Lecture Ia and Ib (Nash) - The Typical American’s Problem, Parts A & B
Closely following the treatment in Becoming Your Own Banker, in these openings lectures Nash explains that Americans devote a shocking percentage of their monthly income to finance charges of various kinds (credit cards, car payments, mortgage). Yet they brag at the water cooler about the rate of return they are earning on that small sliver of wealth they have invested. Americans focus on the rate of interest and ignore the volume of interest they pay out each month, which for most is a surprising percentage of their monthly income. Nash discusses the various psychological pitfalls plaguing Americans (Parkinson’s Law, Arrival Syndrome, Willie Sutton’s Law, Golden Rule, Use It or Lose It.), which are snares that will impede disciplined saving.
Lecture II (Murphy) - The Causes of the Housing Bubble and Lessons for Today
It is important for IBC Practitioners to know the basics of the current discussions about the economy and government/central bank policy. This lecture outlines the explanations for the housing bubble offered by three major schools of economic thought: The Chicago School, the Keynesian School, and the Austrian School. The focus in on the Austrian explanation, which (if correct) implies that the U.S. economy is in store for another major crash.
Lectures IIIa and IIIb (Lara) - Money, Inflation, and Fractional Reserve Banking
Because the “experts” do not understand our modern money and banking system, in these lectures Lara gives a brief historical introduction to these topics. He gives a thorough yet comprehensible explanation of the process by which the Federal Reserve buys assets and creates new reserves in the banking system. The commercial banks may then create new loans on top of the Fed’s injections, leading to a many-fold increase in new money creation. The result is a depreciating dollar (rising prices) and artificially low interest rates. In addition to general financial education, this lecture will also serve to underscore the benefits of financing cash flow needs through life insurance policy loans. In contrast to lending from the commercial banks, policy loans are not inflationary nor do they contribute to the business cycle.
Lectures Ia, Ib, Ic (Murphy) - The Economics of Life Insurance, Parts A, B, & C
Murphy walks through the nature and operation of life insurance from an economic perspective. This will help IBC Practitioners really understand how a whole life policy works, making it easier to give intuitive explanations to their own clients. Murphy will cover several topics, from both a theoretical level and through an actual policy illustration, including: (a) using mortality data and portfolio returns to compute the “actuarially fair” level premium on a whole life policy, (b) the definition of surrender cash value, and why it grows differently depending on the premium structure, (c) the process by which dividends are distributed, and (d) what actually happens when Paid Up Additions are purchased.
Lecture IIa and IIb (Nash & Murphy) - Using Whole Life to Become Your Own “Banker,” Parts A & B
The treatment closely follows Nash’s book and seminar. Nash first uses parable of setting up a grocery store, then compares it to setting up a traditional bank. He then shows how this can be achieved through dividend-paying whole life insurance. Explains concepts of “pool of money” and Economic Value Added (EVA), and gives rules for a successful business (“don’t steal the peas”).
In the second part, Murphy walks through the examples of car financing and equipment financing from Nash’s book. Murphy will use the same numbers as in Nash’s book, but will stress that the point is a relative comparison, to see which strategy does better over time. Today’s lower interest rates do not alter the conclusion.
Lecture III (Lara) - The Sound Money Solution and Its Connection With IBC
Lara outlines the “Sound Money Solution” as discussed in How Privatized Banking Really Works, in which the dollar is tied back to gold (which prevents the government from debasing the dollar) and government returns money and banking to the market. The climax of the lecture will be that insurance policy loans are not inflationary, meaning that each household that embraces IBC can “secede” from the broken system and put the entire economy on a more secure footing. The IBC Practitioner realizes that his or her individual efforts to educate clients and make a living, actually promote the general prosperity of the country.
Lecture IVa (Lara) and IVb (Murphy) - Important Episodes in the History of Whole Life, Parts A & B
The main lecture outlines the traditional role of whole life as a savings vehicle for average American households, and explains why that status changed over time. It gives a brief history of the origin of the policy loan, and its role in the "arbitrage" problems plaguing life insurance companies during the 1960s and 1970s. The lecture explains the role of the 1979 FTC report in pushing the public out of whole life and into Universal Life, and it also explains the relevance of the 1986 and 1988 reforms of the tax code. The second lecture outlines some of the major weaknesses of typical demonstrations that seek to cast whole life in a negative light, when they compare it with the rival strategy of "buy term and invest the difference."
Lecture V (Murphy) - Communicating Popular IBC Topics to the General Public Without Causing Confusion
In the wake of the publication of Becoming Your Own Banker and the (long) seminar that Nelson Nash began putting on for the general public, life insurance agents began developing their own techniques to distill the insights of BYOB into digestible chunks that would attract the interest of the average person. The function of these techniques was to challenge or intrigue the client or prospect, so that he or she would realize there was “something here” and go forward with reading the book or at least further discussing the application of IBC. Unfortunately, in several cases the rhetorical devices were either inaccurate or, if they were not necessarily wrong, they could have understandably led some members of the public to misunderstand what was being claimed about the power or effectiveness of IBC.
Lecture I (Murphy) - Tax Considerations in Policy Design
Overview of the tax rules governing life insurance, including “MEC” limits and the use of PUA and term riders. Explain that PUA buys a “mini policy” that is effectively a single-pay with same structure of base policy.
Lecture IIa and IIb (Nash and Murphy) - Choosing the Right Product and Features From a Bewildering Menu, Parts A & B
The first lecture covers the nuts-and-bolts of the different product types (UL, VL, IUL, etc.), explaining how they work, to make sure the IBC Practitioner understands the main features of each type. Then Murphy explains why Nelson Nash prefers to “do IBC” solely with Whole Life. The second lecture will will explain direct vs. non-direct recognition, and why insurers adopt different rules. He will explain the impact on a client from these different products and features.
Lecture IIIa and IIIb (Nash and Lara) - Matching the Policy to the Client
Lara walks through the construction of two actual policy illustrations, tailored to two hypothetical clients. The first is a middle-income, 35-year-old salaried man, while the second is a high-income, 50-year-old business owner.
Lecture IV (Nash) - Legacy
Nash opens with a discussion of building up a system of policies on one’s children and grandchildren. Perhaps discusses the option of giving child / grandchild an insurance policy with cash value to start a business, rather than a college education. This knowledge will be essential for clients who are uninsurable.
Lecture V (Murphy) - The Importance of Mutuals and a Good Reputation
Murphy explains the emphasis that Nelson Nash places on mutual companies, and goes over the stock/holding company/mutual classification. This is a powerful message that will spread not only among households but business owners.
Lecture VI (Lara) - Building the 10%
The themes of Austrian economics, the Sound Money Solution, and the Infinite Banking Concept all come together when a “tipping point” of the proper segment of the citizenry have been properly informed about the true nature of our financial problem, and the solution. At this point the demand for IBC will exponentially multiply. For this reason, it is critical that IBC Practitioners adopt a strategy of educating the public, using the books, videos, and other materials from the Nelson Nash Institute and other appropriate sources. Lara will explain that this is not a “chore” but in fact is an excellent way to ensure a stream of interested potential clients who already understand how IBC works and realize its ability to solve their financial problem.