Is Dave Ramsey RIGHT?!? About Infinite Banking / Garrett Gunderson

how can it's just absolutely not true then how could you have more money than what you put in dave dave dave dave dave dave's bias is destroying the truth here he is like read a book from the 1950s and forgot that we're now in 2020 [Music] all right i i just barely did a reaction video um of dave ramsey and you're about to watch that so i'm filming the intro after the fact but it's egregious it's it seems illegal to me it's irresponsible it should be malpractice it's misleading it is absolutely insane and uh i kept my cool for the most part and i understand where he's coming from and i i concede where there's some really good points in there but it's absolutely something that is damaging when it comes to people's finances and you need to make sure you know how to avoid these missteps and mistakes that he's putting out there in the world jason is with us in detroit hi jason welcome to the dave ramsey show hey dave thanks for taking my call how are you better than i deserve how can i help well i had a question for you um i've been working with a financial advisor who's given me some advice and i follow the show i'm on baby step 7 currently um but he presented me with an idea that was a little outside the box and i have term life insurance i've been anti whole life but he presented me with this infinite banking concept jesus you're kidding me yeah i have excess money in a savings account and looking to rebalance my portfolio to get it to work a little bit harder but my risk tolerance is a little bit low and he showed me how you can do this where you over fund the whole life policy you can access the money you break even in year seven and then the dividend outruns what you put into it yeah it doesn't seem like a terrible idea in that regard but i just wanted your your take on why i like that anyone even asks him an opinion about life insurance he's made his mind up long ago that no matter what you show up no matter what you say no matter who's doing it like there's everything from private placement life insurance that the ultra wealthy does to premium financing or you can actually get a bank to finance it at a lower interest rate than hopefully what you're doing and i mean i'm talking like we've seen them at a one and a quarter percent interest rate on the loan maybe getting two and a half percent on the on the policy with downside protection and you can just see his disgust already like he's already got an opinion here this guy's saying it breaks even at year seven and then it starts to have a positive dividend after expenses after that i've seen policies that get there sooner than that but um over funded means that you're putting extra cash into it um and dave's gonna say why would you want to put extra cash well why would you put extra cash into a mutual fund why would you put extra cash into a bond it's if you're getting a return on that the problem with bonds is bonds have capital appreciation risk like let's just say that you have a bond uh and interest rates go up well if you want to sell that bond you have to sell it at a loss because you have a lower interest rate so you'd have to compete with a higher interest rate so there's a capital appreciation risk where you could lose money in that where in a policy you might be protected from liability in bankruptcy but also be protected that once the money's made once the cash value is there it's got a minimum guarantee now i believe that dave is right on a lot of things when it comes to life insurance i've seen horribly designed policies that have anemic returns that takes 20 years to break even he should rail against that kind of stuff for sure if we're looking at it from a cash value position but he has these preconceived notions and these biases that don't allow him to consider there might be other options see how my prediction goes that might not be the best way to go the the problem is that where it gets confusing is that um god he's selling a dividend a financial advisor assistant this is an insurance guy well he's he's both they have you know it's one of the bigger companies um northwestern mutual or prudential exactly yeah okay he's an insurance guy he's not a financial advisor okay so because those are both mutual companies now there are two types of life insurance companies mutual and stock okay that's right likely you bought your term unless you bought it from him from a stock company a stock company stockholders owned the insurance company a mutual company which is prue and northwestern state farm is mutual is the policy holders are actually the stockholders okay okay so when the company makes a profit the policy holders receive a dividend as if they were a stockholder and received a dividend does that make sense yep yep now follow the math here well here's the thing um stock companies also pay dividends it's just that they're splitting their dividends between stockholders and policyholders mutual companies are owned by the policyholders so the dividend isn't split so i actually prefer a mutual company for my overfunded cash value policies to a stock company but let's see what dave has to say about that if you are the owner of the company and you're also the customer of the company and the only place the company gets money is from the customers that are owners and they give you he says the only place that the companies get money from is the the customer well the reality is there's a portfolio that they have they're they're they're putting their money to work they can you know sell term insurance which only you know pays out 1.1 percent of the time so term insurance becomes extraordinarily profitable uh for the insurance companies and if you're the uh mutual company where they're paying you dividends not just a stockholder well then guess what those parent policies that don't pay out becomes money for you the second is they they can't invest the general account in a very conservative way and this guy says he's rick of risk-averse so that's actually pretty consistent with what he's saying and third is if you actually borrow money um from the company and they use your cash as collateral there's interest that could be earned for the company there so there's plenty of ways that this company can make money they might also sell disability insurance they may also you know they obvious all these companies are definitely selling term insurance and they might be selling other stuff that i don't really love like variable universal life which has you know a chance to have much much higher expenses and doesn't get paid dividends it's all based upon separate accounts and mutual funds which dave tends to be in favor of is these mutual funds money from a profit by definition that means it's because they took too much from you as a customer there wouldn't have been a profit otherwise okay so the irs has deemed consequently that mutual life insurance company dividends are not dividends in the true sense of a dividend that instead they are and this is the irs's language so here's the thing if you just if you were to actually go to cashflowbanking.com and have them analyze and show statements if what dave is saying is true then how is there a positive return this guy's saying that you're seven it's break even then you're going to have more cash than what you put in the policy how could that be possible if dave is saying no you're just getting a portion of what you you put in and now you've overpaid well if you overpaid you would get a discount or you would get some money back but not all your money back so he has such faulty logic in this they are instead a refund of a deliberate overcharge so they overcharge you in order to give you some money later to make you feel like you're making money off of them then how can you have more money than what you put into it it's a pass through mathematically it's a pastor it's ha it's the way it has to be it's the legal definition the freaking company and the irs says so so the thing i didn't love you know you when you take the money back you basically are paying an interest rate on it exactly and whose money is this well let's let's be clear you can take withdraws and it's fifo first in first out so you put money into the policy and the first dollars you put in are the first dollars you can put out you only would pay uh taxes on money that is above and beyond what you put in and if you look at the policies and you even look at there's a guaranteed side and a non-guaranteed side on overfunded whole life policies the guaranteed side is that they never paid a dividend ever and the non-guaranteed side becomes guaranteed once the dividend is paid the dividend is an is basically the minimum guarantee plus a extra portion based upon their overall returns on a portfolio the amount of money that came in from all their term insurance and the things that i talked about before so he's leaving out so many things and acting like he's an authority dave's bias is destroying the truth here and for someone that claims to be a truth seeker and a truth teller i mean i it's crazy he's he he's against index fund says just just put it in uh you know loaded fund even though the stats are showing after 20 years a lot of those don't outperform like the majority of the time the index funds and i'm not a fan of either necessarily because it's usually handing money over to things that don't create cash flow that you don't have control over this cash value if we're just looking at like what if you had savings and savings accounts do very little in interest they're they're fully exposed for a liability you have to pay tax on it and if you could get a higher dividend here and have more cash why wouldn't you and he's saying that that's not possible based upon definition well whatever your definition is dave look at the reality of a policy instead of just coming to these conclusions right that you're borrowing you're borrowing your own money and you're paying them okay so and let's talk about that saying you're borrowing your own money well you can take the withdrawals as i mentioned or you could borrow and what happens is you could use your money as collateral where it still earns interest and dividends and there's two ways to do that either participating or not participating one impacts your dividend slightly the other one keeps it the same and then they charge you an interest rate for the money that they lent you based upon your money as collateral and so you could get have access to that money without tax without having it hit your credit score with having whatever payback period you want and if you don't pay it back it subtracts from the death benefit so again only giving a very small sound bite piece of the story which is frustrating for me because he's a very intelligent business savvy individual interest yep this is infinite banking for them yeah yeah the infinite banking concept is is old school whole life done whole lives wasn't really over funded with paid up additions is what it's called and they didn't have an increasing death benefit which i've done a other reaction video where dave says the death benefit remains level and you don't get both he he is like read a book from the 1950s and forgot that we're now in 2020 or 2021 depending on when you're watching this video so it's it's just a little bit insulting to give partial advice for someone who's pretending to be the authority real financial advisor not an insurance broker is trying to sell you a load of manure what makes a financial planner a real financial planner versus an insurance advisor there's plenty of insurance salesmen out there that that's what they do and you know i used to say i was a financial advisor in 1998 even though i was basically selling life insurance and i had a series 6 and 63 where i would sell mutual funds and so i wouldn't call that financial advising i'd call that financial selling you know i wasn't the actual fund manager making the trades i was just giving them charts and giving them stories that were regurgitated from what the firms had trained me like real financial planning to me should be do you have an estate plan do you have the right credit score have you negotiated better interest rates on your loans have you maximized your tax savings have you chosen the right corporation if you're a business um you know have you have you thought about basic things to create economic independence we have enough cash flow coming from your assets rather than waiting for 30 years through accumulation hoping that the stock market's going to save you so there's a much more comprehensive picture when it comes to financial planning and if you go to uh wealthfactory.com forward slash private you can actually fill out a few questions and and uh you know strengths and take a wealthfactory.com stress test to see how effective is your financial plan because we're bagging on the insurance advisors and i get a lot of it might be well deserved but this is with false or partial information and then just assuming that everyone that sells the mutual fund's a financial planner i hope that he defines what a financial planner is here and so yeah the other thing is that your cash values that are sitting there all die with you so whatever cash you put into this again he doesn't understand that dividends increase the death benefit and if you look at illustrations from many mutual companies you're going to see those death benefits increase over time that's because there has to be a corridor between the cash value and the benefit as that cash value grows it pushes that death benefit up so again he's talking about policies from the 1950s that were flat death benefits and yes when you died you didn't get the cash value but now the death benefit increases over time with those dividends and so i have policies that started it you know when i was really young at a hundred thousand dollars that are now they're worth more in-depth benefit today so it's frustrating these equals zero at your death because they only pay the face value prue does not have a policy um i was talking about prudential i i don't know anything about prudential don't use them don't have any policies with them although i have one with one america mass mutual penn mutual uh you know guardian you know so i've got a few different policies a few different companies and all the death benefits are higher than where they started and all the cash values you know after a certain period of time one of my policies that at four four years actually hit break even i do have something that took closer to five years it really depends on how you fund these types of policies that's why the over-funded kind of thing you see it down there at the bottom of the screen northwestern mutual does not have a policy that pays more than the face value except universal life b's which are not in infinite banking products again he is absolutely incorrect you if you look you're going to see the death benefit grows the death benefit grows he's not mentioning that it's the face value is what you start with but then that that face value grows over time and he's not telling you the whole story and universal product b is where they charge more than they usually charge which basically buys the insurance so they can still keep your money is the way the math actually works on this so you're dealing with one of the most expensive insurance products in the marketplace if you're dealing with either one of those two companies i would stay complete i just say like the way dave views everything is as an expense and there's four types of expenses and this is really helpful to understand one type of expense is a destructive expense so if you're spending money on something that is leading you into debt because you borrowed for it if you borrow to consume that's destructive if you're paying for something you're not utilizing that could become destructive the second type of expense is lifestyle it's just pay cash for those things dave's got a good idea around that you know don't borrow right um so you pay cash for those lifestyle things the third thing is protective expenses this is everything from building up some liquidity and having asset protection or estate planning or corporate structures or insurances so you can transfer risk and then the fourth type of expense is a productive expense to me a productive expenses if i put in a dollar and more than a dollar shows up it's productive and i'm just measuring how productive it is so i'm being maximizing my dollars so he he's just thinking all expenses are the same so he's saying hey if you're going to pay 2 000 a month for a over funded whole life and you could just go spend you know 200 on term well the problem is 98.9 percent of the time that term insurance doesn't pay off so you have those dollars that go out you didn't get to invest them it goes away and you're guaranteed to die one day so what about those people that have a permanent policy that is actually going to pay out when they die they can actually start utilizing those benefits and use it in coordination with other assets in order to increase their cash flow if you go to billionairesmethod.com for a few bucks you can get my book and it actually demonstrates this on the buy net worth don't build it and it's actually showing you how to use assets together in coordination to increase cash flow 20 or in some cases as high as 50 percent so it creates buoyancy and contingencies and all this kind of stuff that he just is absolutely blind to and i i don't know he's never looked at bank owned life insurance corporate owned life insurance you know non-qualified deferred counselors all these other things that the ultra wealthy is always they've always done and the rockefellers are buying policies and then those policies pay off when the heirs die and it keeps replenishing the trust and then they use that in a very tax efficient manner to build their own system where they don't have to use normal banks but he's not talking about any of that he's just saying higher price equals worse product well guess what you can go out there and you could pay for a flight and that flight might only be a dollar but if they don't have mechanics and they use everything that is uh just broken and scrap and they don't train their pilots you're not gonna it's not gonna work you're not gonna make it and so we have to understand price versus cost versus value price is what we pay and some people only look at minimizing that price and unfortunately spend a lot of time trying to save money but they aren't thinking about how to produce value the second is cost cost is the economic impact say i have an account and i have to pay 500 to and there's another account for 250 but the one i paid 500 for saves me 5 000 more in tax well i did pay 250 bucks more but i still had a lower cost even though it was a higher price and then finally is value what value do you have for peace of mind for knowing that it's going to be there that it's not just going to go away knowing that you could access that cash at any time knowing it's protect from liability and bankruptcy knowing you could use an accelerated benefit rider on the death benefit so if you ever need long-term care you can actually use that death benefit while you're alive what about paid up additions and the dividends growing over time and the dividends becoming guaranteed don't want to talk about that so i challenge you to just go to billionairesmethod.com pick up the book read it and you're going to see the second or third chapter i absolutely dispel what dave ramsey and susie armand have wrong and why they believe that it's in their framework and their perspective and that determines what we teach and his perspective is it's expensive and in his world and in the way most policies are designed that's right but you know what there's another 10 of the time that it's absolutely harmful and wrong and if you learn that i think you're gonna end up keeping a lot more money having a lot more safety and dispelling a lot of the misinformation that he's spewing on this video want to continue the path to be a better investor make sure that you're not losing money and taking too much risk well click here and learn about strengths vesting

Channel: Garrett Gunderson

Views: 15,942

Rating: 4.7853308 out of 5

Keywords: Garrett Gunderson, Wealth Factory, Wealth Building Strategies for Entrepreneurs, Financial Freedom, Financial Independence, Getting to economic Independence, what would the Rockefellers do, business, success, entrepreneurship, Is Dave Ramsey RIGHT?!? About Infinite Banking / Garrett Gunderson, Is Dave Ramsey RIGHT?!? About Infinite Banking, Dave Ramsey, About Infinite Banking

Id: 63mPCbe-HIQ

Length: 18min 14sec (1094 seconds)

Published: Wed Jan 13 2021