Jay and his special guest Sarry Ibrahim talk about how to help real estate investors, business owners, and full-time employees grow safe and predictable wealth regardless of market conditions using a financial strategy that has been around for over 160 years.
Sarry Ibrahim is a financial planner and member of the Bank On Yourself Organization.
Sarry started this journey when he was in grad school completing his MBA. He worked for companies like Allstate, Blue Cross Blue Shield, Cigna Healthspring, and Human before founding Financial Asset Protection, a financial services firm that focuses on one sole concept; the Bank On Yourself Concept, also known as the infinite Banking Concept.
Timestamps:
0:01 – Get Ready To Be Plugged Into The Money
1:39 – Jay’s New Book: “Where To Get The Money Now”- https://www.JayConner.com/Book
2:44 – Today’s guest: Sarry Ibrahim
4:25 – Sarry Ibrahim’s Financial Service Journey
7:02 – Bank On Yourself: The Infinite Way of Banking
9:50 – How does the “Bank On Yourself” concept work?
11:51 – Benefits of the “Infinite Way of Banking” strategy
15:28 – How is the “Infinite Way of Banking” strategy applicable to real estate investors?
16:55 – Connect with Sarry Ibrahim: https://www.FinAssetProtection.com
17:45 – Life policy sample using Bank On Yourself: The Infinite Way of Banking strategy
21:06 – Interest rates when using life policy as collateral.
22:32 – Is better to invest in infinite banking?
23:57 – How the Bank On Yourself: The Infinite Way of Banking strategy can help real estate investors?
24:21 – Age requirements for the Infinite Way of Banking strategy
26:18 – Sarry Ibrahim’s parting comments: Think like a bank!
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Jay Conner is a proven real estate investment leader. Without using his own money or credit, Jay maximizes creative methods to buy and sell properties with profits averaging $64,000 per deal.
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Bank On Yourself: The Infinite Way Of Banking with Sarry Ibrahim & Jay Conner
Jay Conner
Now, the way my guest does financial planning is different from anybody else that I’ve ever had on the show. He’s a member of this organization called Bank On Yourself. So my guest helps real estate investors, business owners, even full-time employees to grow safe and predictable wealth, regardless of what the market is doing and the way he does this he uses a financial strategy that’s actually been around for – check this out – over 160 years! When my guest started this journey way back, I said way back but he’s not that old. In fact, he’s rather young when he was in graduate school and he was working on getting his MBA. Well, he has worked for companies like Allstate, Blue Cross Blue Shield before founding his company called Financial Asset Protection, which is a financial services firm that focuses on one primary concept and strategy and that is the “Bank on yourself” concept, which is also known as the “Infinite banking concept.” I’m so excited to have my guest here on the show with me today, so, welcome to the show, Sarry Ibrahim.
Sarry Ibrahim
Thank you so much for having me on and thank you so much for that awesome introduction. It’s a pleasure to be here. I’m excited to chat with you.
Jay Conner
Well, I’m excited to chat with you, Sarry. So first of all, why don’t you take a moment and tell folks how in the world it is you’re qualified to talk about what you’re going to be talking about.
Sarry Ibrahim
Yeah, definitely. So, I started my financial services and financial planning journey when I was doing my MBA. I was about halfway through the program when I started working for different insurance companies and financial services institutions. I worked at Allstate, Blue Cross, and Humana and I started to enjoy working with clients. Originally, I thought I was going to get into project management when I got my MBA. And was it a concentration in project management, but I quickly realized that I loved talking to people. I loved problem solving. I loved listening to people, too. And I started to notice that people became more comfortable speaking to me about their financial problems and things that they wanted to accomplish financially. So then it was kind of a light bulb went off and I thought maybe I can make this into a long-term career where I’m just helping people plan financially and solve money problems, either they have too little or too much debt or they’re not sure how to position real estate deals and things like that.
But I wasn’t really sure of a type of a career like that. So, I stuck through the insurance world and mostly in Medicare. I was a Medicare consultant, too, and helped people plan for retirement, with Medicare in retirement. And I kept my eyes open for financial planning and just read a lot of books. I read about 3 books at the same time for the last 10 years. And I came across a book called, “The Bank On Yourself Revolution” by Pamela Yellen. And the book talks about the strategy that we’re going to talk about today, the Bank on Yourself strategy – what it is, how it works, why it was even invented, why it was even created to begin with. And I loved the book. I loved the content of the book. And then at the end of the book there was a section that said, “If you want to join our program as an advisor, let us know.” I applied to the program, got accepted, and went through an 8-week rigorous training program on how to structure these policies, how to understand different kinds of financial vehicles out there, like mutual funds, ETFs, stocks, and all these different other types of conventional types of investments.
And we went through the problems with them, the pros and cons of all of them. And then most importantly, it was how to structure Bank On Yourself-type whole life policies. And then I started a company called Financial Assets Protection, and that was kind of the overall point of the company is to become a Bank On Yourself organization where we can help clients use these policies, especially since a lot of our clients are real estate investors and private money lenders and hard money lenders. So really I’m excited to be on your show because I think it’s going to really connect really well with you and the audience
Jay Conner
That’s super. So I know you have ways in which you can actually help real estate investors and private lenders, but before we get into that, let’s start from ground zero here. My guess is I probably have hardly anybody that is listening in to the show that even knows what the Bank On Yourself concept or the Infinite banking concept is. So where did this come from? I mean, it’s been around for over 160 years, but what is this concept? Why did it originate and how does it work? And take your time, go nice and slow because I want to make sure we understand what this is all about because quite frankly, this is probably a brand new concept to a lot of people that we’ve got tuning in.
Sarry Ibrahim
Absolutely. So this concept really started, I would say, about 20 years ago by Nelson Nash, and Nelson Nash wrote the book, “Becoming Your Own Banker,” and he’s kind of the godfather of the Infinite banking concept. He invented the infinite banking concepts, and in his book, “Becoming Your Own Banker,” he starts off talking about some of the problems he had. Like at one point he had about $500,000 in debt, and back when interest rates were like 20%, he was paying about $67,000 a year just in interest payments alone on that outstanding loan. And he started to realize that a lot of other people have this problem. The average American spends one-third of their income on servicing debt. So, he realized that this is a common problem. And then he kind of went through the technical details of whole life insurance and for those who don’t know what a whole life insurance is, it isn’t just life insurance.
It also has a cash value component to it, like a savings account portion that grows over time. And you actually earn compounded interest on that money. And the point of it isn’t just necessarily from an investment standpoint, it’s more of a saving standpoint and a way for you to become your own source of financing. So Nelson Nash, throughout the book, talks about structuring dividend-paying, high-cash value whole life insurance policies. So that way you could become your own source of financing and then you could pay the interest back to yourself. So originally it was created to address the interest part of the interest problem. Instead of paying out interest to other lenders, you would pay interest to yourself and become your own banker, or you would bank on yourself. Now the actual asset – dividend-paying whole life insurance – that’s been around for over 160 years. Families and financial institutions have been using dividend-paying whole life insurance policies for over 160 years, but really, the infinite banking concept and it being used by more people than just banks and financial institutions and family offices, it’s being used more now by everyday people, people who make $100,000 a year to $200,000 a year, real estate investors who have like 10 properties, who are on the way to becoming financially free, but not just for the billionaires. Does that make sense?
Jay Conner
That does make sense. So how does the concept work?
Sarry Ibrahim
So the first step is you want to work with a financial advisor who understands this from a conceptual standpoint and not just a product standpoint. So using infinite banking is not just going out and buying a whole life insurance policy and that’s it. You’ve already checked all the boxes. You need to work with a financial advisor who understands the high cash value use of whole life insurance. There’s only a limited set of companies that could actually do these policies and a limited set of advisors who actually know how to structure and design these policies, so that way you have high cash value in the first few years and you also have access to it. And there’s also a lot of tax benefits when it’s structured the right way. So I guess step one is you want to find that advisor that really knows this and does this full-time and has a track record of actually working with clients.
And the second step is you want to make sure that your advisor is going through your financial analysis, making sure that you’re doing all these things for the right reason. So for example, we do a financial analysis to understand the client’s financial situation. Number one, we see where they’re at, what they’re doing, and are they investing in the stock market? Are they full-time employees or do they have their own business? We want to understand their financial life, their financial health. And then we also want to understand their objectives and what is it that they want to accomplish? Do they want to return in the next 10 years, 20 years? Do they want to buy more real estate? Do they want to loan out their money as hard money lenders or private lenders? What is it that they want to do with their money?
So we want to identify those objectives. And then we would structure a design, maybe one policy, maybe more than one policy, to address their objectives. And also based off of their financial situation, based off of their tax rates, based off of all these other intricate parts that need to be taken into consideration from there. Again, it’s important. It’s not a commodity. This isn’t a product. It’s a way of living. It’s a way of understanding how the financial system works and for you to become your own financial system. Not literally starting an actual FDIC-insured bank, but having the banking principles in your life where anytime you need to finance something, you can go to yourself, go to your whole life insurance policy, leverage that, borrow against it and then use it for other investments.
Jay Conner
So I’m still a little confused. What’s the benefit of this strategy? And what pain or problems does it fix and solve?
Sarry Ibrahim
So, there’s a couple. So the number one benefit of this is guaranteed growth. So the whole life insurance policy is based off of growing guaranteed wealth. When you start a policy, there are two sections in the policy. There’s the guaranteed growth, the projections that the insurance company says. For example, if you’re going to fund a policy over 30 years, they say if you put in $10,000 a year for 30 years, we’ll guarantee you X amount of dollars during this duration of 30 years plus more in the future. Plus we’ll guarantee you life insurance. And then, if everything goes well, we’ll also give you dividends on top of your cash value. Dividends are not guaranteed, but we only work with insurance companies who have a proven track record of paying dividends for over a hundred years.
So the first benefit is the guaranteed growth in the policy and the high certainty of dividends being paid over time. Number two, there’s a lot of tax benefits behind this. So the way the policy grows and accumulates with interest in dividends, it’s growing tax-deferred. So for example, you have $100,000 in cash value in year 1. Year 2, it grows to $105,000. You don’t pay taxes on that growth. That growth is tax deferred. Also in most situations, when you go take money out of the policy, either through loans or withdrawals, that’s also going to be tax-free because if you use after-tax dollars to fund the policy and under current tax law, loans and withdrawals on life insurance policies that are non-modified and dominant contracts, non-MEC policies are currently tax-free. So there are a lot of tax advantages. Also, the death benefit is income tax-free to your beneficiaries.
It could be exposed to state taxes, but it’s income tax-free to your beneficiaries, either your family, or if you own a business, the business would get that income tax-free. The fourth benefit is, it’s not affective, which kind of goes with number one, it is not affected by market conditions. So that means if you have all this money and whole life insurance, and then there’s a major market crash or a recession, it’s not going to affect the cash value of your policy deal with the way the whole life insurance company pays out. Interest in dividends is not correlated with market conditions with the stock market. They’re mostly invested in private loans and the bond market. So it’s not going to be hindered by market conditions. And then also, you have guaranteed access to the policy loans and withdrawals. So for example, let’s say you’ve been building up the policy.
You have $100,000 in cash value. Next thing you know, there’s another 2008 that happens and another market crash happens. Banks aren’t giving out loans, market values have dropped. You can go to your policy that didn’t drop in value based on market conditions. And the insurance company will guarantee you that your ability to borrow against your money, it’s guaranteed for you to take out a loan against it. The only collateral you need is just the policy itself. You don’t need any other collateral, no credit check, no credit scores, no other property to put up. Nothing. No other collateral, but the policy itself. So this kind of opens up the doors when other people can’t take out loans in poor economic times, you’d still be able to do that in your policy. It wouldn’t be affected by market conditions and you wouldn’t need any other way to take the money out.
And then also, I guess the sixth benefit is in most states, the cash value of the whole life policy is protected from creditors and judgements. So this means, if you’ve been building up cash value in a policy then somebody sues you for whatever reason, check with your lawyer about this, but in most states you can look this up that the cash value is outside of the judgment, it’s an exempt asset. So it doesn’t really count when you’re being sued. Again, I’m not a lawyer, so check with your lawyer about that. But in most situations, there’s a lot of asset protection behind the use of dividend-paying whole life insurance.
Jay Conner
So a person can borrow using that whole life policy as the collateral, they can borrow against it with no credit check or whatever. That’s one way, through this strategy, you can help real estate investors, is that right?
Sarry Ibrahim
Absolutely. And we can help them through a couple of different ways. So one way we can help them is, literally, if they have enough cash value in the policy, they can go to the policy, and borrow against that for the downpayment. And then banks also allow that. So if the bank asks you, “Hey, where did you get this 20% down payment from?” You can say, “I got it from my whole life insurance policy.” They actually like to see that in portfolios because when you borrow that money, it doesn’t decrease the value of it. Your money actually keeps growing, even when you’ve borrowed that money. So you can use it for downpayments. Now, if you have a lot of cash value in the policy, you could actually use it to finance the entire deal.
So you’re becoming your own mortgage. You go to your policy, you borrow against it. You buy a deal as a cash buyer, and then you finance it yourself. Instead of paying monthly payments to a lender, you pay it to yourself back into the whole life policy. And then when you do it, and the reason why it’s important to do it that way is you have two assets instead of just one. Instead of trading cash for another asset, you have 2 – you have the whole life policy accumulating in value, and you have the real estate that you buy that’s also going to appreciate in value, hopefully, over time. So you have these two assets now that are growing and then you leverage one for the other asset.
Jay Conner
That’s awesome. So sorry, just for the sake of those that may have to leave the show early, I want people to go in and get your contact information right now, and then we’ll continue the interview. So I know you’ve already piqued a curiosity with some of our listeners, what’s the best way for them to connect with you?
Sarry Ibrahim
So the best way is to go to our website. It’s FinAssetProtection.com. And then you can schedule a free consultation there. You can also download a free book that talks about this concept.
Jay Conner
Awesome. So again, everyone, you can connect with Sarry at www.FinAssetProtection.com and you can schedule a call with him. So I’m back to this concept. So, let’s talk about some hypothetical numbers, right? So I’m thinking one question that some of our listeners may have is, “Okay, if I get to borrow against my whole life policy that you can help me get set up and structured and all that, let’s do some real numbers here.” So let me give you the blanks to fill in, and you can give us a hypothetical situation. Let’s say someone’s going to take out $100,000. You decide in this hypothetical scenario, they’re going to take out a $100,000 whole life policy, how much money have they got to pay into that whole life policy, to where they can actually start borrowing against it? In other words, have they got to pay $50,000 to where they could borrow $50,000 back? Or are they able to pay in a smaller amount of money into the policy and they could use that as an asset and borrow a higher amount of money? That’s question number one. Question number two is how long before they would open or establish a whole life policy before they could start borrowing against it?
Sarry Ibrahim
So, I’ll start with the first one. Typically in the first couple of years, you won’t be able to put in, for example, $50,000 to borrow $100,000. Typically you’d be able to borrow out less than what you put in, in the first couple of years. Eventually it’s going to grow. It’s a long-term strategy. It grows over time, and that’s really where you can borrow more than what you put in, in the future. But to answer clearly, the first question is, no, you wouldn’t be able to put money in and then borrow a higher amount, typically less than what you put in, in the first couple of years. And then you could actually borrow right away. So for example, I worked with a client who put in $200,000 in cash value in a single-premium whole life policy.
She put in a one-time payment of $200,000 and then was able to borrow right away. Probably, I would give it 2 weeks until the policy gets issued. You get your online account that you can access and see the cash value. About 2 weeks after that, she can access 90% as a loan out of the policy. So about $180,000 can come out to her and then she could pay us back whenever she wants. She’s actually going to use this to become a private money lender. She’s going to loan this out to another real estate investor, and then of course, she’s expecting between like 10% and 15% as her ROI on the interest. And then she’s going to take her profits and then pay the policy loan back.
And then also, the way we structured this policy was that she could put more into the policy than she borrowed. So, for example, she takes out $180,000 then she invests it. She ends up making the 180,000 into 200,000. She can then take all of that 200,000, put it back into the policy, paying the loan first then some of the interest of the insurance company, and then whatever’s left over from there, her profit or true profit, she could add it on top of the policy. And then now her cash value is like, $210,000 or $220,000, whatever this might be. So it’s going to go up when you’ve added more into the policy.
Jay Conner
Gotcha. So, of course, over time, interest rates are going to fluctuate, but as of today, on the recording of this show about what interest rates are hanging around when someone borrows using their policy as collateral?
Sarry Ibrahim
When they borrow, it’s typically 5% simple interest. So if you took out a loan, paid it off in 4 years, it would be about 1.9% APR, 1.9% compound interest that you paid to the insurance company. And then while that’s happening, typically you’re earning 4 to 6% in your policy over time. So that’s how you can kind of have an arbitrage, a split between how much you paid in interest and how much you earn. So it’s very common for somebody to, for example, in 1 year who took out a policy loan, paid it back in that time in that one year, they earned like $10,000. For example, an interest in dividends, depending on how much cash they have and they’ve paid like $5,000 in interest to the insurance company. So there was an arbitrage, there was a split between how much they borrowed and earned and how much they paid back to the insurance company. So really when you connect this with real estate, you have a double compounding effect on your money. Like in this case with this client, she’s going to make money in her whole life policy, through the interest in dividends. And she’s going to make money with the private money lender with the real estate investor, who’s borrowing her money. She has two sources of growth in her policy.
Jay Conner
That’s amazing. So from your experience, Sarry, in working with people, what’s your overall advice or opinion, that is, is it best to invest in your business? Is it better to save cash? Which way to go and why?
Sarry Ibrahim
Definitely. And I think that both of them have their reasons, right? It’s important to have cash for emergencies and to kind of grow your wealth over time, your actual cash. And at the same time, there’s downsides to that, right? It’s like when you have money sitting in a bank account, it loses opportunity costs you could have earned had you invested that money somewhere else. You lose it to inflation and I think, as an entrepreneur and as a business owner, you never want cash just sitting around because you’re probably just going to spend it. So I think that investing is really important, but really that’s another advantage of infinite banking is that you have the opportunity to do both. You could fund the saved cash, and then anytime you need to access that cash, you borrow against it. And I’m seeing these words, clearly, Jay, that you want to borrow against it, so that way you’re not interrupting the growth of your money. So, for example, if your goal is to save for the next 20 years, and you’re accessing that money in the middle of those 20 years, it’s not going to interrupt your overall goal. You’re borrowing against it. You’re leveraging that asset and you have the ability to keep growing that asset, that cash asset, while still being able to invest in your business and other areas.
Jay Conner
So I just want to make sure all of our real estate investors or those that are interested in real estate, summarize for us one more time how you can help real estate investors.
Sarry Ibrahim
Yeah, I can help them become their own sources of financing instead of having to rely on banks and hard money lenders and private money lenders. They can become their own source of financing. I can help them do that.
Jay Conner
That’s awesome. What’s the minimum age that someone needs to be in order to deploy this strategy?
Sarry Ibrahim
So, there’s many ways you could do this for you to own your own policy. Technically, it’s typically the adult age, 18 years old to own your own policy, to be insured. I’ve insured clients who were newborns. That could be a whole ‘nother podcast, is how you can use infinite banking as a college savings fund for children. So I’ve insured children as they were newborns where the parents own the policy. They pay into it up until the time the child is in college. By the time they’re 18 years old, they’ll have like $150,000 in cash value, just from putting in a few hundred dollars a month into the policy. So to be the owner, typically, 18 years old. The youngest clients I’ve had, the owners were probably about 23, 24 years old, where they’re the owners of the policies.
That’s kind of the youngest age I’ve seen, but technically it can be 18. Usually, we’re looking for clients who are kind of not really starting their careers and already have some income, like $1,000 at least a month and they could save $500 a month. But we also do work with clients who are in a tough situation where they have a lot of debt and they kind of want to figure out a way to pay the debt. It’s not just wealthy clients we work with. We work with all types of clients.
Jay Conner
That’s awesome folks. One more time, I’m visiting here with Sarry Ibrahim and his company uses this concept called “Infinite banking concept,” also known as the Bank on Yourself concept. To connect with Sarry and get a consulting call, you can go to www.FinAssetProtection.com. And if you’re listening, Sarry is like ‘Larry,’ but with an ‘S.’ So, Sarry, any parting comments and final thoughts?
Sarry Ibrahim
Definitely. So I have a show called, “Thinking Like A Bank.” And the reason why I mentioned this is because one of our ideas or theories is you want to think like a bank. Banks are the largest purchasers of whole life insurance. They’re doing it for a reason because of the guaranteed growth, the tax benefits, the asset protection, all the benefits we mentioned, they’re using it for that. So, as an entrepreneur, think like a bank. Think how, instead of just thinking about how to always actively manage real estate, think about what if you become the bank where you are actually loaning out your money to other people. And in the sense that you’re now a banker, not just a real estate investor, and that’s kind of what the show is. We talk about how to do that, how to become your own banker, how to save on taxes, how to save overall in your life and be able to find financial freedom by applying the same strategies that banks use.
Jay Conner
That’s awesome. Well, I appreciate you so much, Sarry. You’re taking the time to be here on the show. And again, folks, you can connect with Sarry at www.FinAssetProtection.com. Sarry, thank you so much. I appreciate you, my friend.
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