L. Carlos Lara
Picture yourself having just recently returned from one of the most exciting vacations you have ever had. But you are home now and you begin reliving the trip’s experience. Suddenly you are unable to understand your wife’s words when she speaks to you. Furthermore, and worst of all, you are unable to share your own words and thoughts back to her. Now that would be a frightening experience for anyone. You silently ask yourself– “has something gone wrong”? Am I ok? Am I sick? Actually, yes, there is something wrong. This is what is known as “aphasia,” a language disorder that’s caused by damage to the brain and caused by a serious stroke.
David Knopman, MD, a professor of neurology at the Mayo Clinic in Rochester, Minnesota, explains the signs and disorder of aphasia in this way. “The difficulties in processing or expressing verbal and written communication are obvious only to the patients themselves, or the people around them.” It’s not that they cannot hear those talking to them, it’s a perception issue and why some doctors refer to it as “perception aphasia.” In desperation to articulate their thoughts to others the pitch of their voices intensifies and it comes off as anger, but the victim cannot control it. Even though they apologize for their actions to others, nonetheless, the isolation it leaves behind for the stroke victim is intense, and it’s scary to family and all others around him.
Aphasia has various causes and is usually triggered by serious trauma, like a gunshot wound to the head. If this issue is new to you and you have never heard of aphasia it’s actually quite common, affecting 2 million Americans annually.
Sharon Stone, the Basic Instinct star and Oscar-nominee suffered a brain aneurysm in 2001 at age 43 and the subsequent cerebral hemorrhaging destroyed her career. She had lost her ability to read and has developed speech issues, including a stutter. In her own words she shares what she had to do about it. She says, “I became more emotionally intelligent. I chose to work very hard to open up other parts of my mind. Now I am stronger. And I can be abrasively direct. That scares people, but I think that’s not my problem. It’s like, I have brain damage; you’ll just have to deal with it.” That attitude is very harsh and difficult to accept, especially by family members.
Another example of aphasia is what happened to Emilia Clarke of Game of Thrones fame. She experienced a painful headache in 2011 that she says felt like an elastic band was squeezing her brain. She was actually suffering an uncommon type of stroke caused by bleeding on the surface of the brain. During the ordeal she could not remember her name. She explains, “Instead, nonsense words tumbled out of my mouth and I went into a blind panic. I’d never experienced fear like that–a sense of doom closing in.” Emilia was very lucky because fortunately the aphasia left her after a few days and she returned to herself, but she has never forgotten the experience.
This was not the case for Randy Travis, the Grammy-winning music star. He suffered a stroke in 2013 and lost his ability to talk, much less, comprehend language. Even now his struggle with aphasia continues and his ability to speak is limited. As he explains, “In my case, my brain was functioning, and I could understand what Mary (Travis’s wife) said to me, but I could not respond in anything close to a sentence. When we first returned home, I could barely speak at all. We spent three months in speech therapy before I learned to say the letter ‘A.’ Eventually, after about a year and a half, I could say ‘yup,’ ‘nope,’ and ‘bathroom.’ I could also say ‘I love you’ and a few other phrases but not much more. All this was extremely frustrating for me; I felt like I was trapped inside the shell of my body.”
That feeling of being trapped inside your own body certainly hits home with me. I suffered a stroke on June 17, 2019 and the battle with aphasia became my own. I still cannot read, right, or add and subtract, but I have learned phone and computer shortcuts that help me keep going. I have mentioned several celebrities here in this article, but the truth is that strokes and, or aphasia, is no respecter of persons. It can happen to anyone, young or old. One minute you are working out at the gym, fit and strong, like I was once, and the next minute a stroke comes upon you like a ravenous wolf and ruins your life probably for forever.
Three years later after my stroke I realize now how important health and life insurance coverage really is. My hospitalization costs you would not believe, they were enormous. Thank God I had medical coverage. Yet, unlike most developed nations, the US health system does not provide health care to our country’s entire population. Instead, most citizens are governed by a combination of private insurance and various federal and state programs.
According to the World Health Organization (WHO), total health care spending in the U.S. was 18% of its GDP and continuing to climb higher leading it into a “dysfunctional” system. As an example, the Cato Institute claims that because government intervention has expanded insurance availability through programs such as Medicare and Medicaid, the problem is exacerbated. Because the U.S. health system is also the most expensive and worst-performing in terms of health access and efficiency, 27 million adults do not have health insurance. This causes roughly 18,000 unnecessary deaths every year in the United States.
A 2009 study in five states found that medical debt contributed to 46.2% of all personal bankruptcies, and 62.1% of bankruptcy filers claimed high medical expenses in 2007 according to a Wikipedia article. It goes on to say that since then, health costs and the numbers of uninsured and underinsured have increased. A 2013 study found that about 25% of all senior citizens declare bankruptcy due to medical expenses. In practice, the uninsured are often treated, but the cost is covered through taxes and other fees which basically shift the cost.
More importantly, the US healthcare system does not sufficiently promote wellness. Over the past decade rates of obesity, heart disease and type 2 diabetes are areas of major concern. While chronic disease and multiple illnesses became increasingly common among a population of elderly Americans who were living longer, the public health system has also found itself fending off a rise of chronically ill younger people. According to the US Surgeon General “The prevalence of obesity in the U.S. more than doubled (from 15% to 34%) among adults and more than triple (from 5% to 17%) among children and adolescents from 1980 to 2008.”
What so many people do not realize is that the best type of health coverage can be obtained by the oldest and original insurance policy in America, the Dividend Paying Whole-Life Insurance Policy. In fact, it is the best kept secret in America. Whole- Life not only pays a death benefit to the insured’s beneficiaries at death, but it also provides the insured living benefits while alive. In fact, this is what it does best, therefore, understanding what it is and how it works is essential, but this information is not readily available. R. Nelson Nash, the founder of the IBC concept has written a book that explains the mechanics on how to turn your policy into a financing instrument and is the main reason why the book, BECOMING YOUR OWN BANKER, has sold millions of copies worldwide. More recently, Nelson Nash, David Stearns, Robert Murphy and myself created the Authorized IBC Practitioner Course for financial professionals. It is the only financial course of its kind that helps individuals understand the “the Infinite Banking Concept” and it can be obtained at infinitebanking.org
Basically, the course teaches that the core element of a life insurance policy is the death benefit, but the financing function of the policy is made possible because the owner can take out policy loans with the surrender value of the policy serving as collateral. This is a legal right that is provided to all policy owners and is spelled out in the language of the insurance contract. Assuming you understand IBC and own such a policy, the following message is for you.
There are several things to consider at the outset before deciding whether to use cash or a policy loan, the first of which is the nature of the expenditure itself. We should begin by asking ourselves if the expenditure we have in mind is a lifestyle “necessity,” a reduction of debt, or an investment. If it is any of these types of expenditures my personal preference is to use a policy loan after I have first put the cash in the PUA Rider of my policy, simply because these types of expenditures, given the mechanics of IBC policies, serve to conserve and grow the wealth I already own.
This wealth that I already own actually exists inside and outside my IBC policy. So, in effect the triggering of this wealth increase generated by the injection of the cash into my policy’s PUA Rider will partially offset the interest charges on the loan. But in certain situations (mostly in the future), the expenditures I have selected to pay for using my policy loan will have the potential to completely offset the entire loan balance when they are sold for a profit.
Let me explain. Lifestyle necessities, as I see them, can be thought of as repairs, maintenance, and replacement costs of facilities and infrastructures that serve to increase my future production, and/or future revenue. Debt reductions serve to increase net worth. Investments appreciate and then can be sold for a profit. Hence all three of those types of expenditures contribute to building my estate in the long run and are appropriate expenditures for using a policy loan.
For example: A car that is used up and needs replacing is, in my opinion, a lifestyle necessity. So is the replacement of a mayor home appliance that has reached the end of its it’s usable life, such as a heat and air unit in your home or office. Or, it could be the roof over your head, or any expense that can easily be classified as an on-going life style essential that needs fixing or replacing to keep it operational and help maintain the market value of it’s underlining asset that can be sold at a profit or at least converted to cash.
On the other hand, living expenses such as food, gasoline, utilities, clothing, and similar consumption costs are completely different types of expenditures. They should be paid for with cash, not policy loans. Now there is certainly nothing in writing that says you can’t use policy loans to pay for these types of bills, or any type expenditure of your choice. But if you are truly attempting to manage your money well and grow an estate you should draw the line between lifestyle necessities that affect the growth and value of your estate and those that don’t. Otherwise you would wind up using your IBC policy as though it were an ATM machine practically every month, which is a gross misinterpretation of IBC.
Windfalls also play a major role when considering taking out policy loans versus paying with one’s base working capital (the cash in our checking accounts). We should never forget that we are “banking” with these policies, which involves the full scope of cash management and finance. Although a windfall is often thought of as a piece of unexpected good fortune, typically one that involves a large amount of money, sound money management can create windfalls. As IBC “bankers” we should manage our money with expected windfalls in mind. In fact, all of our efforts should strive to create windfalls and policy loans can be used for that specific purpose.
For example: Let’s take the case of an expected, or even an unexpected, family inheritance. This event can certainly be described as a windfall, actually more like a gift from heaven–an expression of love in the form of money from a deceased family member. A bonanza such as this can take care of a lot of previous money mistakes for some lucky person or family.
Yet an IBC Practitioner, by the mere fact that he has taken out an insurance policy and has assigned a beneficiary to it, has already taken a very first important step toward establishing an estate. If he or she now begins to take out policy loans in the manner prescribed above, over time this privatized banking system will create living benefits for the policy owner while alive, and an inheritance (windfall) for the beneficiary upon death.
Keep in mind that what we are doing is practicing IBC while “thinking long range” as Nelson Nash advocates. Also, with everything that I have stated up to this point in our exploration, I have been addressing it to salaried individuals and managers of households. What I am trying to make clear is that when practicing IBC, you must learn how to start thinking like a business owner because, whether you realize this or not, an IBC policy has placed you squarely in the management role of a business–a banking business.
Business owners reading this analysis are more naturally inclined to understand the points I have made thus far in this report in addition to understanding the value of creating windfalls, because this is their modus operandi. Business owners use business profits (after taxes) to deliberately invest in hard assets that they hope to sell in the future at a profit. Since they generally think of their business enterprise as their chief asset, they tend to reinvest these profits into their business in order to increase their wealth and eventually sell the business in the future—as the final windfall.
In the meantime, and at great risk to themselves, business owners will not hesitate to take out loans and borrow from lines of credit from commercial banks in order to create those windfalls. But once they become their own bankers using IBC, policy loans take preeminence over commercial bank loans. Space constraints prevent me from unpacking each of the steps business owners use to wean themselves away from commercial banks using IBC, but for a complete treatment of how they make the switch, please read my newest book co-authored with Bob Murphy, Nelson Nash, and David Sterns, The Case for IBC. https://infinitebanking.org
The Power of Whole Life
Let’s also not forget that dividend-paying Whole Life not only has multiple-dimensional benefits unlike any other financial instrument, but it also has three very important characteristics that are foundational to this particular discussion. Briefly summarized, the first of these is the legal right every policy owner has in his policy contract to take out policy loans so long as he or she has cash value in the policy.
Second. Although an outstanding policy loan rolls over at interest, you can pay the loan back on your own terms and schedule, or not at all, if you wish. This is extraordinary! That kind of payment flexibility on any kind of loans exists nowhere else in the financial world, but obviously with that kind of freedom also comes responsibility. With regards to this I have a suggestion. My August 2017 LMR article, “An IBC Tax Strategy: Part III,” contains a thorough treatment of the most important discretionary guidelines on policy loans that every policy owner should know. The 2017 article is a great companion to this article because it breaks down the functions of practicing IBC correctly and responsibly and will eliminate the worry of a 1099 surprise or the worry of the IBC policy ever being underwater.
The third foundational characteristic of Whole Life is that no matter what amount of money you borrow from the life insurance company with the cash value serving as collateral, that very same amount of money continues to earn interest, dividends, and a growing death benefit in your policy for as long as you live and for as long as your policy remains in force. But when additional cash is injected into the policy’s PUA Rider it grows even more and it grows even faster. For that reason, all three of these elements of a specially designed Whole Life policy when used in combination make it the ideal financing system that every household and business owner should own.
In this article we have examined IBC from an angle many advocates have not often considered. It is only when you have personally suffered a debilitating illness and what one has to go through, let alone your family, that the reality of the brevity of life sinks in. Nevertheless, because of Nelson Nash’s IBC, we get a chance at life once again. This is why we say that Privatized Banking is for everyone. It really is.