The Before Asset …

Why

The before asset is not about deprivation. It is about sequencing financial decisions in a way that benefits both the owner and the owner’s legacy. Order affects outcome, and this is built for using that order intentionally.

What

The before asset uses a system of participating whole life insurance (PWLI) contracts coupled with convertible term life insurance from one or more mutual insurance carriers to help a family generationally reclaim long-term control over key banking functions.

These functions include the acts of exchanging, saving, storing, increasing, deploying, and replenishing money and are typically conducted with a checking and savings account in conjunction with various structured and unstructured debt instruments through a bank relationship.

The before asset’s primary purpose is to replace the bank with the insurance company to service all spending needs. To accomplish a system large enough to accommodate all spending needs, maximum insurability or human life value is purchased to guarantee the right for future system expansion.

Once complete, the insurance-company-for-bank transplant creates the ideal private spending platform whereby the owners of PWLI contracts not only continue to enjoy their typical spending but also participate in the financial benefits created by that same spending.

How

Rather than liquidating assets or interrupting long-term growth, this approach allows the owner to meet spending needs while preserving the underlying asset base. Leverage instead of liquidate.

Overview:

• PWLI contracts increase in value each year through contractual guarantees -perfect collateral with the company making the guarantees.
• That growing value creates a strong foundation for storing capital.
• Cash flow is directed into the before asset rather than into traditional savings vehicles.
• When spending needs arise, the owner can collateralize the before asset with the insurance carrier to access cash.
• Afterward, the owner replenishes the before asset by satisfying the lien or liens.
• The carrier must be mutual in structure, so policyholders are the only ones entitled to receive annual dividends. The before asset is designed not only to support the current generation’s spending needs, but also to serve future generations. In that sense, the system is intended to benefit an entire lineage, not just one individual.

Not

• A way, method, or excuse to sell PWLI.
• Any asset, or property, or combination of assets or property, outside of PWLI from a mutual carrier, used to personally control the banking functions.
• Deliberately utilizing banks for any purpose outside of helping transition/migrate away from banking intermediaries and toward mutual life insurance carriers.
• A PWLI contract from a mutual carrier designed with disregard to maximum efficiency of the insurability with respect to lifetime cash flow absorption.
• A PWLI contract from a mutual carrier designed with the obsession of current cash value egregiously above current spending needs with disregard of future benefits.
• Limiting a PWLI contract from a mutual carrier to being a piece of the financial puzzle as taught in Modern Financial Planning.
• Limiting a PWLI contract from a mutual carrier to being a tool to access leverage for asset purchases.
• Limiting a PWLI contract from a mutual carrier to being a tool to refinance existing debt.

Context

The process begins when a person realizes their normal spending represents valuable economic activity to someone. The direction of that spending is typically away from them and toward someone else. This domino starts a chain reaction.

The direction the cash is flowing leads this person to feel starved of access to money. Like most, they make good money but can’t seem to figure out where it all went. They are keenly aware that everything they want to purchase seems to cost more year in and year out. That makes it very difficult to save and invest. It’s a tug of war between trying to save and invest for the future and live in the present. If they manage any success, it draws attention to their silent partner who didn’t risk anything -the IRS. This person feels like they were one of the lucky ones and that they hate the idea of losing it all. The default answer is to use IRS blessed accounts and plans to delay taxes as much as possible. They will just have to deal with it in the future. Unfortunately, the red tape to do so means they put their money in a stranglehold where they can’t touch their own hard earned money for decades. The result is this person constantly feeling starved of access to money and having to rely on credit cards and loans for average spending despite making really good money.

Said differently, one man’s spending is another man’s income; one man’s liability is another man’s asset. The act of spending is a business. It impacts every financial decision we make. If you can direct your spending, which will be someone’s income, to an entity you co-own, you’ll make spending a profitable business for that entity. When businesses have a surplus at the end of the year, the send it to the owners of the company in the form of a dividend.

This person realizes three truths: the direction of their cash flow is a choice, that banking is the business of spending so it impacts everyone, and there is one pool of money flowing. So, they decide to move away from society’s default financing model, which relies on third-party intermediaries such as banks to put them on the wrong side of all three truths and they do it with a burning passion and an unshakable desire. Instead, they choose to build a primary financing relationship based on mutuality where the customer becomes the owner -they are inseparable. This is done through mutually owned insurance carriers.

From there, they work to redirect as much cash flow as possible into the before asset. As cash flow increases, they expand the system by purchasing additional contracts. As personal insurability increases, or as new insurable interests arise, they seek to capture that value by acquiring additional coverage, including convertible term life insurance.

This migration turns what was ordinary, often wasteful spending into profitable loan activity for the insurance company. Because the PWLI policyholder is also a co-owner of a mutual carrier, they participate in the financial benefits created by that spending activity. As carrier profitability increases, the year-end dividend to the owners increases.