IBC and 'Key Person and Executive Bonus' Insurance Planning

Posted as written by Richard Weizeorick (May 2012) - MTL Financial Group Life Success and Legacy can help your business plan for key person life insurance via the use of Infinite Banking Concepts (IBC) as taught by Nelson Nash in Becoming Your Own Banker. How does a business protect its assets? Normally when you ask this question, most people think about the building, office equipment, supplies and salable material, so the answer is by purchasing fire and casualty insurance. But what if the assets are the people who keep the business running on a day-to day-basis? These are the people whom the business relies on to make the management decisions, handle the finances or have that special rapport with customers and creditors - a key person. Definition A key person is usually a highly paid employee or owner who is responsible for management decisions, has a significant impact on sales, and has a special rapport with customers and creditors. If the key employee should die suddenly, the business would suffer a loss of the person's management skills and experiences, and loss of sales and missed business opportunities. In some cases, his or her death could even cause credit difficulties, including missed payments, deposits or a creditor's reluctance to extend credit. How it Works Key person life insurance is a life insurance policy purchased and owned by the business, on the life of the key employee. Upon the death of the key employee, the insurance company pays out the proceeds to the business, providing an immediate source of funds to the business. While there are many advantages for a business to own key person life insurance, one disadvantage is that because the business is both the owner and the beneficiary of the policy, the premiums are not tax deductible. Key person life insurance is not a specific type of policy, but a way to use life insurance to offset a business risk. By using a permanent, participating life insurance policy, set up in the IBC way, the policy not only pays a guaranteed death benefit, but it can also be a valuable asset to the company’s balance sheet because of the policy's cash value. More than a Death Benefit Key person life insurance can even benefit a business if the insured doesn't die while employed by the company. Some added benefits are that the company can access the policy's cash value for other purposes, the cash value can be used to demonstrate financial stability to creditors, or it can be used as collateral for a loan. If the key employees are also the owners of the business, the policy can help fund a buyout of their interest in the business at their retirement. In addition, if the policy isn't needed to protect the business, it can be used to provide deferred compensation funds to the key employee. The bottom line is that key person life insurance can serve a number of uses and benefit a business both during the key employee's life, as well as after his or her death. Key person life insurance is a simple concept: it's life insurance that insures the life of a person key to the success of the business against unexpected death. It pays the business the death benefit so that it may cover the additional expenses associated with hiring and training a replacement for that employee. For a complimentary analysis of what this could mean for your business contact me at mzimmeribc@gmail.com.

IBC or 529?

...College Savings Food for Thought

What is a 529 College Savings Plan?

A 529 college savings plan is a tax-advantaged state-administered investment program that is authorized under Internal Revenue Code Section 529. These plans allow investors to save money in an account in which the earnings will grow free from federal income tax and, when used to pay for "qualified higher education expenses", may be withdrawn federal income tax-free. In many states, a participant can receive special state incentives, including state tax treatment that mirrors the federal tax treatment, tax deductions/credits and/or other state tax benefits, based on participation in their state’s program(s).
Earnings in a 529 plan grow tax-deferred and are free of federal income tax when used for qualified higher education expenses under Internal Revenue Code Section 529 (26 U.S.C. 529). Qualified higher education expenses include tuition, mandatory fees, books, supplies, and equipment required for enrollment or attendance. Room and board expenses are also eligible for students enrolled half-time or more based on the current allowance for room and board determined by the eligible educational institution for federal financial aid purposes, or actual invoice amount charged by the institution to the beneficiary, if greater. In addition, qualified higher education expenses also include expenses of a special needs beneficiary that are necessary in connection with his or her enrollment or attendance at an eligible educational institution.

What are the tax benefits?

Earnings on non-qualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes.   Additionally, most states allow tax-deferred earnings and tax-free withdrawals for qualified higher education expenses, and some states allow families to deduct the full or a partial amount of their contribution from their state income taxes.

While many aspects of 529 plans sound very appealing to "the masses," how we think about what is going on here is vitally important.  Note that in the above descriptions I've highlighted each brief segment points us back to the idea that someone else (our government) is in control of the flow of our investment dollars going and coming.  This is really the fundamental difference between this seemingly benign savings plan and having true, 100%, control of your cash flow in every way including college savings.  If you were to engage the IBC teaching videos on this page you would receive a healthy quick education on how IBC promotes flexibility, versatility, and freedom.  If you read the above on 529 plans you have to ask yourself - am I getting those three values from this college savings option?

Further, once a 529 plan is exhausted of funds on use of school/educational purposes what do you really have to show for the savings (other than a diploma)?  With IBC as your college savings option, you not only have a safe cash growth environment, use of cash for anything in life including college, an ever increasing pool for wealth building beyond college and a financial tool for retirement and generational legacy.  All this happening with 100% access and no penalties to access funds. Finally, an IBC plan allows for you to apply for FAFSA funding while not being required to report your dollars on the form. Simply stated, IBC is truly a strong consideration for college funding and wealth building beyond college providing versatility, flexibility, and freedom.

  

Millenials and Retirement

...The Pluses of Using an IBC Plan...

For members of Generation Y (Millenials), people born between 1983 and 2000 retirement is but a gigantic far-off dream and knowledge of how to retire using an IBC plan OR using the cash value of a participating whole life insurance policy as supplemental income may be even more foreign and probably a bit, if not a lot, very old fashioned.  Yet, for this generation there are no gold watches as symbols of long-held employment over a significant time period. There may be no huge lump sum pensions to grab and for all practical purposes (as far as we know) possibly no Social Security funds to access. Indeed Millennials will probably hold 10 or more jobs by the time they are forty (Chicago Tribune, July 8, 2013), and they know that wealth accumulation will probably come about only by maintaining an "entrepreneurial" attitude about where to tuck money for they days of retirement.  A real "do-it-yourself" nature will be the vanguard of this generation for retirement savings/planning.

While most companies will offer some kind of 401(k) alternative as employee benefit, there are plenty of strings attached to tax qualified monies (even though it sounds cool that employers will match contributed dollars).  The glitch on this among several is the job changing.  A trail of 401(k) plans makes it hard to keep track of funds accumulated in some cases.  Job switches, start ups, second careers, promotions and bonuses, underemployment, all add to the idea of retirement funding being hard to track or maintain funding not to mention that funds are not really in your full control.  

However, with an IBC plan, funds are in full control of the contributor, NOT subject to minimum distributions, penalties for early withdrawal, or other restrictions typically associated with formal retirement accounts. An IBC plan is essentially life insurance with a participating whole-life insurance company. It is designed to demonstrate that our need for financing, cash flow, and retirement funding is greater than our need for death benefit which we'll only need once, and, it is implemented so that Gen Y can place funds in a steadily growing financial vehicle that allows for accumulated wealth using non-tax qualified money for funding.

One final thought - using an IBC plan can account for debt reduction for Gen Y WHILE simultaneously allowing for a ever growing retirement plan. If you are someone born between '83 and 2000 and concerned about retirement funding, please contact me.

 

Managing Pastoral Stress

...A Financial Perspective

I just finished reading probably one of the best, if not the best book, on stress management as it relates to the pastoral service in the local church.  Authors David and Lisa Frisbie have just released Managing Stress in Ministry with Beacon Hill Press and this one is well worth the copy price. I get no monetary "perks" from conveying my positive feedback for this great NEW release! The true reasons I post this today is because David and Lisa offer "real time" clinical (not too heady) advise on stress and they offer great "real time" examples of pastoral stories that fit perfectly for how to assess and address stress triggers.

The engaging stories of pastors and churches, the chapter on pastors in bivocational situations, and the final chapter on Stress Reducers are my favorite parts of the book.  I will say that one of the stress reducers helps in the book calls for pastors to build healthy financial margins.  This is a BIG-DEAL for me because as a teacher/coach of the Infinite Banking Concept I deeply desire to help pastors struggling with being able to build those financial margins so they can reduce that area of stress level.  If you are reading this brief blog and happen to be a pastor, and would like to contact me about reducing financial stress, your call to me would be welcome.  I know I can help.

Back to the book - I hope you'll place your order with Beacon Hill and allow David and Lisa to encourage your heart and nudge you closer to ways you can handle the stress in your life better.  God bless you.

The Cost of Living

...1966 or 2014?

Paying out the nose at the pump.  Beef, chicken, eggs, bread, all rising in price.  Utility prices jumping. The value of our dollars shrinking.  Is it 2014? No it's 1966 and Paul Poirot is commenting on rising costs of living in October of 1966.  His comments are found in The Cost of Living that I stumbled upon recently on the FEE website.  The first FOUR paragraph's sound like something that could have been written - YESTERDAY.


Poirot's thoughts easily translate to today's public sentiment that it simply seems like the cost to live just keeps rising, and rising with no end in sight. So, in this economy of rising costs and a constant barrage of federal government "solutions" streaming at us in the form of new retirement safe guards/strategies like MyRA and so on, how can we step back and rethink what is going on around us and come up with a viable solution to face our American feelings of dissolution about being able to retire comfortably? (Employee Benefit Research Institute 2013 Retirement Confidence Survey)

I would point you to Exhibit A: The infinite Banking Concept and Nelson Nash's book, Becoming Your Own Banker and Exhibit B: Emailing me to get YOUR link of how YOUR financial situation might improve by using an IBC plan for retirement funding and cost of living funding now and in the future.

The cost of living is rising, but you can do something about returning more dollars back into your pocket.  I'd enjoy hearing from you soon or to fulfill your order to receive Nelson's book for more insight.

Do You Need a Brick and Mortar Bank?

What if you were that bank on the corner?

Recently I had a conversation with a Kansas City business entrepreneur who is doing quite well for herself. Her business model is sound and she is already thinking about where her business needs to be in a year - in five years - even in ten years.  We were talking about the constant question of financing huge ticket items/equipment needed for her business to expand to meet the demand that is certainly growing.  One comment she made was the idea that she likes her local bank, the people, the service, etc. But there was that "but" in her next thought.  "It's sometimes a challenge to get a needed loan."

At this point I asked her, what if she could become the lender and borrower of her finance needs?  With this question came peaked interest and conversation.  She went on to describe how nice it would be if SHE could in essence, become both borrower and lender of the capital she'll definitely need.

This shared conversation begs the thought then of whether YOU need a brick and mortar bank? Oh, I'm not talking about daily cash flow banking.  I'm referring to the need for a brick and mortar bank to finance the things in your life or business?  To be fair, I like my local corner bank, but through the power and implementation of Infinite Banking Concept, I'm making it my family goal to not use my brick and mortar bank for loans I need for cars and other big ticket items.  My goal, is to use my Infinite Banking system to do this for me, and as a result, I'm funding those items and paying for them and in turn ensures that I can purchase those items and return money loaned at a time frame, interest rate, and amount that suits me.  The control is all mine, not my corner bank's control.  I like this feeling.  I like this lifestyle.  I like that my IBC plan allows me the freedom to build wealth, finance items needed and desired, and all in a system that is outside traditional lending practices and VERY sound.

So, what if YOU could BE that corner brick and mortar bank?

I can show you how.  Send me an email or give me a call today.

IBC and Too Good to Be True

I recently returned from Birmingham, AL, having attended the Infinite Banking Institute annual Think Tank. Unique to the event is getting to hear from well known Austrian economists Nelson Nash, Carlos Lara and Robert Murphy.  My "take-aways" from hearing these three men is the message of sound money solutions that are needed in every home and in our nation as a whole.  Another included the mounting debt we continue to incur in homes, in post-college years, and again, as a nation.  The national debt is a scourge on our generation and future generations.  This is something it would seem that is inescapable - or is it?

As I sat in Birmingham and listened, these men also shared that sound money solutions can take shape in every home, large debt loads eliminated, wealth can be created, generations can be left in better shape financially.  How? Through the understanding and implementation of the Infinite Banking Concept or IBC.  Now, these men, and others I know, have tried traditional financial products offered by banks and Wall Street.  But without question the soundest and safest vehicle for money use they have found is in the use of IBC as taught in Nelson Nash's book, Becoming Your Own Banker.

Problem - getting this message of IBC to the masses.  Second problem - Getting the masses to think in ways they would not normally think about money.  Final problem - Getting masses to move beyond thinking that IBC, and how it functions, is "too good to be true."  Listen, I sat around a table full of men and women in Birmingham that teach and coach IBC daily AND make a living doing it.  Admittedly, when my wife and I first began to contemplate IBC in February 2008 we thought, maybe as you, "this has got to be some sort of joke, trickery, too good to be true."  Six years later we cannot think of one single decision we've made that was better than IBC other than to continue to love and serve our Lord and Savior as local church pastors.

"Too good to be true" is out there running rampant in our society through a wide variety of financial products and services, but I can assure you, IBC is not in that camp.  IBC employs sound money principals using a 250+ year old financial instrument that has stood the test of time.  MANY, wise men have tried to disprove IBC as a viable debt elimination, wealth building and financing process, but try as they may - it just works.  For your FREE report of how IBC could work in your life call me at 816-588-2328 or email me at mzimmeribc@gmail.com and ask for more information on how IBC and your current financial status can paint a clear and bright future for you and your family.  It seems "too good to be true" but is works!