Transcript Slide 1

“IBC Review, State of
the Economy, and IBI
Plans for the Future”
Robert P. Murphy
IBI Think Tank
February 2014
OUTLINE OF TALK
(a) Review of 2 Technical Issues
(b) Economic Outlook
(c) IBI’s Plan for the Future
(A) Reviewing Two
Technical Issues in IBC
Review Topic #1:
Cash Value Growth in a
Whole Life Policy
 A “front-loaded” policy has faster
cash value growth than a more
uniform policy.
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Theoretical Definition:
The cash surrender value is the
“expected” death benefit payment
minus the “expected” flow of
remaining premium payments.
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 Consider: A PUA contribution is just
a “mini” ONE-PAY policy!
 So of course it gives a big jump in
cash value, followed by a gradual rise
for remaining life of policy.
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 Related (many missed on Exam): For
the same out of pocket flow of $$ into
policy over time, if structured as PUAs
(rather than base premium), then DB is
lower at any point but CV rises more
with each payment.
 This underscores Nelson’s focus on
“need for finance” > DB
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Review Topic #2:
“I heard the insurance
company keeps cash value
when you die!!”
 Defusing a typical objection to
whole life insurance.
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Here’s what I said at Night of
Clarity 2013 workshop…
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• “Cash surrender value” is the
anticipation value of the
expected future death benefit
payment
(net
of
future
premium payments).
• Akin to building equity in
house
nobody
demands
bank “pay my full equity” and
give deed to house after 30
years!
Although technically true (and
important to stress), my
answer conceded too much to
Dave Ramsey and others who
make this objection, if we’re
talking about IBC (not just
generic use of Whole Life).
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 If you take out (spend)
dividends and no PUAs, then
death benefit constant. This
allows apples-to-apples
comparison with a term policy
(+ mutual fund) that Ramsey
wants to make.
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(Taken from Course Manual to show
constant death benefit illustration…)
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 BUT, if you reinvest dividends
and PUAs, then you’re pushing
up CV (analog of mutual fund),
but also DB. So yes, upon death
you “only” get the DB (and not
the CV too), but that DB itself is
higher because you are listening
to Nelson.
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(Taken from Course Manual to show
rising DB w/ dividend reinvestment…)
 What DB on “same” term policy??
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(B) Economic Outlook
On Janet Yellen’s alleged
forecasting skills…
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“At the time of our last meeting, I held out
hope that the financial turmoil would
gradually ebb and the economy might escape
without serious damage. Subsequent
developments have severely shaken that
belief…I have significantly marked down my
growth forecast. The possibilities of a credit
crunch developing and of the economy
slipping into a recession seem all too real.”
Yellen at Fed meeting IN DECEMBER 2007.
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 We have to admit that another crash is
coming. This is why the IBI stresses Austrian
Economics—they are the only school that
really
understands
the
crisis
that
Bernanke/Yellen
are
setting
up.
 Practitioners must inform their clients of
these developments, both as a general
service, but also to win their trust. They will
remember who had warned them, and who
thought the worst was over.
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(C) IBI Plans for the
Future
 The IBI has a two-pronged
approach to spreading IBC:
Educating Practitioners directly,
but also evangelizing to the general
public and pointing them to the
Practitioner Finder.
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Practitioner Education:
* the Think Tank
* Bank Notes
* online Forum discussion
* Lara-Murphy Report
* Monthly online video briefings
(begun in December 2013).
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Outreach to the Public:
* Night of Clarity (Nashville)
* Videos on IBI YouTube Channel
*Lara-Murphy Report
* Marketing brochure (ask details)
*Forthcoming new books from
Nelson and Bob/Carlos!
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We appreciate your early support.
The IBI has a bright future.
Americans need to learn the
benefits of IBC…NOW!
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