Lara-Murphy Report – The Greatest Hits

The LMR Greatest Hits are articles selected from past Lara-Murphy-Reports financial news letters that are still relevant and popular today. Paid subscriptions are available – click here for more information.


From March 2012
Whenever a newcomer is introduced to the wonders of dividend-paying whole life insurance, he soon encounters the dangers of overfunding and hence “MEC”-ing a policy. In this article I’ll give a quick primer on what this status means, where it came from, and the ramifications it has for policyholders.

Banks vs. Insurers During the Depression

From April 2012
When explaining the relative safety and stability of the insurance sector, proponents of Nelson Nash’s “Infinite Banking Concept” (IBC) will often point to the 1930s. They make claims that although thousands of banks failed, no insurance policyholders missed a payment. Is this true? In the present article I’ll rely on a hostile article, with at least one of the authors affiliated with Citicorp, to see just what happened. As we’ll see, even though the authors of the piece, Huertas and Silverman (H&S), try to paint a different picture, their own statistics and storyline show that the insurance sector was much more reliable during the Great Depression than the commercial banking sector.

Equipment Financing With IBC, Part II

From August, 2012
In last month’s issue, I discussed one of the most important parts of Nelson Nash’s book Becoming Your Own Banker, namely Part IV on Equipment Financing. I walked through (what I called) the base case, where a hypothetical individual had a whole life policy and did not take out any policy loans. Nash’s purpose in this portion of his analysis was to establish a baseline so that we could isolate the effects of the Infinite Banking Concept (IBC) proper, as opposed to just using whole life insurance the way a textbook would recommend. In the present article, I will finish the analysis by walking through Nelson’s treatment of the hypothetical individual using his whole life policy to finance purchases of large logging trucks for his business. We will see that our individual grows wealthier even relative to the base case. In other words, we will see that if you use your whole life policy productively, you will hit wealth milestones faster than if you let it sit in the corner and merely make your premium payments on it.

Equipment Financing With IBC, Part I

From July, 2012
In the present article (the first of two parts) I want to walk the reader through one of the most important parts of Nelson’s book, namely Part IV on Equipment Financing. After extensive study of the theory and practice of whole life insurance, as well as discussion with Nelson himself, I believe I can shed some light on the illustrations on this topic. My goal is to “connect the dots” and make sure the reader of Nelson’s book understands exactly how the different numbers fit together. Before diving into the details, I should offer a general disclaimer: Nelson was quite clear in his book—and with me on the phone—that IBC isn’t “about” interest rates. Rather, Nelson is showing his readers how to cut out the middleman of a commercial bank or other institutional lender, through the use of dividend-paying whole life insurance policies. Naturally, if a person can redirect cash flow that otherwise would have gone out of the household and steer it back in, then the person will be wealthier.

A Closer Look At Commerical Banks

From August 2015
Authorized IBC Practitioners understand, but so should their clients, that when Nelson Nash explicitly says that his book, Becoming Your Own Banker, is an instructional guide on how to “get the bankers out of your life,” he also makes it quite clear that IBC is not about life insurance. To the contrary, what Nash is really saying is that we need to move our money from the current domiciles of bankers to a completely different place—a place that is free of bankers. More specifically he means for us to stop doing business with bankers, to get out of commercial banks altogether, and establish our own financing system.

Building the 10%

From November 2015
“Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage, indeed, and not that of the society, which he has in view. But the study of his own advantage naturally, or rather necessarily, leads him to prefer that employment which is most advantageous to society... He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was not part of his intention.” —Adam Smith, An Inquiry into the Nature & Causes of the Wealth of Nations. Volume I, 1759

How to Weather the Coming Financial Storm Part II

From June 2015
Are we adequately prepared to survive the next financial storm? This is the question all prudent financial managers everywhere are asking themselves. Quite frankly, this concern has no simple answers. The reason for this is because the reality of the world in which we live varies considerably from one person to the next and covers one end of the thinking spectrum to the other. For example some would ask, “What storm?” —while others intuitively know a huge financial tsunami is on its way and fear the worst for our country and the world. This is the difficulty we face in laying out steps to a sound financial survival strategy. And this is the subject of this article—part two and conclusion to last month’s LMR commentary on, How To Weather the Coming Financial Storm.

How to Weather the Coming Financial Storm

From May 2015
With so many of our most popular doomsayers, conspiracy theorists, even trained economists and historians now claiming that we are in the quiet of another menacing financial storm, this one being more destructive than the last, their messages are getting a broader appeal. Day after day, in mainstream news reports, through the internet and by other broadcasting means these the eye of the beholder, for none of us views the world in the same way. The image of this storm can be so taxing on the nerves that many simply deny these unacceptable truths.

Understanding Interest Rates in Cash Value Life Insurance

From May, 2012
Cash value life insurance policies can be very complicated, making it difficult for the newcomer to evaluate claims made about these mysterious creatures. One of the chief ambiguities concerns the distinction between the “guaranteed interest rate” and/or “credited interest rate” on a cash value policy, versus the very familiar concept of “internal rate of return” on more traditional financial products.

The Modified Endowment Contract AKA the MEC

From August, 2014
For those of us who have read Nelson Nash’s book, Becoming Your Own Banker, or even for those of us who are just now entertaining the idea of doing so, the resultant understanding after reading it is that the platform used to set up the process for becoming your own banker requires a specially designed insurance contract. To be even more specific, it requires a dividend-paying Whole Life insurance policy with a special codicil known as a Paid-up Additions Rider. Of course, if you are not at all familiar with insurance vernacular, it’s very possible that these terms may easily confuse you and soon have you scratching your head. Please understand that this is not at all intentional on the part of Nash, actually it’s his best attempt of doing just the opposite since he is aware that he is writing to the general public, not financial professionals. He keeps his explanations light and uncomplicated for the public’s benefit knowing full well that the public is generally unsophisticated in these matters and that the experienced insurance professional will be able to explain the technicalities of all these terms at the proper time.