28 Feb 2014

“My History With IBC [Infinite Banking Concept]”

Infinite Banking Concept 5 Comments

This article is from the May 2013 issue of the Lara-Murphy Report. This area actually represents a large and growing portion of what I do for a living, so I thought my autobiographical tale would interest some of you.

5 Responses to ““My History With IBC [Infinite Banking Concept]””

  1. Keshav Srinivasan says:

    Bob, didn’t you already make the article into a blog post here?

    • Bob Murphy says:

      I think I posted the text of it, but I wanted to permanently store the PDF version with the pretty pictures.

  2. Chase says:

    Great article… for anyone willing to fully read and internalize.

  3. Random Guy says:

    I got an unsafe site warning. Lol

  4. Steven M says:

    This post is interesting to me, because in my life, I also have encountered the Become Your Own Banker concept, Austrian Economics, and Actuarial Science along totally unique paths.

    Attending school for my undergrad degree in economics in 2004, my intermediate macro-economics professor suggested that students take advantage of the special pricing that the Wall Street Journal offered for students. He said reading the front page and the opinion section each day would make you an expert on current events. I took his advice and was glad I did. One day, I was visiting this professor during his office hours, and I mentioned to him that I had been enjoying reading the newspaper, especially the opinion section. He didn’t seem too interested but did say that the WSJ could be “too libertarian”. I had no idea what this meant, so I looked up “libertarian” on wikipedia when I got back home. I was ecstatic to discover there was political philosophy that basically summed up my personal belief system. From there, I discovered libertarian media, such as, Free Talk Live, and Lew Rockwell .com. I didn’t gain a proper appreciation for Murray Rothbard until after graduating with my economics degree in 2006 (So, I spent 2008-Present unlearning everything I learned in my college econ classes!). Luckily, future generations are safe – my 6-year-old son goes to bed listening to me read “Economics In One Lesson” 🙂

    Also while in college, a classmate I had known since high school started working as a financial adviser. During this time, he sold me dividend-paying whole-life insurance from a mutually-owned life insurance compnay, and we included a PUA rider on the policy. I specificially recall listening to the “Become Your Own Banker” pitch almost 10 years ago! I have kept the policy inforce, and in essence, I will never need a car loan from a commercial lender again 🙂

    In 2007, I began working as a life insurance actuary for a multi-national stock-owned company, and I’ve been doing so ever since. I don’t read as much as I used to, and parly because I am firm in my beliefs that a voluntary society is the best way for humans to be organized! Through this lens, I can apply my principles to current events, and usually come to the same old conclusion: the government is usually the problem.

    I enjoy discussing economics, politicial philosophy, and personal finance with friends and co-workers. This blog post was a neat reminder of how inter-related my favorite topics can be. And, I like the suggestion in the blog post that there is more that people can do to steer society in a better direction than just educating others!

    Thanks for allowing me a chance to reflect on my personal journey.

    Regarding, the BYOB concept, a few questions came to mind (being an actuary for a life insurance company, I’m not sure if I should be embarrassed of a few of these):

    1) Does a life insurance policy loan have any impact on the future cash value of the life insurnace policy? Let’s say that the cash value at time A is $30,000, and illustrated to grow to $50,000 at time C under guaranteed rates. If there is a policy loan of $10,000 taken at time B, does this have any impact on the time C cash value?

    2) How would an economist compare/contrast “being your own banker” by using life insurance policy loans compared to 401(k) plan loans for big-ticket purchases (cars, college, weddings)?

    3) One of the items that disturbs me most about life insurance is the large first-year commissions. I suspect that the traditional, agent-initiated approach to life insurance sales may eventually give way to something less intimate, with lower costs for the insurance company, and ultimately, consumer.

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