Episode 271 - Marshall Family Bank

Marshall Family Banking System: The Capitalization Phase

Do you want to build your family bank that will provide capital to you and future generations? Come see behind the scenes as we talk about our Marshall Family Banking System in real-time. 

Today, we’re updating you in real-time to show the impacts of paying another year of premium, how our cash value is growing, and our vision for how we’ll use our family bank as the foundation to grow generational wealth.

So, if you want to see exactly how and why you can grow a family bank to secure capital reserves for your family for generations to come… tune in now!

How Do Life Insurance Illustrations Work

[3:45] “What I want you to understand is that the illustrations are simply snapshots in time. They are the insurance company’s best guess at what’s going to happen. In some periods of time—whether it’s 5 years, 10 years, 20 years, 30 years—[the policies do] better than what they projected. And then some periods of time they’re slightly worse than what they projected.” 

Because of the nature of these projections, illustrations go out of date quickly. As soon as the floor of your cash value increases, your illustration is out of date. First, you’ve “locked in” your cash value floor, which will affect all future projections. And second, every year the companies declare new dividends, which will change the projections. 

Ultimately, when you look at an illustration, it’s a snapshot in time. So although you can trust the general trajectory of your policy, thanks to the good work of the actuaries, it won’t be accurate to the dollar. Don’t get bogged down in the minor details of illustrations. What’s most important is that you find a mutual company with good business practices. 

[9:13] “There are too many people selling on the basis of an illustration, which is a projection, which can look really good up front. But the real reason to have an infinite banking policy is that you’re looking for a place to store cash that is safe, it’s liquid, and that’s growing. And if you’re looking for as much safety [as possible], you want a stable, solid company.” 

A Brief History of the Marshall Family Bank

We’ve discussed how we got into Infinite Banking in other posts, but we’ll do a quick recap for you here. In December of 2012, we opened our first infinite banking policy on Lucas. At the time, we had a pretty sizeable store of gold and silver but found that we weren’t in a position of much liquidity that way. Because the market was down at the time, we ended up losing about half of what we put into those assets. 

This was a major catalyst for us to change how we thought about our savings and capital. We realized how valuable it was to have quick and easy access to your money, as well as protection from market losses. 

In November 2021, we did a 1035 exchange of that policy into a new policy with a higher annual premium of $20,000. Then, about 7 months ago, we opened a policy on me, as previously I had only had term life insurance. That policy has a $30,000 premium. 

When we set up my policy, we backdated it by six months, before my birthday. This allowed us to get more bang for our buck because the cost of the insurance is less the younger you are. It also allowed us to put more capital in from day one of the policy. So our first premium was able to be retroactively applied to when we backdated the policy. Effectively, this allowed us to pay two years’ worth of premiums in a year. 

Maximizing Human Life Value

In addition to our two whole life insurance policies, we also have term insurance that helps us reach our full Human Life Value. This means that we have the maximum amount of death benefit that each of us can have. Even though we’re using infinite banking strategies for our savings, the death benefit still has incredible value. 

Besides allowing us to create generational wealth by leaving a legacy, the death benefit is also about protection. It’s there to support our family in the event of a death. While term insurance may be temporary, with no cash value, it’s an important part of our system because it gives us maximum protection and peace of mind. 

The Capitalization Phase of Infinite Banking

Our policies are now in what we call the capitalization phase. We’re funding the policies so that they can grow and eventually pass the “break-even” point. This is the point at which the cash value equals or surpasses the total amount of premium paid into the policy. During this time, we can access the cash value if necessary, however, we’re more focused on funding this policy. 

For most companies, the break-even point happens somewhere between years 7 and 10, give or take depending on certain factors. While the company may factor into this slightly, it’s more important to pick a strong company than to pick a company that has the best projected break-even point. This can change over time, and it’s more important you pick a solid company you can trust. 

After this point, your cash value will always exceed the premiums you’ve paid (unless you make a withdrawal). This is because the interest and dividends on the policy are incredibly efficient, especially when you’re maximizing PUAs. 

Where the Marshall Family Bank Stands

Here’s a snapshot of where the Marshall Family Bank currently stands:

  • Total Whole Life Premiums Paid: $160,673.54
  • % of Premium as Cash Value: 87.75%
  • % of Premium Available to Loan: 76.35%
  • Total Cash Value: $139,376.37
  • Total Cash Value Available to Loan: $122,674.23
  • Total Loan Balance: $0
  • Total Whole Life Death Benefit: $1,495,721.35
  • Total Term Death Benefit: $5,508,960.00
  • Total Death Benefit: $7,004,681.35

As you can see, the cash value of both of our whole life insurance policies have almost caught up to the total premium we’ve paid. Last year, the percentage of our premium available in cash value was only about 75%. And the cash value grows every single day, which means in the near future we’ll be able to see that percentage reach 100% and even cross that threshold.

Our loan balance is at zero because we’re focusing on this capitalization phase. We’re working on building our family bank up first and keeping it as liquid as possible for emergencies and opportunities. 

[1:04:34] “What’s really amazing is that we know where we’re going. And where we’re going is having more cash value than we’ve paid into a policy. Having more death benefit, should we pass away, that would pay into our trust that would be taking care of our children. We have a plan for continuing our family legacy and the financial resources to do good for generations to come in the future. And so, getting started capitalizing a policy might not be the most fun portion of having a life insurance policy, but we’re looking forward to those years ahead where we’re going to be able to say, ‘We’re so grateful that we did this.’”

Other Installments of the Marshall Family Bank Series

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 the Infinite Banking Concept 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.

Rachel Marshall

Rachel Marshall is the Co-Founder and Chief Financial Educator of The Money Advantage and President of Marshall's Insurance and Financial Services. She is known for making money simple, fun, and doable. Rachel has built a team of licensed professionals (investment advisors, insurance agents, attorneys, tax strategists) to help her clients create time and money freedom with cash flow strategies, Privatized Banking, and alternative investments. Rachel is the co-host of The Money Advantage podcast, the popular business and personal finance show. She teaches how to keep more of the money you make, protect it, and turn it into cash-flowing assets.
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