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Alternative Wealth is a non-traditional investing, personal finance, and retirement podcast hosted by Ryan Kolden. Weekly guest interviews, plus shorter deep-dive episodes about alternative investments, personal finance, and retirement strategies. Covering everything from private equity, venture capital, hedge funds, private credit, & real estate to tax-efficient exits & captive insurance corporations, privatized banking, and different retirement strategies.
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Tom Suvansri:
And the infinite banking concept is just an alternative approach that gives a little bit more control and freedom for the user to manage the cash flow and finance things in their lives. So it's just a different vehicle to kind of do what we're already doing in terms of banking.
Ryan Kolden: Welcome to Alternative Wealth, where we explore traditional and alternative investing, retirement, and personal finance concepts. I'm your host, Ryan Colden. Join us as we talk about the strategies and tactics that can help you make better financial decisions.
Disclaimer & Disclosure: Ryan Colden is an investment advisor representative of RPG Family Wealth Advisory. Colden Wealth is a DBA of RPG Family Wealth Advisory. The opinions expressed by the host and or guests in this podcast do not necessarily reflect the opinions of Colden Wealth or RPG Family Wealth Advisory. No information on this podcast should be construed as as investment, legal, tax, or financial advice.
Ryan Kolden: Today on the show, we have Tom Suvanstreet. Tom's going to teach us about how we can create our own family bank. A little bit about Tom. He's a wealth strategist and authorized IBC practitioner at Perennial Pride, which is a virtual family office located in Stanford, Connecticut. Tom is a Penn State grad, received his MBA, and he is an expert in advanced insurance strategies and investment analysis. Tom has a background in real estate investments and private lending. Tom, welcome to the show and great to have you.
Tom Suvansri: Ryan, so great to meet you and thanks for spending some time with me. I appreciate it.
Ryan Kolden: Yeah, no problem. I'm really excited to talk to you today about the infinite banking concept. So, Tom, let's just get right into it. Can you explain to me what a family bank is? What the infinite banking concept is?
Tom Suvansri: Yeah, and it's crazy because since its inception and now everyone calls it something different. You might hear it called infinite banking, family banking, bank on yourself. It's all the same thing. Right. In general, just people like to change the name of it, but I affectionately call it family bank because that's how I use it to help fund my bank. And, you know, historically, when I first learned about this concept, my initial connection was around like families that you may be aware of, like the Rockefeller family, right. That they've used things like this to help support their business growth. So frankly, it's not an actual bank. I know, you know, people get confused with that and I'm sure the banking industry doesn't love that people are using the infinite banking concept or banking in this way, but, you know, really at the heart of it, it's fairly straightforward. It's just a different way to basically manage your cashflow and financing needs in life, right? We're so accustomed to using banks that flow our money through before we actually use it or invest it or give it away. And the infinite banking concept is just an alternative approach that gives a little bit more control and freedom for the user to manage the cashflow and finance things in their lives. So it's just a different vehicle to kind of do what we're already doing in terms of banking. We just have to switch the approach and tool that we might be using and then start thinking a little differently about it.
Ryan Kolden: Yep. And I'm sure we're going to get to it, but talking about just like the need for finance versus the need for other things in our life and how that can help manage our cashflow. But before we get to that, can you kind of tell everybody how you got introduced to the family banking concept?
Tom Suvansri: Yeah, I reflect on it. I had gotten, you know, the tool itself, the kind of financial piece of it is whole life insurance. Something has been around for well over a hundred years, it's been around longer than the tax code, frankly, it's been around forever. So it's an old product. And I came across this when I was young before I even had kids, right? I didn't understand what infinite banking was, but I got whole life insurance by luck, right? I just found the conservative nature of it's saving as a savings tool very attractive and it was protecting my family. And so that was the draw to it. And I, you know, just like a lot of people experienced in 2001 and 2008, you know, the downturns in the market, I was just saying, there's got to be different ways to save and invest. And so I looked at my whole life policy and lo and behold, it never went down. And I was like, that's pretty good. And it's in a tax shelter environment. And, um, I said, what do we do with this? And my advisor didn't know. He didn't tell me about anything around that it could be leveraged. So I just started researching about it. And I found, uh, I found this book called, you know, Becoming Your Own Banker. And I was like, what is this thing? Like I read it. I had to read it, Brian. I had to read it like three times in a row. So I was like, this cannot. make it, this doesn't make any sense, right? Where has this been? And it took a while. This was, you know, a little over 10 years ago. I had my policies for already like 15 years and never used it in this capacity. And I was like, oh my God, I have an untapped resource of capital that I've never even leveraged. So once I got into it and at the same time I was learning about real estate. So, you know, a lot of things kind of moved at the same pace. almost. It was just an incredible, I guess, luck that I was researching for.
Ryan Kolden: Absolutely. One of the interesting things that you said was during 01 and 08, you looked around and everything crashed and went down, but your whole life policy was sitting there unaffected. It just kept going up, right? And the idea of infinite banking itself is not about rate of return. It's about recapturing finance and controlling your life. However, There's a lot to be said as whole life as like a volatility buffer or the idea of an absolute return vehicle in someone's portfolio because it does provide returns in any kind of given market now, or I guess I could say a buffer to a portfolio now. What are the benefits of infinite banking that someone could utilize in their life? And I guess maybe start with the mechanics of kind of how it works, and then we can talk benefits and risk and reward about it.
Tom Suvansri: Yeah, you know, and the thing I usually because when people are not familiar with whole life insurance, and there's this sort of, you don't have to Google it that much to find all the negatives associated with it until you understand what it is. And I always equate it to when you talk about real estate, like a house, right? When you're buying a house, right, you're buying this asset with leverage and, you know, you're making deposits into an asset that you're paying into for the duration, right? And obviously a house is like 30 years, but like for a whole life policy, it's for your entire life. So you bought an asset that is leveraged and you're paying into this over a long period of time, for as long as you're alive. And so you're just buying into this asset that's protected, protecting your family and growing without loss. And it's a private contract and it's just a storage bin of money, right? That is not taxed if you do it right and protects your family. It just so happens that this savings type vehicle comes with a guaranteed loan provision, just like you would borrow from a bank, like a line of credit. It has a line of credit built into it that gives you as the owner the ability to borrow against it and use your cash as collateral to use however you want, whenever you want. And then you can control when you pay it back. So when you equate it to a home, there's a lot of similarities because you're leveraging money, you have equity or cash value building up, and then you can borrow against it. and use that asset and let it continue to grow. Unfortunately, like a house, there's no guarantee it goes up in value. Well, our whole life insurance policies only go one direction, right? They go up and it's contractually obligated. So it's a safe, solid savings vehicle that once you understand the financing arm to it, then it becomes a pretty powerful complimentary tool to your investing. whether it's business, real estate, wherever you want to invest. I don't really care. Wherever you know best, but it's your safe house. And it just so happens that it's pretty tax advantage and earns a decent rate of return when you really peel back the onion.
Ryan Kolden: One of the things that you said that was interesting there was leveraging the policy, right? Now, the majority of Americans They're used to financing things when it comes to the car and a home. They're used to financing effectively liabilities, but at no point do they ever really consider reversing that role in financing assets. And so one of the things that I think is very interesting that maybe people who don't understand banking is a banking doesn't view deposits as assets. They view deposits that you make to the bank as liabilities. And the first thing they do is they try to get that off their balance sheet and work in for them as hard as possible, which is effectively what we're doing. Am I right? When you talk about bank banking?
Tom Suvansri: Yeah, that's exactly it. And obviously, you have to just like a bank would maybe take my money that today you're maybe earning something, but historically not that much. And they're loaning my money to ride. right, to buy a house or buy a car. And so they're just wholesaling money, right? And marketing it up. And so from our perspective, it can work the same way where we can reverse it. We borrow their money to make more money, right? As long as you understand what you're investing in and you can have that little leverage while your boring asset of a cash value and life insurance just grows and grows and grows undisturbed. And we all know compounding interest in this world works if you allow it to work for long periods of time, right? So this allows that trajectory to never end and that's why I have policies on my kids. When's the earliest, when's the longest runway they have? The day they're born, right? And people will think that's insane. Well, that is definitely a philosophy that the families who understand this, they want to take advantage of that. Right. And they allow that thing to compound. So the financing to, for assets, yeah, certainly within the infinite banking world, it is to finance even purchases. And that is definitely efficient and can help recapture interest flowing away. But I think from, from my lens, I've used it primarily more for investments, for business, real estate, and other ventures.
Ryan Kolden: Yep, absolutely. And one of the things that I want to visit real quick is what people get wrong about infinite banking. So is it right to compare this as an investment to the stock market or some other kind of asset? Or is infinite banking really about the processes about something else?
Tom Suvansri: Yeah, you got it right there, Ryan. I mean, Most people want to compare this to an investment, right, the stock market. And that's usually the whole concept when it started back in the day, the buy term and invest the difference because, you know, they're trying to compare apples and oranges, right? And Ryan, you talk about this a lot about alternative investments. You got to understand the risk profile you're in, right? You can't just throw a rate of return. If the rate of return was the only thing, I might as well try to play the lottery, right? That gives me the highest rate of return. Right. Possible. Right. But the highest also amount of risk. Right. So you have to factor it in. What we consider for the infinite banking, it is more of a process and is a storage of capital and use of capital. So in our world, it's, it's more equatable to a banking environment, like what you do at a bank. So same risk profile in the sense that there's no chance, low, very low chance of loss. I guess nothing's completely out of the realm and you see banks fail. So, but very little chance of loss. So, and it's not going to give you massive returns. The risk is very, very low. So from a risk adjusted basis, to me, it's one of the best, is the best place to store cash, right? From a risk adjusted basis in terms of return, when you factor in, you know, that you don't have to pay taxes on it and it grows if you can hold it for long enough period of time, which, you know, time horizon also matters. right? You know, one year versus 30 to 50 years, like when people say rate of return, what are you asking about? Is it next year or 50 years? Very, very different sort of description.
Ryan Kolden: Yep, yep. And how could someone like an individual or specifically a business owner benefit from implementing the IBC concept into their life?
Tom Suvansri: Yeah, that's a great question. Yeah. And for Actually, it's interesting because I think business owners, once they sort of grasp it, it fits them even more because they're in a world of constant management of cashflow for their businesses, depending on the type of business. So they're typically having to potentially use lines of credit from banks to pay salaries and go through the cycles of their business. So they understand the power of having cashflow and access to other cash. But they also have to potentially finance a lot of things, right? With their equipment or business buildings. And so once they understand that this could be a more efficient way to do it, right, they really glom onto it because then they have more control. And, you know, Ryan just as well as I do, business owners like control, right? That's why they're in business, right? They're trying to. control their own destiny and certainly their cash flow. So they can use it that way too. And, you know, some of the more other things that they could use it for to, you know, fund for compensation plans for key employees, the buy-sell agreement. I mean, there's a plethora of options here. that they can leverage it while still being able to use it as more of a capital source for their business cycles and even investment, which is what we're doing with a lot of our clients today.
Ryan Kolden: I think one of the most attractive pieces of infinite banking is the control that it gives you. Especially as a business owner, one of the things you were talking about was lines of credit. Well, I'm sure if you've been in business long enough, you've had probably a time or two where a bank comes knocking on the door and says, Hey, we need to either lower your credit line or you need to reduce a portion of your balance that you have on the line or we can't extend you any more credit and you have to pay it on our terms versus with infinite banking. No one's going to tell you how much you need to repay your loan. No one is going to tell you what kind of schedule you get to set that all as the business owner. Now, since we've kind of separated the infinite banking concept from investments, can you discuss how whole life can be used as an alternative source of retirement income or how it can be used as basically an alternative to maybe bonds or used as like a long term source of creating a pension for somebody?
Tom Suvansri: Yeah, absolutely. Yeah, because there's a lot in the beauty of in some people try to, you know, when they talk about whole life and some people say it's so boring, but it it does have a lot of flexibility to it and that people don't, I think, have never been educated about. And when you look into it, it can be very, very flexible in terms of how you use it. And you don't have any restrictions on when you can use it, like, you know, like a qualified plan or something. I got to wait till 59 and a half for some reason. Right. So this is very flexible. So when you, when there is a time when you want to get into retirement, the good part is if you've kept this long enough and it's, it's well capitalized, right. We talk about family banking. We want to capitalize this just like it was your own bank. So once your time, you want to start creating some income from it, you have flexibility to essentially start taking these tax-free income up to your contribution amount, your basis, right? Like all the money you've put into this thing, I think of it like a house, like I'm just selling off little pieces of my house that I paid in already into it and I'm getting all that back tax-free. And that's the way it should work, right? I put the money in after tax, it should come to me after tax. So you can create that. income stream and the policy still maturing each year, right, still growing. And then once you get to your basis and all you've contributed, then you can, then we go back to the potential loan provision that you can borrow money from an account here against your cash on all the gain. And that comes out tax free because it's a loan, right? It's not a distribution like you're selling an asset. So you're taking a loan from that. And so, um, the beauty is that you can create those streams of income. They're not going to be taxable. They won't show your CPA won't have to report it, which, you know, it's funny. Sometimes CPA is like, I talked to mine is that I never see any of your life insurance. Well, there's a good reason for that. Right. None of it's taxable. And so, um, if you, once you die with any debt on your, you know, on your policy, then that's where the death benefit pays it off. And then everything else goes tax-free, income tax-free to your heirs, right, or beneficiaries. And likely state tax, unless you are of that level hitting that state tax problem. But you can create a very good supplemental income stream and flexible, right, when you use it and when, how much you take. But you have a lot of options as things change. You know, as well as I do, things change. It's going to be set in stone. So that's why I love it too, because I don't have as many restrictions against it than a lot of these other accounts.
Ryan Kolden: Yep. A lot of people don't know this and maybe you can touch on it a little bit, but some of the largest corporations in the United States and even just small businesses for that matter, they actually use life insurance as a mean for executive compensation to get around their safe harbor rule. So for those of you that don't know that companies are limited from being able to match and contribute to certain 401k plans. someone is a highly compensated employee, and you can actually use life insurance to get around that. You can fund it, overfund it, and then when the executive or the employee leaves, they can leave with that life policy as a way to basically compensate them outside of their 401k. And so, yes, you can create kind of like pension-like income. I say pension-like, not pension, but pension-like income using these policies. So, yeah, I couldn't agree with you more.
Tom Suvansri: And to the point of the volatility, which everyone who's, say, primarily invested maybe in the public markets will know, right? You have some volatility. To your point about the volatility, this is a great way This is at least one way to buffer against some of the volatility that people face in retirement, right? If you have to withdraw money from an account, you probably wouldn't want to do it when it's taken a loss. Well, this is another source of income that could replace that and allow your other assets that maybe can regrow, right? So it can help sort of maximize the use of both. So I always say having this in retirement. is actually going to make your life a lot easier and to manage all the hiccups along the way and maximize your income and your legacy. Like you have both, right? Usually it's an either or sort of concept. This sort of asset helps you have both, right? On both sides and maximize the heck out of your money.
Ryan Kolden: Absolutely. And nobody cares about buffering volatility until the market crashes, right? Then it's too late. The other thing that we were chatting about before we hopped on the show was how IBC pairs really well with real estate investing and private lending. Can you explain how somebody could capitalize their system? And that's a key point. The system has to be capitalized before you deploy it. And I'll let you maybe talk about that. But How could someone, assuming they've already capitalized their policy, how could they use it, put the money to work in things like real estate and private lending?
Tom Suvansri: Yeah. And it's a great tool for that, a compliment for that. Yeah. And to your point, which is a great one, Ryan, I mean, the downside for some people, especially when they're real estate investors, they want to get their money to work immediately. That's usually the challenge. So the capitalization part is the sort of the biggest problem people face, right? So you got to think longterm and be comfortable capitalizing this. Now you could do it other ways too. You can do the real estate and have the cash flows to basically fund your policy. You can kind of reverse the direction. That's fine too. But I was in the mode of building it up. I was saving money. I'm just a natural saver. So if you're a good saver, this is a tremendous sort of strategy and process for you. And so once you build it up and we're designing these uniquely, they're not like the old school whole life insurance where there's no cash available in the first couple of years. These, some can have a lot of cash early, right? So we can sort of design them to be able to take on way more than the base premium so that you can have access to cash earlier. You're still going to be behind early, but you'll have some cash that you can borrow against and most of them are in the You can borrow up to 90, 95% of the cash that's available in your policy you can use as leverage, right? Versus like you think of a home equity line of credit, they still want to buffer you 20, 25% for their own safety, right? So you can't get access to your equity here. You can get a good chunk of it. And then so you borrow it just like, you know, you're borrowing a line of credit and it's pretty straightforward. You can get in a few days, there's no applications. No credit checks, it's off the books essentially. And, you know, I've taken them for a whole bunch of different ways. When I first started real estate investing, because I didn't know a lot, I hung out with seasoned real estate investors. And I, and the biggest problem they had was capital. So I would loan them money. I would take the life insurance company's money, right at the time, you know, rates today are a little bit higher, but before it was like in the threes or fours. I would borrow, take that money and loan it to my real estate investor friend for 12% or 15%, right? So you say, well, that doesn't seem like a lot, say 12 minus 4 is 8%. Well, it's actually triple, right? It's not just a single like 8%. So that's where banks really make that killing, like that difference is sizable. So I would just take that cash flow back and then pay it back into the policy and kind of recycle it through. And we could do that with real estate, with buying single family properties or whatever you want to buy. I've used them for down payments, right? And then actually get a mortgage from another lender, right? Proper one and use that. And then I have a little more control of it. And then once I pay off the note, just recycle.
Ryan Kolden: And you have no money in the deal too, right?
Tom Suvansri: Yeah, at that point and so, you know, this is where you got to get comfortable and a lot of people are not always comfortable with debt, but this is where it's about, you know, and I know you talk about this too. I mean, it's about the investor. You got to be confident where you're investing money to as well, right? That's obviously very key, but you do your due diligence and you find good deals, right? Chances are they're going to do well, you've done your homework. This is just a much more efficient financing way and it gives you some flexibility as life changes, right? Certainly markets change. You don't have to pay that back right away unless you want to, right? So I'm using it a lot in that ways. And, you know, the last thing I'll share about this is, you know, I started with my kids on this too, because they have some policies, not as big as my wife and I's policy, but it's part of our family bank now structure and We've used their cash to invest that pays off their premiums and then we're going to be using that for college funding. Right. Because now we can control that note. Right. And it's not a note that's like the student loans or even if you go bankrupt, you can't get rid of these things. Right. By law today. So we can control that and help fund our family future with it while protecting kind of our capital. Right. So that's the type of stuff you can do with it.
Ryan Kolden: Mm-hmm. And just so I understand this correctly, or maybe to simplify it in case you and I understand this pretty well, but hopefully people listening are trying to keep up and The whole point of infinite banking, number one, is to recapture lost interest and to control your financing. The second piece is once you've capitalized that system, now you have deposits in your bank, you have liabilities that you need to put to work for you. So let's assume I had $100,000 just as a hypothetical capitalized into a system. And I don't want to make up… I won't even say a number, but that policy or that capital is growing at some guaranteed interest rate plus a dividend every year, which is we don't use it for that. We don't care about the fact that it earns a rate of return, but it still does. And it's not comparable to what you could put it to work with. But what we're doing is getting a loan from the insurance company with the cash value and the death benefit serving as a collateral. All $100,000 is going to stay inside of our policy, earn uninterrupted compound growth like you talked about, and then you're going to go put it to work, earn a rate of return with real estate, and then either number one, pay your cash flow back into the policy, Or number two, cover that interest yourself, whether that be out of pocket or what. So is anything that I said that you want to clarify or explain for people, or is that how you implement infinite banking in your life?
Tom Suvansri: Yeah, you got it right, Ryan. And thank you for helping simplify it. Yeah, that's exactly it. And the biggest thing that is, when I first, just the only thing to add to it, which I don't think I kind of said it initially, Nelson Maddox, who wrote the book, he basically said, you finance everything, right? Whether you borrow someone else's money and pay interest or you use your own cash and you give up the ability to earn that interest, right? Either way, you're going to incur an interest cost, right? The opportunity cost or the actual interest you pay. And that's the thing that really took, even me, when I first read it, I was like, I didn't think that, I thought I was like super smart, I'm paying cash for everything, right? And I didn't realize that my money is now stopped working somewhere. At that time, the banks weren't giving us anything anyways, we didn't feel that bad, but now we found a better home that could still earn at least a decent rate of return, right? With low level risk that can really work over long periods of time. So it's really that sort of, I guess a subtle shift in the way of thinking about financing is really key to the infant banking concept. So hopefully that was clear.
Ryan Kolden: Yeah. And is there anyone that is not a good fit for infant banking in your mind?
Tom Suvansri: Absolutely. You know, it's that Spiderman thing, right? With great power comes great responsibility, right? If you are not a discipline saver, and manager of your money, cashflow, this could be a big problem. Right. And so I often encourage folks, like once they get in, people come so eager to get into it. But if you're not disciplined with the cashflow today to be able to make sure that you're not spending more than you're making, right. You're able to save and stay disciplined and stay on top of making loan payments back into your, then probably is not a good fit. Right. Cause then you're going to. potentially get over leveraged and run into problems, right? So it really is about a disciplined sort of financial manager and steward that this is a better fit for. If you cannot, then this is really not a good fit, right? It's just going to cause problems.
Ryan Kolden: And one of the things we did talk about flexibility and control. So you should always use caution and care when dealing with leverage. I don't know if you've ever heard of the saying, there's like the three L's that get people into trouble or men into trouble, ladies, liquor and leverage. But one of the Interesting parts about infinite banking is via those loans, you're never going to get margin called and you're never going to get a capital call. You have the flexibility to pay it back, but you have to be disciplined and pay yourself back. So I wholeheartedly agree with you that This is not a good fit for someone who is not long term minded, you know, who isn't looking at the next 10, 20, 30, 40 years, or who just can't save in general, like doesn't have that discipline. Now, one thing I want to revisit, because a lot of the times you see stuff on, whether it be the internet or people talking about this, that infinite banking is a scam, whole life insurance is a scam. Can I do this with any company, any whole life policy? Or does it have to be somewhere very specific? Or does the policy have to be engineered a certain way to do this?
Tom Suvansri: Yeah, definitely. The most appropriate are, and I only like to use really highly rated companies, and the ones we use are the mutual insurance companies, right? So that means that they're not public, right? You as an insured member and you have insurance policy with them, you are actually part owner of this life insurance company, right? As a mutual insurance holder. And so those are the ones we use, and there are a number of tremendous mutual insurance companies Some of them are not as in love with the IBC concept versus some others. So you have to sort of weed through them because some of them are much more IBC family banking friendly than others. And so I usually gravitate to a handful of them. And they're all going to also have some unique natures on how you design them and the flexibility of being able to infuse more cash. You do have to sort of be careful which ones you go to and that's why you, you know, I would definitely try to go to somebody who's a practitioner, they've been trained on this stuff and you know, they have a strong connection with the community or surrounding this and are going to give you a higher chance you're into something that's appropriate for your situation. There's a lot of people trying to sell this this day and unfortunately some of them are not quite equipped to do it and unfortunately it may hurt somebody down the road. right, which is our last thing we want for something like a safe asset like this. This is not why you're getting into it. Right. But in that respect, it's obviously highly rated companies are huge. That's the only ones that I would go with.
Ryan Kolden: Yep. And one of the things that people complain about when they talk about this is they say, Oh, you're just trying to sell this to me to get a commission. Can you explain the relationship between death benefit paid up additions and how agents are compensated? And I guess really what I want to talk about before is, because I just used the word paid up addition. Overfunding the policy is ultimately what allows you to create that cash value quickly. And so, can you please just explain how death benefit, overfunding the policy, and commissions all relate with one another?
Tom Suvansri: Sure, sure. And just to step backwards just for a second, I mean, I won't go too crazy details into it, but there was a time when Back in the eighties when, you know, they made some law changes related to real estate that impacted taxes in a negative way. Right. It used to be able to, anyone knows about real estate, used to be able to take your losses and apply against active income, regardless if you're like a real estate, active real estate professional or not. And so it made some changes and so it shifted and they're like, well, where else could we store some cash? that is tax advantaged. Well, life insurance became a very nice vehicle and people were flooding it with money. And so eventually they had to put a kibosh on that and said, okay, there's going to be limits to this, right? To ensure that maintains its life insurance characteristics. And so nowadays there's this concept called MEC, Modified Endowment Contract. I'm not going to go crazy into it. It's not the worst thing in the world, but from an infinite banking perspective, it's not ideal. And so really at the heart of it is there are rules now in place, and most companies apply these slightly differently, is there's only so much cash value you're allowed to put into a policy compared to the death benefit to ensure it stays life insurance, right? There's a cap. And, you know, you just have to recognize that, you know, there's going to be a limit. And so that's why the death benefit, having more death benefit is important. And I'm, much a big proponent of protecting my family, so I'm not, that's not a problem. But you just have to realize there's that relationship that there's only so much cash you can put in compared to your death benefit. And there's calculations that they do as in help people stay under this. But we can stay and design policies so you can contribute this extra cash infusion, the PUA, up to that limit and make sure you're safe and sound and you still can use it how Brian and I have been talking about it. So, as it relates to the commissions, most of the commissions are going to be generated from the base policy, which is really the core sort of, that's probably more tied to your death benefit, right? The paid up additions, the cash infusions, what they really are, are basically completely, paid up additions is just a funny word, but you are making a one-time payment completely paid off for this piece of life insurance you're just adding. It's almost like an addition to your house. So these paid up additions will buy more death benefit that's completely paid off, increases your death benefit, increases your cash. That becomes more available pretty quickly, right? And that's what we use the design to infuse that. That does not make nearly the amount of commissions than the base, right? Most of it comes from the base. And so the paid up additions are probably like Certainly less than 10% and then the base type stuff could be 50 to 90%, depending on which company you're dealing with. Right. So when you're designing these policies for more cash, it actually is shrinking quite a bit of commissions for your advisor. Right. And I realized that as I started off policy with just all base with my advisor 20 plus years ago, never even once sniffed the idea of what a paid addition was. Right. It didn't come into the equation. Now, I'm going to give him the benefit of the doubt, he just didn't know. But my suspicion is there are some that use this because that's the way they make their money, more of it, right? This actually cuts it down quite a bit.
Ryan Kolden: Most financial advisors and even insurance agents for that matter do not know about the concept itself. Or if they do know, they don't know how to design the policies. Now, one of the things I just want to make clear is that what Tom said, which was generally speaking, and this is all going to be different, but Insurance companies, a lot of the times will pay out 100 to 130% to agents on the first year's base premium, right? And base premium doesn't really have a high early cash value component to it. It will build up over time. But as an example, if someone wanted to stuff 100 grand into a policy and be able to pull out $85,000, $90,000, $92,000 of that, so 85% to 90% liquid in year one or within the first 30 days, if that's properly designed, the agent or advisor could be getting of the 100%, 130%. They may only be getting 20%, 25%, 30% compensation at most. So I think that's just key to understand is poorly designed products. Either number one is out of incompetence or number two, there may be that… I want to give people who benefited out, but that nefarious for an agent or advisor hunting for a commission. So But again, two, everything matters on your individual situation. If someone needs the life insurance for estate planning purposes, then they're going to need the death benefit and not the cash value. But anyways. Hey, Tom, I've really enjoyed talking with you today. Is there anything else that you want to let people know with regards to Infinite Banking? And then after that, I'll let them know. I'll ask where they can connect with you.
Tom Suvansri: Yeah, the only thing I would emphasize, and you said earlier, Ryan, which is spot on, you know, for those who understand this, it is very, it is a long-term thinking concept, right? And if you are thinking long-term, you got to think of it that way because sometimes you get asked, well, how quickly can I fund these things and stop funding it? Well, I'll tell you this, if you've designed these things properly, I look forward to contributing to my policies because they're getting better every year I own them, right? And so when you're thinking about these things, and this is where things can go awry, is that we think too short term about things, we actually can make the longer term quite risky, depending on how you leverage and utilize this strategy. So I would encourage you to think through it. If it is something that is potentially appealing to you, the longer term with it, as you get into learning about this, that that's, you're going to get so much benefit out of it if you can think of it that way. Right. And not get impatient and try to kind of jam everything into a few years because it gets better as it ages, just like fine wine, but you got to be patient with it. And I understand this was maybe difficult to do, but I would encourage you before we're getting into it, that you take that lens and if you can't, then it might not be a good fit.
Ryan Kolden: Beautiful. Tom, now, number one, where can people learn more about the infinite banking concept? And then number two, if anybody wants to connect with you, I will go ahead and put all of your information in the description. That way people can go ahead and find you. But can you tell us, you know, what's the best way to get in contact with you?
Tom Suvansri: Yeah. Best way to contact me. My website is perfect. The only options here to contact me. And I would definitely encourage you to read Nelson Nash's book, Becoming Your Own Banker. It's wonderful. It'll give you a kind of a starting point and it's 80 some pages. So if you can't read that, then maybe this isn't for you.
Ryan Kolden: Well, awesome, Tom. It's been a pleasure talking with you today and thanks for coming on the show. And that's a wrap for today's show. Hey, real quick before you go, thanks for listening. And please remember to hit follow on your podcast player. You won't miss any episodes and it helps support us bring you the show. Today's show notes and resources are available to you by clicking the link in the description. The opinions and views expressed here are for informational purposes only and is not tax, legal, financial, investment, or accounting advice. This material is educational in nature and should not be deemed as solicitation of any specific product or service. All investments involve risk and a potential for a loss of principle. Should you need such advice, please consult with a licensed financial, tax, or legal professional. Neither host nor guest can be held responsible for any direct or incidental loss incurred by applying to any of the information offered.