The 5 Rules of IBC, with David Stearns

So you’ve decided to buy a specially designed whole life insurance policy. You’re working with the right advisor, you have an excellently designed policy. But one day you think: How do I become the best banker I can and use my policy to its fullest potential? To get the most out of your IBC policies, you must follow Nelson Nash’s 5 Rules of IBC. Here to unpack these 5 principles for IBC is David Stearns.

David Stearns is Nelson’s son-in-law and president of Infinite Banking Concepts, LLC. He is carrying on Nelson’s legacy both professionally and personally.

If you want to learn from the best, this is as close to the source as you can get… so tune in now!

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Continuing Nelson Nash’s Legacy

Nelson Nash was the innovative creator of the Infinite Banking Concept and the Author of Becoming Your Own Banker. Now, IBC and the Nelson Nash Institute continue to educate people about IBC and how life insurance can play an instrumental role in personal finance. The company is now headed by David Stearns, Nelson’s son-in-law, who we have the pleasure of speaking with today. 

David joins us today to share the 5 Rules of IBC that Nelson shared, and how he interprets them today.

[22:30] “Whole life insurance is not glamorous–okay, number one. Number two, it’s hard work because you’ve got to make the effort to build your portfolio over the years.”

The Evolution of the Nelson Nash Institute

Nelson Nash saw IBC as a way for people to get their money out of Wall Street, and have greater safety, liquidity, and leverage. Nelson was so passionate about IBC that even at the age of 85 he was doing dozens of seminars a year, teaching people about IBC. 

These seminars were hosted by insurance agents and other financial professionals all over the country. They’d hire Nelson and fly him out, and he’d share his wealth of knowledge with whoever was in the room. But, according to David, no one ever really asked the question: what are people doing with this information? 

Because the reality was, people were applying the information to the wrong life insurance products. Or, agents were sending non-selling associates to listen to the information. There were just too many instances of the IBC message being watered down or twisted into something it wasn’t. But, they were still using Nelson’s name.

That’s when David Stearns and a few others got together and decided that it would be critical to the future of IBC to implement a standard. That standard would become what is the Nelson Nash Institute and the IBC Practitioner Program, which was meant to hold advisors accountable to the information Nelson offered. 

This would ensure that advisors couldn’t co-opt Nelson’s message, nor morph it into something that it isn’t meant to be. 

How to Find an IBC Practitioner

If you are ever interested to know whether or not you’re working with or connecting with an IBC practitioner, there’s a database you can check. The IBC Practitioner database is extremely useful in verifying who has been through the training and whether they are adhering to the rules and standards of IBC. 

The benefit of working with someone who is in the program or completed it is that you can be sure of their character. An IBC Practitioner will have all the values that Nelson Nash and IBC have shared and cultivated. Those in the program also get the benefit of working with other Practitioners to boost their knowledge and skills. This ensures that the training is solid and standardized. 

The fundamentals of IBC are critical to the success of an agent and their clients, so it’s critical that you work with someone who upholds those fundamentals. 

David Stearns Shares The 5 Rules of IBC

As David mentioned, IBC takes work. While you may be able to automate your premium payments, it’s not quite a “set-it-and-forget-it” product. You’ll have to work on it over time and be diligent in how you use it and construct your money habits. 

Below are the rules of IBC that Nelson Nash came up with, at IBC Practitioners learn. 

Think Long-Range

Long-range thinking is one of the most important fundamentals of IBC. Not only does your IBC policy take time to be at it’s best, it’s going to be something you use over your whole life. And more than that, it’s a seed you plant for future generations: your children and your children’s children. 

This is a wealth-building strategy and legacy that takes time and effort and intentionality. This is the gift of IBC—wealth building that benefits you now and later.

Don’t Be Afraid to Capitalize

It’s up to you to determine the purpose of your money. Likely, to some extent, that purpose includes being able to have experiences with your family or to do things you enjoy. Or, you may have the desire to invest in assets that will further grow your wealth. That’s all a part of financial freedom. Don’t be afraid to use your money or take a policy loan, that’s what it’s there for. 

Of course, there are ways to be more efficient and wise with how you capitalize on your cash value. However, you should not be afraid to use your money for things that matter to you. 

Don’t Steal the Peas

“Don’t steal the peas” is a reference from Nelson’s book, “Becoming Your Own Banker.” By this, Nelson simply means that you shouldn’t shortchange yourself just because you can. If you owned a grocery store, in theory you could simply take something off the shelf—like a can of peas—if you wanted to, without saying anything. After all, it’s your store, who cares, right? 

Yet when you steal those peas, you’re directly impacting your grocery store’s bottom line. Even if you don’t think it’s a big expense, it makes an impact. The same goes for policy loans—you have the flexibility to pay your loan however you wish. However, if you don’t come up with a responsible repayment schedule for yourself, you’re stealing the peas. 

For the best results with IBC, you have to be a good steward of your money and your IBC policy. That means being a good steward of your loans and your policy. Making your PUAs when you can, paying the annual interest, and other actions keep you from stealing the peas.

Don’t Do Business with Banks

Part of Becoming Your Own Banker is just that… becoming your own banker. You are creating a system of wealth that you can leverage yourself so that you have the control and the power. Why would you want to put that control and power back in the hands of the bank? What you don’t want to do is use your policy for collateral with the banks, because you can already do that with the insurance company.

Re-think Your Thinking

Be willing to see the world in a new way. IBC requires that you throw away popular financial beliefs about debt,  investing, and Wall Street. You’ve got to be open to seeing the world and finances in a new way, and then implementing that.

Bonus: Be Prepared for Windfalls

As important as it is to be a good steward of your IBC policy and pay down those loans, you also want to have a place for windfalls. This could be windfalls from an inheritance, the lottery, or even a large unexpected bonus. 

One way you can be prepared for a windfall is to have a policy loan. Then you can use that windfall to pay the loan back. You can also open a new policy with a windfall, or contribute it to your PUAs.

The point is that you want somewhere to store a windfall where you can benefit from it, without squandering it. Because most people, when they get a windfall, end up spending it within a few years, and that’s not good stewardship. Be prepared and have a game plan for unexpected money. 

About David Stearns

David Stearns is Nelson Nash’s son-in-law. Nelson recruited David to help with the administrative side of Infinite Banking Concepts, LLC in June 2004. Nelson asked David to take over the company to continue the IBC legacy in 2009.

David retired from the U.S. Army as a Lieutenant Colonel. David served 27 years in the Army, first as a field artillery officer, then as an Army aviator. As with all military officers, he had a variety of assignments including command, operations, safety, and systems analysis/operations research. David served throughout the Continental U.S. and worldwide with a long tour in Egypt and multiple deployments to Germany, Korea, and Kuwait.

David is the President of Infinite Banking Concepts LLC, which controls the distribution of Becoming Your Own Banker and Infinite Banking Concept materials, copyrights, and trademarks. IBC LLC manages the administrative activities of the Nelson Nash Institute.

David has been a Director of the Nelson Nash Institute since the Institute’s formation in 2013.

David graduated from Buffalo State College in 1975 and received a Master’s of Public Administration from Auburn University, Montgomery in 1992.

He has been married to Kimberly Nash Stearns since 1979. They live in Birmingham, Alabama, and have four children and eight grandchildren.

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