StackedLife - Authorized Infinite Banking

2026 IBC Think Tank - Podcast Version
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[00:00:00]

Introduction & Speaker Bio
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Jeremiah Dew: All right, ladies and gentlemen, we have our next keynote speaker coming to the stage right now, seven years as a practitioner and 20 years prior to his journey through Infinite Banking concept as a data center real estate guy looking at institutional investors, working with them in the Silicon Valley area.

And he's going to make sure you are all that you can be today. Let's give it up for Mr. John Perrings with Be bold sir.

John Perrings: Something, also that has been great over the last few years.

The Problem with High Early Cash Value
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John Perrings: The Nelson Nash Institute, I think has done a really good job focusing, over the last few years and really addressing, the topic of policy design, and really recentering all of us, back on the idea that The Infinite Banking Concept is not just about designing policies for high early cash value.

Obviously early cash value is [00:01:00] important, of course, overly focusing on it though takes us away from thinking long range, which is obviously this year's theme of the think tank and, it's all in the name High early Cash Value. So there's still a good amount of noise out there around this, there, there's, I think, this false assumption that higher early cash value automatically means there will also be higher, late cash value.

and it's based in the status quo investing mindset, which is, the more you have now, the more there will be to grow and compound, which will means there will be more later. And in an investment account, assuming positive growth. Of course, that's true, right? But something we should all I think, likely agree on.

We're all trying to, fight the status quo, dave Ramsey type of noise out there. And what do we know? Life insurance is not we, right? We know it's not an investment, it's not an account [00:02:00] either, right? It's a life insurance policy. And everything related to the policy is actuarily calculated based on a guaranteed future cash flow, which is a death benefit. Over the past several years.

many of us, including James Nethery, Ryan Griggs, just to name a couple, there have been a lot of great ones. they've done a really great job demonstrating that not all things are equal when it comes to buying life insurance. And so I'm gonna just talk about the concept of, I just call it a more balanced policy design, and you'll see what that means here in a second.

But a more balanced policy design generates better results long range. And what I've found though is that, there are, I think, are a lot of advisors that tend to agree with this in principle or want to agree with it. They have a hard time putting it into practice with clients. They don't necessarily have the tools or the language to convey to clients how whole life insurance can be an incredible, [00:03:00] financial asset without resorting to the high early cash value conversation. On the internet,

there's still plenty of talk about this. They talk about, correctly designed policies or efficient policy design, which is really just code for high early cash value. And I'm just gonna say a couple things about high early cash value. I'm not taking shots here, but this is what I think about it.

Max funded Overfunded "10/90", whatever you wanna call it, with a hyper fixation on year one, cash value. It's a race to the bottom. My first job outta college. I'll talk about my Silicon Valley experience here in a second. My first job outta college though, was a door-to-door salesman selling long distance services to businesses.

So there some people in here that probably remember long distance. that's not really a thing anymore. And, it was a commodity sale. I was a, 24-year-old kid and a, and I owned one suit going door to door, selling long [00:04:00] distance, trying to sell 10 cents a minute. And it's a commodity sale, for the lowest rate.

And to me. That's what selling high early cash value is like. It's the 10 cents a minute sale of life insurance. 10 cents was pretty good back in '98 by the way. or if you've ever gone on any of the real estate forums, people hating on "key jockey" real estate agents, they show up and they get a pretty good commission for not doing, not much more than unlocking a door so people can look inside.

And so I think, one of the things is do we want to be the key jockeys of life insurance? if all we're bringing to the table is a high cash value, high early cash value policy, which by the way, literally anyone with a life insurance license can do. If that's all we're bringing to the table, are we really offering that much in value to the clients?

Or are we just adding to the ever increasing circle of noise that's part of the "financial hack" culture is how I see it. It. So if this is something you've been, if it's been on your mind for [00:05:00] whatever reason, maybe you're doing this and trying not to do it or don't want to do it, or maybe you're already not doing it and just maybe you'd like to not do it a little bit better.

I'd, like to build on some of the great presentations of the last few years and share with you my experience in successfully recommending more balanced policy designs to truly better honor long range thinking. So in the rest of this talk, I'll talk about how IBC syncs up with my experience in the data center space.

with my background, we'll talk about how high early cash value, how we get that and what the trade offs are. We will expose a little bit of the truth around like what base premium actually does for a policy. And then all throughout the talk, this isn't just me trying to

say, Hey, this is bad. I just, I'm gonna share with you snippets of language that I've used, over the years that, I've just I've learned from other people and, massaged it into my own talk. And it's really [00:06:00] helped, convey to clients about thinking long range in a way that's not just paying lip service to it.

It's a way that, inspires clients to actually want to implement it. And so the goal for all of this is really just to give anybody who wants it or needs it, or both, the confidence to talk to clients and orient them in a way of, to talk about what we're doing with IBC and whole life insurance, without having to resort to one trick pony type conversations.

Silicon Valley Background & Institutional Investor Lessons
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John Perrings: if we haven't met yet, my name's John Perrings. I implemented IBC in my own life about, over a decade ago. I've been in the business for about seven years, and this is my second career. Before this, I had a 20 year career in Silicon Valley, in the tech industry with a background in cloud and data centers.

so I've been around for a little while. I started in tech, in 98, in the late nineties, just in time for that DotCom bubble to pop. So that was a good way to start off my career. [00:07:00] And, I was selling cloud services before it was even called the cloud. It used to be called application service provider,

and then it eventually turned into the cloud. And then, a lot of that time was spent on the actual infrastructure of Cloud, which is, data center, real estate, finance, and then finally mechanical and construction. So here's a picture of me in front of a few. this may probably won't mean anything to you, but it's two custom, 200 ton computer room air conditioners, also known as "CRACs" that I designed and sold to a data center in, where the Canadians, Calgary, Alberta. It's boring to look at, but like a normal size one of those would come up to my shoulder maybe. And so in there, there's a gigantic coil, a gigantic screw compressor. And I know you guys don't care about this. This isn't a HVAC conference, but this is, that, that's like one of the things I did.

So that was a pretty good run. And before that I was a real estate agent focused on data center, real estate assets. So I would, I would, broker deals for [00:08:00] data center, real estate. Data centers are their own class. Now, everybody's probably heard of 'em and maybe don't know what they are, but they're probably closest to power plant development than anything else.

And so I'd be involved in, or I would consult on these big data center real estate transactions where an institutional investor would come in, buy a data center, and these could be, 3, 5, 10, $50 million transactions. Of course, now they're more like, hundreds of millions, even billions.

But, what I learned from working on these deals is big money institutional investors. I learned what their priorities are and their top two priorities when looking at these transactions were not rate of return. Their top two were control and risk. Of course, cap rates and rate of return

were a very close third, but, their top two concerns were control over the asset and the deal itself, and minimizing the risk of owning and operating that [00:09:00] asset, which makes it a high quality asset. And this is completely counter to what we learn as individual investors, where we've been taught for generations now that we have to take high risk to get a high return.

Everyone, is already fighting that. And this is really the first thing that kind of started me on the path that I'm on now. It's like the spark. I didn't know it then, but it's the spark that kind of led me to this because I saw a big disconnect between people that are, taught as individuals, what they're taught, and what I see, what I saw people with actual big money doing with their priorities as institutional investors. Control and risk were their top two priorities because they knew if they had control over a high quality asset, meaning low risk,

they could create multiple returns off of that same asset. The return that they get on an individual acquisition is not as important because if it's high quality, low risk, they can use that asset to safely leverage and finance the acquisition of other assets that [00:10:00] just roll up into the same company or some subsidiary and create massive returns in that way.

They use the value of a high quality asset to create returns outside of that asset. They're using the same value over and over again to buy more assets, which expands the system and increases their capability over time. The Infinite Banking Concept was what finally connected what I saw as priorities in institutional investment space with something that we can actually do at the personal level. Because, it's pretty much the same thing that we're doing with IBC, isn't it?

Like we strategically capitalize with ultrasafe whole life insurance to get leverage and better control than you can get anywhere else. Safety and control over our capital. It's the same thing that I saw the institutional investors doing finally. So I was finally able to connect that. And so we don't have to try to make getting the best return on the first asset or any individual asset or number [00:11:00] one focus we buy for safety and control over a super high quality asset that then we can then get some leverage to create even more growth on top of that, outside of that initial acquisition.

The safety and control gives us the ability to expand the system. Meaning that's where the growth comes from. The rate of return really only assists. So why am I giving you all this detailed background on my data center experience and all that? We talk about becoming our own banker, and I think we understand philosophically and tactically how to do it that we're taking over the banking function.

IBC as High-Level Financial Strategy
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John Perrings: The truth is, I don't really know anyone in our space who is ever actually a high level banker or an institutional investor. You might be out there, I'd love to meet you. But by the way, I wasn't one either, but, I worked with them. The idea here is I want to just give you, if you want it, more confidence to speak about IBC as an overall process that sits at the highest levels of financial strategy.

[00:12:00] I saw it. I know it to be true. The Infinite Banking Concept is not a hack. It's a tried and true process used by organizations at the highest levels of finance every single day. The only difference between them and what we're doing is we're just using a different asset class to kick off the process.

An asset class that you don't have to have deep pockets to get started. But because this idea is so foreign to the typical consumer and because all the strong opinions about whole life insurance, the message can be difficult to convey, right? So how can we tether our message to the most successful financial orgs in the world in a way that makes sense?

And so we don't need hype and sensationalism to promote IBC, we just need to orient clients to what's actually happening with the process itself. L So now that we've conveyed what whole life insurance is, we also need to help them understand what it's not.

And it starts getting into some of the things we'll talk about with long range policy design. But in order, life insurance is not a bank, it's not an [00:13:00] investment, it's not an account. It is a life insurance policy that's a private contract between you and the insurance company, and it's created based on a contractually guaranteed death benefit paid by the life insurance company that you have to qualify for with your health and your wealth.

Because of this, everything having to do with life insurance is a trade off, and that's in fact true of all insurance. many of Todd Langford, I get this from him and his mentor, Norm Baker. There are no deals in the insurance business. Everything is a trade off between cost and risk.

I know there's some differences of opinion. Some people don't like calculators. There's been differences on interest rates, et cetera, et cetera. But that's true. And practically speaking, what this means is there's no super secret, correctly designed policy that somehow gets you something for free.

Everything's a trade off, and if more people took this to heart, I think there'd be a lot more long range thinking out there in the cash value life insurance world. All [00:14:00] right, so let's talk about, let's talk about high early cash value max funded overfunded, "10/90", whatever you wanna call it. If the code name, efficient policy, design, all that stuff.

The Three Ways to Get High Early Cash Value
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John Perrings: There are really only three ways to get it. These are macro-level, designs that all of them end up really being the same thing with the same problem that we'll get to. You have short pays, which are policies designed to pay only for, maybe five, seven years, maybe 10 years, and then no more premium can be paid if you've got short PUA duration policies where you max out the PUA ratio for maybe five to 10 years, drop the PUA to prevent a MEC, and then you continue paying a relatively small premium after that.

And the third way is to use a lot of term over a long period of time. Term insurance allows you to pay a full, high PUA ratio premium for a long time. But there's the term on there, which is a cost not against term. I'm gonna show term. I'm just, saying how it's done.

So let's look at short pays. [00:15:00] Often short pays are sold as positives that people will say, Hey, look, all you have to do is pay a premium for seven years and then you're done. You never have to pay another premium again. And it's like you never have to pay. The reality though, is that oftentimes you can't pay anymore.

And I always think like, why on earth would that be considered a good thing? You're telling me that, right as this policy is starting to fire on all cylinders, meaning the costs have been overcome, every dollar you pay in premium creates more than one new dollar of cash value. Why on earth would I wanna stop putting money there?

Why would I want to stop, right as this thing gets awesome.

So it's, this is often where people are told, yeah, okay, you have to stop paying on this one, but this is when you buy your second policy and then maybe your third down the road and you start building your "system of policies." And first of all, I would say that's, I don't think that's what Nelson meant by system of policies, but also even, aside from that, you know that's true if you still qualify. [00:16:00] And only if you still qualify.

Ryan Griggs. Okay. Check out his recording in, your practitioner portal. There's a just quick link to it. his talk in 2023. He showed what I'm starting with here. I didn't duplicate what he did or anything, but it's the same, it's the same talk that I'm starting with. And I'm gonna try to, I'm gonna try to build on that even further.

And then again, just share the language. I used to convey some of these ideas. When he gave that talk in 2023, I came to those same conclusions before that talk. And I'm not, saying that like I don't need Ryan Griggs to, that was an awesome talk. But what I'm saying is everyone should be coming to those same conclusions.

Why didn't everyone already have those conclusions? The information's there, the data's there. All you gotta do is look at it. So that these are, some of the things as professionals and experts in our space, I think. I think it's important.

Policy Design Comparison: Short Pays vs. Long Pays
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John Perrings: So here's what we're gonna do.

We'll assume you can [00:17:00] always qualify for life insurance. You can, and you can buy a seven pay policy designed for high early cash value today, and then another one in seven years, another one after that. We'll do that five times for a total of 35 annual premium payments, and we'll just compare that to a single, I don't know if there's really a name for it,

a 35 pay or a long pay, where I pay 35 annual premiums on the same policy. In each scenario, it's a 40-year-old male. They're gonna pay 20 grand a year over 35 years. We're gonna analyze it for 50 though. The only difference in scenario one is one will be broken up over five seven pays, and scenario two will be 35 payments to the same policy.

The seven pays are roughly in that "10/90" base to PUA area, and the single pays in the 50/50 type of range. They both have term riders with enough terms to support the PUA without MECing the policy.

All right. So here's a chart of the cash value over 50 years to age 90, [00:18:00] the short pays are in orange, and the long pay is in green. Is this a surprise to anyone? The most more balanced design approach has a little bit less cash value in the early years, A little bit more in the later years.

But when we zoom out and look at the big picture, this is what all the fuss is about. What are we all arguing about? There's not much difference. It gets back to what I was saying earlier about how with typical investor mindset, if you have more to compound early on, it logically follows that you'll have more later, right?

With that mindset, it's not surprising to think that high early cash value should lead you to have high late cash value, but it doesn't. Does it? It's because it's not an account. It's a life insurance policy. It's an actuarial calculation. It's a math equation. And by the way, like I'm, not discounting, at all, the lost opportunity cost of having less cash, that if we were able to zoom in on this, [00:19:00] you'd see there's less cash with that orange line that, that's real.

Not discounting that. But this chart isn't the end of my talk. It'd be funny if it was right. It'd be like two lines, just walk off. It's not though. I'm gonna, I'm gonna build on this chart a little bit here. And first I want to show something about base premium versus PUA. Other people have talked about this as well.

Base Premium vs. PUA: The Real Story
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John Perrings: We have a lot of PUA in the green numbers. All base premium in the blue numbers. And check out these annual returns on high PUA versus base premium. These are the annual returns, meaning what the premium did for the cash value growth in that year, not internal rate of return, which accounts for the previous years.

We've got a Max PUA policy on the left. The same policy in the middle where I dropped the PUA Rider after five years. And then just for fun to compare an all base policy with the same premium to show you what that looks like. Look at the annual returns of the base premium.

They're actually a little bit better than the PUA premiums. Not a lot better, but they're not [00:20:00] worse. So the only point I'm really making with this particular slide is, all this talk about high PUA designs, it's pretty clear, base premium is not the problem. What we have is a timing problem, especially in the first four years of this all base policy,

that's pretty bad. And then we have a premium amount problem in the case of the middle policy, if base premium builds cash value every bit as well as PUA after year five, I don't wanna reduce my premium down to 10%. That's crazy. By taking a more balanced approach, you do start off with a little less cash value.

Like we don't have to hide that. It's true. But because you can continue to pay a higher premium for longer, you end up with significantly more cash value long term. And I know those two lines were equal, but I'll show you how we get there. Okay. Now that we understand that base premium is, is not something to be afraid of, let's [00:21:00] go back to our chart and we can see the base premium conversation starts to connect some dots. And this chart, we start to understand why this chart looks the way it does. Okay? So again, right now these lines are pretty similar, but this isn't the end of the story.

Expanding the System: Income Growth & Policy Potential
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John Perrings: The orange short pay, those short pay policies are designed right up to the MEC limit. There's no room to expand the system without buying yet another policy. The, they just played Nelson's recording. He just said, where do windfalls go? The green long pay still has room to make additional PUA payments over and above the scheduled premium.

So what happens, for example, if I do a single additional $20,000 lump sum PUA payment on day one, which I can do with the green policy, but not the, orange. When I do this, I now have a blue line, which is the potential of the green line. That's my policy potential. When I do this, I make one additional lump sum PUA payment, over and above the schedule.

The blue line shows I have more cash value. If we could, again, if we could zoom in, I [00:22:00] have more cash value on day one and every day after that with one additional premium payment. And the difference is starting to look a little more significant. During those later years. But by the way, I also still have more room to put more PUA, for years to come.

I'm not done with just that lump sum. So we think about people's income. Like I don't, it's, we need a place to put windfalls, but we also have people, their income typically increases every year, especially for young people. If we think about people's income, they experience this income increasing to some extent over time,

even if it's just typical cost of living increases. So if I, what if I increase this person's income by say 4% every year? And I don't even need to, put all that increased income, assuming they're saving the difference, which most people don't and they still can't with the orange line.

But what if I just increase my savings by the same 4%? I don't even capture the full difference. What if I just increase my savings by 4%? [00:23:00] So that $20,000 starting premium every year, that's starting to make additional payments in those amounts. And now this is starting to look even more significant and it's significant a lot earlier.

In doing this, by year 10, I've increased my premium payments by 50% and I almost double them by year 18. In this scenario. Now, I have to stop, and go down to the base premium in year 18, which is the base is $12K in this example, or the policy will MEC. So even with this more balanced policy design approach, because I'm paying more PUA over and above the schedule, I still do have to stop eventually paying PUA.

But I'm okay with that because I now have a way bigger policy than what was scheduled. And it's like a million dollars ahead by 50 years, which means the death benefit is more than a million dollars ahead. Where's Richard Canfield? Is that good or good? All right. With the max out PUA designs, I do not have room to expand the system. Leaving out, of [00:24:00] course changes with the dividend or anything. The orange line is as good as it'll ever be. Meanwhile, the green line in, is the schedule, but the blue line is the maximum potential of this policy. Some people probably thinking, yeah, but more cash value is great, but you had to pay more premium to get it right.

So this is no longer an apples to apples comparison. And I say, yes, that is true. You're right, because I'm not looking at this like an investment or an account. This is a life insurance policy and all things are not equal. It doesn't matter that I paid more in premium 'cause it all created cash value. This is a place where we strategically capitalize, where we store cash. We're not investing in life insurance. And if our goal is to capitalize the number one thing that builds cash value is the ability to pay a premium as much premium for as long as possible. Is the internal rate of return slightly less when I have to pay more premium?

Probably. Sometimes Do I care? No, I do not. If I get 50 [00:25:00] basis points less on the IRR, thank you. thank you one and one guy. We here appreciate that. IRR doesn't necessarily mean more cash value. I get 50 basis points less, but I got 40% more cash value, right? I'll take that trade off all day.

A bigger number, right? Control and low risk sets. The foundation for growth rate of return only assists. Now we're gonna take this a step further. 'cause the reality is, I'm actually not locked into paying only $20,000 a year in premium on these short pay policies over the entire 35 years. Remember, I assumed we could always qualify.

So if I'm being fair, can I also make income increase adjustments every time I buy a new short pay? Can't adjust it. I cannot adjust every single year, but every time I have to buy a new one, I can increase, make the cost of living increase at that time. So in [00:26:00] seven years, on the second short pay with a 4% savings increase, instead of $20,000, I could pay $26,000.

And I do that every seven years, increasing, every time. And I can see the results here. Oh my God, the orange line is bigger. It's like I should flip the podium over and just walk out. The seven pays are better? If the balance designs are so great, why'd this happen? it turns out it's because the number one thing that builds cash value is the ability to pay a premium.

And in the blue Balanced policy design, it can only accept so much extra premium before I have to stop and go down to the base. So these short pays actually are beating it because I can pay the full premium every seven years of each policy. But remember, we assume this person could always qualify.

if this person qualifies for more short pays, don't they also qualify for more balanced policies, more blue line policies? What if I take the difference between the base premium on the, that I'm [00:27:00] still paying on the first policy and the cash flow from the savings increases and apply that to a new balanced policy every time I hit the limit.

And what I end up with are three longer pay policies that instead of maxing out the PUA ratio from the start, I instead max out their potential to expand the system. And when I do that, the balanced policy designs are back on top. It's not, it's significant. I wouldn't say it's blown it outta the water or anything, but it ain't worse.

Alright,

Qualifying Risk & The Case for Balanced Design
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John Perrings: now we're gonna start laying on the plane on this section and in this scenario, we made the assumption that this person always qualifies for the next policy. But what if that changes? This person bought the last seven pay at age 68. Anyone here in this room know a 68-year-old with income and or assets that no longer qualifies for life insurance?

So now that starts to look a little more significant. What if they could only [00:28:00] buy four seven pays? they'd also have to drop that third long pay, to be fair. What about a 61-year-old, right? Can no longer qualify. That's starting to look like a problem. How about a 54-year-old? And then what if this person bought that first seven pay and could never qualify for a policy again?

Yikes. I hate to be the guy that recommended that one.

That's not good. And there, there's all the things we can buy, convertible term insurance, all that stuff. But it's a cost. And that'll affect the orange line.

Alright, so let's go back to the three ways of getting high early cash value. You got short pays, short PUA duration, a lot of term insurance. And earlier I said, these all end up being micro variations of the same problem. That problem is they're all maxed out. There's no ability to expand the system without MECing the policy.

And it [00:29:00] all circles back to this problem. And so I'll, you're locked into a trajectory. Even if everything goes the way you hope it does, this individual policy will never get better than this line. There's no room to expand the system without qualifying for another policy.

And if we remember, there's no long-term downside to a more balanced policy design, but with maxed out designs, there is a downside in the form of lost potential with each and every policy. It's all the same problem.

Conclusion: IBC Is a Process, Not a Hack
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John Perrings: The Infinite Banking Concept shares a place with the highest order of financial strategy, and it does not need to be sold like a hack because it's not a hack, it's a process. Help your clients think long range and implement the process of a lifetime. Thank you.