it. The buy-a-whole-car thing, the truth is, you’re still paying interest to somebody, whether it’s the insurance company or to the bank. Don’t believe that lie that you pay yourself interest, that’s bull crap. They’re paying you interest on the account because that account still makes a money while you have this other simple interest loan that’s going out that you can use for whatever you want. So, you’re still paying interest on that loan.

But the thing is, you’re making more in interest than what you’re paying for that loan. As a result, you’re making a spread there. And if you’re using this for investing purposes, you’re also making money there. So, this is way better than using a savings account. For the savings account, you pull it out, you use it, it makes money in that real estate deal, and that’s it. But here, you’re making money instead of life insurance and you’re making money in the real estate deal at the same time.

Josh Cantwell: I love it. And not only that, but inside of the life insurance, if it’s a whole life policy, it’s getting dividends from the insurance company. If it’s got a variable life policy, it’s getting a return from the stock market. And by getting this secured line of credit against it, you can then go invest. So, you’re borrowing the money at 4%, earning at 6%, the spread of 2%. But then you borrow the money at 4%, you go– I had an investor who took over a million dollars line of credit against the businesses and his houses so he was able to get that like 3%, 3.5%, 4%, and then invest all of that with me as a limited partner in our apartment deals. We paid him a 10% pref plus he got equity for a total annualized return of north of 20%.

And by the way, he did that with none of his own money because it was borrowed money. It was borrowed money at 4% that he got a return on of 20%. So, that when Chris says infinite, now that’s an infinite return because you borrowed money from the bank against an asset that you have, which is this life insurance policy, and now you’ve set yourself up to get these amazing returns.

And Chris, why do you think more people hear about this? Like you said, you stuff out on YouTube, there’s different podcasts about it. But in the grand scheme of things, there’s not as many people doing it as you would think. Mostly, because of my opinion, and I’d love to hear your opinion on it, this is, number one, you have to have some foresight to set it up first and begin to fund it and plow money into it well before you kind of need it and then turn it into this opportunity, this secured line of credit opportunity we just described.

So, help me understand two things. I’ll ask you kind of a two-part question. The people that are doing it that you work with, how excited are they that they set it up early, and what kind of things are they doing with the money? Are they mostly investing in real estate or are they doing other things with it? Number one. And number two, the other people that aren’t doing this type of strategy, why aren’t they? But let’s talk first about the people who did do it. Tell me about some of those stories, those key studies, and what they’re doing with by adding the strategy to their portfolio.

Chris Miles: Yeah. So, a lot of my clients love it. I mean, they see it as like an essential part, I mean, even on my podcast, you’ll hear different people talking about how they use it as part of their plan. Again, it doesn’t ever make you financially free. Don’t believe all the insurance agents saying this is how you become financially free, live in tax-free retirement. Bull, there is no financial product that a financial advisor can offer you, including insurance agents that will ever make you financially free, including life insurance. This does not work by itself. It has to work in coordination with everything else you do in your investments.

So, my clients primarily use it for buying real estate, whether it’s buying their own properties and they’re creating the cash flow from that, could be syndications that you just mentioned, last syndicated opportunities, people use that night and day all the time for those kind of deals. Those are easy to use for I’ve had people use it for their business. They invest in their business to do things to generate higher returns in their business. And then, obviously, now they’re double-dipping big time.

We’ve had people pay off debt with it, like maybe high-interest credit card debt. They said, “Well, I can pay it in cash, or I can rent it through here, still get the lower interest and everything else, and pay back on my terms, my credit boosts up immediately, but now, I get some extra leverage on my money.” I mean, there are so many ways that people have used this and different stuff.

I mean, even the way I use it, one of the other ways I use it besides just investing is I’ll hold its cash reserves because right now, especially as we’re moving into recession, people need to be liquid. You got to have that war chest ready, especially for opportunities that are coming. And even just having emergency savings in case crap hits the fan. That’s more important in any business, not managing your own personal finances more than ever.

Well, for my family, like my wife says, I want at least $250,000 sitting liquid. We never touch just in case. Well, do the math. If you’re earning point nothing percent in your bank account that you then pay taxes on at that bank, the thing is, like you’re making nothing on a quarter million dollars even finally, my online savings count raised up to a full 1% per year that I still get taxed on.

But if I can make 4% or 5% a year or more net return on my money tax-free, imagine, I mean, I have $200,000 of that money, I diversified my savings. So, I have $200,000 of that, that’s in my life insurance, earning high at least 4% more than any bank account. So, do the math. That’s an $8,000 or more a year plus no taxes. And then the other $50,000 that’s split between the local bank we can pull money out of today versus online savings accounts or whatever else. So, that’s how I use it, too.

Now, to answer your other question. Why don’t more people know about this? That’s what everybody says, like, “Well, if this is so good, why haven’t I heard about this?” Understand this, insurance companies don’t have any self-interest to teach you how to manipulate the system. Just like banks don’t want you to manipulate their system by borrowing at lower rates, then turn around and make higher returns. They don’t want you to do that.

They want you just to let it sit there and do nothing. They want you just to be a good boy and a little girl, like Dave Ramsey taught you to do, just pay off that debt, sit in savings and do nothing, and live broke the rest of your life. By the way, Dave Ramsey hates this. He addresses it on a show every once in a while.

Now, I agree with him. Him and Suze Orman, when they rip on infinite banking, I 100% agree with them because most of the time you see insurance agents out there doing infinite banking. So, let’s just say this is the grand– this represents all the insurance agents out there in the United States. Of these insurance agents, this many even know what infinite banking is. Most of them never heard of it. I never heard of it after four years of being a financial advisor. Never heard of it.

Now, of this, this many actually do it right. So, almost none, I’d say 99.9% of time is done incorrectly. So, when you do get these people that do the infinite banking, they do it the long, expensive route. They’ll try to convince you saying, oh, hey, you want to pay more in fees because it works out better in the long run when we do this strategy, bull. Even the guys I respect in this industry, guys that are big on YouTube teaching infinite banking, they sound like, oh yeah, well, 40% should go to commissions in the first year. No, it shouldn’t. It should be more like maybe 20%. That’s the thing.

So, they make it more expensive to pay their pocketbook because these insurance agents need the money. This is how they make their living. The difference with myself and my team is that we don’t need the money. We’re already investing and doing real estate deals. We don’t care. Like we’re just doing this because we’re so pissed off that everybody else out there is doing this infinite banking strategy wrong and there’s overcharging on their fees, and you never know the difference. So, that’s the one thing we always say is like toe to toe. We show you the numbers. We don’t do any weird pull-the-wool-over-your-eyes type of thing.

And then two, we actually say, hey, here’s exactly what it is, this is the best ROI you can possibly get on this policy, bar none, no matter who you compare it to, shop around with which we encourage. If you want to do that, great, because we’ll still beat them all. We’re fully confident in that. And that’s the problem, is that out there, infinite banking is ripping you off. Even if it’s a good concept, if they’re not designing it right, it doesn’t work. It’s like saying, hey, I’m going to try to use a Pinto to do a stock car race. Like you don’t have the right vehicle, it’s not going to work. You’ve got to have something that’s going to actually get you there fast.

Josh Cantwell: So, Chris, when you say design it, I know what that means because I was in the financial services world in my early 20s, but please describe it because most people that this concept hasn’t matured with them, maybe they’ve been pitched a traditional term policy or a whole life policy or a universal life policy, and it’s just very vanilla, versus you design it. That sounds more exotic, like you could do more things with it. It sounds better.

So, what does that mean design it? Help our audience understand some of the mechanics of the way that you could make this better, more cash value, more money going towards the value buildup versus the cost of the life insurance or the cost of the commission. Help me understand what you mean when you say design it.

Chris Miles: So, for an insurance agent, there are multiple levers you have to pull. And just, again, insurance companies never teach us how to do it this way. They don’t ever want you to do it this way. They’ll allow it, but they’re not going to teach you how to really lower their profits. So, we can pull all these levers. Some of those levers, like you said, the money that goes in the cash value, the bulk of it, especially in the beginning, is what’s called paid-up additions. That’s just a fancy term for overfunding or putting in more than what the minimum is for that death benefit.

So, what we do is we try to do the lowest death benefit needed to allow X amount of dollars to go in. So, we don’t even worry about the death benefit. What we just tell our clients is you figure out what you want the max contribution per year to be, and we try to figure out how to get the lowest death benefit possible to lower all your costs so the bulk of this money is actually going into that tax-free savings account versus just going to insurance costs.

And that’s the difference because lots of people will say, oh, well, let’s just do a quarter million insurance or even a million or $2 million. They’re trying to give you this death benefit first and then whatever’s left over might go into your cash savings. Again, we do the opposite. We figure out how do we get the lowest cost in your possible coming out of it and the highest amount going into the cash because we’re putting in more than what’s required for that death benefit.

Josh Cantwell: Yeah, I love it. Look, when I got out of college and I went into the financial services business, I was thinking life insurance, retirement plans, Roth IRAs, 529s. Probably, a year and a half into– I was 23 and a half years old, it was the first time I was exposed to exactly what you just described, designing, overfunding, paid-up additions. And then I started going to talk to high net worth business owners, and I got referred in the business owners and a couple of guys that were in. They owned businesses that did office supplies, they did office flooring, they did office cubicles, they would basically design offices and then furnish them. And these guys were highly compensated owners. And sure enough, like one after another after another after another started referring me, and they all did this.

So, some guys would drop in 10 grand upfront or 10 grand down and then $1,000 a month. And then they would kind of very flexibly dump money in at certain times when they had cash, or end of the year, they’d figure out their tax situation and dump a bunch of money. And other guys would just say, all right, maybe the cost of the life insurance, I’m going to fund a thousand a month at this cost of the life insurance. There was a million-dollar policy. But I’m going to put another $1,500 a month into it on top of that. That was the paid-up additions, the extra overfunding that would just grow, grow, grow, grow, grow in this tax-free environment.

Some guys like to do whole life. Some guys like to do variable life just depending on their appetite for the market. But I became one of the top-selling young financial advisors in my office, in the company using this strategy because I became passionate for selling it to the right guy, which was the business owner who– and Chris you know this, like there were a lot of times they wouldn’t even have a 401(k) because maybe they only had 10 employees. So, the cost to run a 401(k) was too expensive or they would try to overfund, and then it would become what’s called top heavy, meaning they had themselves, they were highly compensated, maybe making 400 or 500 grand a year, but then they had a bunch of employees making 40 to 80 a year and they could only put so much into their 401(k).

Then it was like, well, what else can I do? And then it became, why make $400,000 or $500,000 a year already? I’m already paying a lot of taxes. I don’t really want to make a lot of interest that’s more tax. And Chris, I’d love to hear your thoughts on this. Then you’ve got guys that are in real estate who are paying very little in taxes because of depreciation, accelerated depreciation, bonus depreciation, they still throw money in these policies, including me, because it’s the long-term way to just force that value dump money.

And then, again, like you said, get a higher return on essentially what would be the equivalent of a bond portfolio. One of the ways they used to sell this was to say, look, if you want to go with a more conservative whole life policy versus a variable life policy, this is a better way to get tax-free returns. That’s the equivalent of a bond portfolio, a very low– it’s very stable. The risk is less. It’s just more of a fixed income type of portfolio versus buying bonds that might be 3%, which are also taxable. So, that was the model.

So, whether it was a highly compensated executive or it was somebody in real estate or somebody just looking to get a higher return on what is essentially their savings dollars that you described earlier, one of those three buckets, that was the client that I wanted and I was fortunate to be able to find and get referred to lots and lots of them. That was amazing for me. And I got so much joy out of selling this because I thought it was actually going to have an impact on their future financial life, not just, hey, if you die, you need a million dollars to get your kids through college like a term policy. So, that’s just my personal story around that. I’m sure you have different reasons why you’re passionate for it, but those were my reasons.

Chris Miles: It’s a great point. I mean, it’s funny because even when I started as a financial advisor over 20 years ago, I started out selling variable life term insurance, indexed universal life before it got popular. I found out that when it came to the strategy, those didn’t work well. Obviously, term doesn’t work, but even variable universal life and those kind of things just don’t work with this strategy very easily.

Well, one, the insurance costs go up over time in a universal life policy, where whole life, it goes down over time, especially if you design it right, things like that. But that’s the thing, like I was anti-whole life. I was agreeing with Dave Ramsey, but I did have a good reason because other financial advisors said the same thing.

So, this passed on the same misinformation to myself. And then I was teaching other people. Then when I actually realized when my boots are actually on the ground and able to use it, I was like, wait a minute, this thing is actually awesome. And yeah, I don’t have to worry about market swings, all that kind of junk. And yeah, I can use it for retirement. And some people will, but I’m like, man, the fact I can use this money today to create wealth now and generate more passive income, a cash flow because it’s working with my money instead of against it.

The problem is most people or insurance agents say, well, put your money in here, but don’t put your money in your investments or in your business. For a business owner and/or a real estate investor, we all know that we can make more money over here than 5%, 6% over here. There’s no doubt. And yeah, I can have this conservative return, but why not have both? Why not have the money here, invest over here too, instead of competing? Because you have all the money going to fees, they have to tell you that, oh, it’s going to go here, put away for the long haul because that’s eventually when you finally see a positive return on this piece of crap that I sold you. No, we can have a great positive return quickly in these policies where, pretty soon, within three years, it’s net positive. It’s paying for itself in just three years. I mean, other policies, I was like, wait, can you do that? Is that even possible?

I remember I used to be happier if I did it within five or six years. I thought, oh my gosh, this is amazing. But you can do it so much better than what’s being sold out there. And that’s why we do exist. I mean, that’s why I’m out here training other agents to do the same thing, even guys on my team saying, let’s go out, let’s fix this problem. And in fact, let’s just be a disruptor in this industry to the point where these other insurance agents have to say, oh crap, I’m losing business because these guys are doing it better. How do I do it better? And then they have to uplevel their game, creating more competition, which is what a free market needs to get everybody a better deal.

Josh Cantwell: I love it. Chris, listen, our audience is definitely going to want to reach out, I’m sure, learn more about this, talk to you directly about it, maybe add this to their portfolio. How can they do that? How can they get a hold of you?

Chris Miles: Yeah, easiest way, just go to MoneyRipples.com, and there’s a Contact Us form you can just go to and just say and mention infinite banking. Heck, we even put our YouTube playlist, there’s even a section on infinite banking if you want to dig deeper into that little rabbit hole.

Josh Cantwell: Got it. Awesome stuff, Chris. Listen, thanks for coming back and sharing some more on infinite banking with our Accelerated Investors.

Chris Miles: Thanks so much.

[CLOSING]

Josh Cantwell: Well, there you have it, guys. Listen, I just wanted to share that strategy with all of my listeners and with all of my followers and friends because it’s something that I do, something that I believe in. It’s something that I started doing in my early 20s when I was a financial advisor, something I still do today as a 46-year-old married father with three kids. So, it has a lot of different benefits, not only from the tax perspective and long-term wealth accumulation, but also for the life insurance perspective if I ever did get run over by a bus and something I feel like everybody should have in their portfolio. So, get a hold of Chris at MoneyRipples.com. I hope you enjoyed today’s episode. If you did, share it, review it, rate it. We’ll see you next time. Take care.