This was originally published on January 21, 2015.
Man, I’m starting to have trouble keeping up with all this. The folks at the Palm Beach Letter are so enamored of their “outside the stock market” investment idea that they change the name of it every few months. Whether they’re just testing out which term most appeals to potential subscribers, or because they’re ardently trying to keep their “secret” I don’t know.
But we can, at least, keep telling you what it is they’re actually talking about — whether it’s the “Babylonian Money Code” or the “President’s Private Account” or the “Invisible Retirement Fund” or the “770 Account.”
Yes, those are all the same thing. This is how the latest ad from Palm Beach describes the “Babylonian Money Code”:
“Outlawed by Caesar before the birth of Christ…
“Banned in France in 1681…
“Stolen by Hitler during World War II
“What you are about to discover is the tale of an asset so controversial… so coveted… that it is still cloaked in mystery today.
“Modern pundits scorn it… the rich love it… government all but censors it….”
Sound familiar? It’s a great story — Mark Ford hasn’t lost his ability to teach the next generation of copywriters how to pitch an idea and make it sound fantastic. Here’s a bit more, just to give you a taste:
“The individuals who possess it-even those who have stumbled onto it-see their wealth and their fortunes flourish.
“But it’s not a tale of gold, silver, stocks, bonds, or real estate…
“And its roots go much deeper than bitcoin or any of the latest financial inventions.
“No… The secret we’re going to uncover today traces its roots all the way back to the dawn of recorded history. To an ancient code written more than 3,800 years ago…
“And even though this asset appears 500 years before the Ten Commandments, it’s been scorned throughout much of history….
“In the 19th century, the Church called it ‘a speculation repugnant to the law of God and man’…
“But despite these obstacles, many of the world’s elite have long sworn by its power.”
So there’s plenty of intrigue — and the implication that this asset class has its roots in the Code of Hammurabi and the “first Wall Street” of ancient Babylon. More…
“In fact, scholars today believe this code unlocks a secret that’s made people wealthy for nearly 4,000 years…
“It’s the source of an investment formula rooted in the twin pillars of safety and prosperity-which made the Babylonians so wealthy.
“Some researchers refer to this method as the Babylonian Money Code-in honor of Hammurabi’s own text.
“For the past four millennia, it has quietly protected and grown personal fortunes.”
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And yes, “some researchers” likely means “the people at Palm Beach Letter.” Though yes, it is true that scholars credit either the ancient Babylonians or Chinese traders with the invention of what we would call insurance (depending on who you ask)… and this is a kind of insurance that Tom Dyson and the Palm Beach folks are talking about. Though it’s not the kind of insurance Hammurabi would have been interested in — which was mostly insuring trade and shipborne goods — it’s life insurance.
Have we lost you yet?
Yes, the “Babylonian Money Code” is Tom Dyson and the Palm Beach Letter‘s most recent made-up phrase to describe the “Bank on Yourself” or “Infinite Banking” system — which is essentially a system that has individuals buy up participating whole life insurance through mutual insurance companies, maximizing the cash value through “paid up additions” or other means and maximizing the potential dividends from the insurance company, and borrowing against that cash value for life’s needs in the future while finally, in the end, passing the assets along to their beneficiaries in the form of the tax-free death benefit.
We’ve had many discussions of this system over the last year or two that Dyson has been touting it, so I won’t rehash the chatter for you — here’s my quick take on the many back-and-forth discussions that readers have had:
The arguments in favor are that (once the cash value has built up) you can create your own “bank” and borrow from your insurance policy to buy a car or start a business or send a kid through college; that mutual insurance companies have historically paid nice dividends to participating policyholders that can build up the cash value substantially over decades; and that the gains in the end are tax-free and eventually create a steady mid-single-digit “safe” return on savings that compounds the ultimate value of the policy.
The arguments against are that it takes ten years or so (that’s an average number I’ve heard, not a promise) before the cash value of whole life insurance starts to work for you (and not for the insurance agent), since commissions are front-loaded; that it requires discipline because you can lose the asset or the tax benefits if you don’t keep up your payments or repay your loans; and that the whole system is complex and opaque and non-standardized, so it can be very hard for consumers to set it up properly or to compare whole life plans across companies or providers, let alone the more complex riders that maximize the value of “bank on yourself” (or “770 account” or “Babylonian Money Code”) plans.
So if you’d like to chat about all of this again, feel free — or you can revisit our past articles on the subject, you can find our look at the 770 Account / President’s Account here from about 18 months ago, and our more recent piece about the Invisible Retirement Fund here.
I think I can write at least two novels with the premise promised in the teaser. Robert Langdon, I’m gonna need you once again.
Well I can tell you right now who benefits from this short term. 1. The seller of the newsletter. 2. The insurance companies.
10-15 years to start making money seriously! Imagine what you could do if you took the news letter payments and put them into a solid investment and then reinvested the profits over and over for 10-15 years! You would have a huge account on your own without paying a guy to get rich selling you the information, or the insurance companies. I can almost guarantee the insurance industry came up with this having done the math showing most people fail to keep their policy payments for 10-15 years. Most people can’
t event keep up on car payments, morgage payments etc for that long.
Run like heck from this.
P.S. The people who create these fake intellectual money siphoning schemes are professional lying crooks! It’s is actually the norm and then taught to the apprentices etc. The hierarchy ends up with all the money while their lying incompletely educated schemer helpers get just enough to live slightly more comfortable than the average joe. In the end these schemes enslave everyone who doesn’t have a billion+ in the bank. Even those people are still coerced financially, or through the public propaganda machine.
Reject the liars in positions of influence, business, organized religions, politics, and enforcement etc. Replace them with the most good honest people possible! Your lives and futures literally depend on it. These selfishly insane liars have destroyed countless societies throughout history and are on a roll to do it once again. Start with you local politicians, then the State, and just keep going from there if you don’t want to end up betrayed and enslaved by your lying masters who teach lies and leave out all the real key details to monopolize and control everyone’s lives.
Demand real truth, true freedom, peace, prosperity, and the opportunity for EVERYONE to live the best possible lives. The liar clubs always get sold out by the hierarchy when their done using them for the dirty work. The people in general are sold out daily and it’s completely ridiculous! The world cannot sustain to much more of this nonsense and the golden goose will die if you keep going along to get along. Treat everyone as good, or better than yourself. Love everyone as much, or more than yourself. You will find these liars always do the opposite and are the scum of the earth!
Don’t believe their lies, do their dirty work. allow others to do their dirty work, fund them, buy from them, sell to them, or aid them in anyways. Build an amazing world for ALL!
“The liar clubs always get sold out by the hierarchy when their done using them for the dirty work.”
You might consider using the contraction ‘they’re instead of the possessive ‘their’ in your above quoted sentence….. But thanks for the critical review, it is informative.
Saved me $49.00.
“Real Truth” makes plenty of sense and instead of picking apart the grammar/spelling you should be directing the readers to the main fact regarding whole life insurance. ie: “anybody who desires to purchase a “whole life policy” requires an unbroken stream of income to finance the policy if they ever hope to benefit.” That means monthly premiums must be paid when due! If not, the cash value of the policy dwindles faster than a stalk of corn/wheat in a prairie drought.
The average Babylonian (meaning not part of the rich entitled governing class who were guaranteed an income and pension) like many of us presently probably went through extended periods of unemployment lasting perhaps weeks or months. I imagine countless numbers of people in the past losing their wealth to the Insurance Brokers who lived in the best homes, travelled in the fanciest chariots and plied their trade in the biggest buildings much like they do today.
You omitted mentioning the Real Estate Sales person – who is a major beneficiary from the sale of this bogus investment to uneducated consumers. The reason it takes 10 to 20 years before it starts to break even is that is how long it takes to compensate the insured for the heavy commission paid out in the early years to the Agents – which can often be 67% to 120% of the first 2 years premiums. Some Sales Agents have gone to jail for selling 20 year pay off policies as 10 year – and a major Australian Life Office went to the wall because of the fraudulent sales by its top agents.
Where a profit can be made – and it is a good investment – is to buy up policies from owners for the surrender value. in a similar fashion as Viaticals are sold to investors when the policy owner is terminally ill.
will this give details l ,on how to get started in a #770 Account. I have inquired to mutual ins co ,and nothing
These insurance policies are generally customized and sold through agents, not direct by companies — part of the reason they’re so opaque.
I certainly can help you fund one of these plans Patrick through a variety of companies.
What a dead horse flogging idea. No one buys whole life anymore, at least the friends & family I know. Term life is the way to go when you have marriage & family responsibilities to cover should you die. Drop it when the kids are grown, you are older and have saved enough to retire. Some term plans via your job even switch to a paid up lifetime plan at age 65, but have no cash value to borrow against.
Yes. I am a member and they give you the information you need to get started.
Do you mean you’re a Palm Beach member? How much have you banked so far?
I have been in the insurance bus. over 25 years, and dispute you statement.
Term insurance is only good if you have whole life with it. Whole life is good for your whole life. You can sell your policy when you don’t want it or don’t need it. With term ins. , the term policy usually dies before you do. Most common term is 20 year term. You will have paid premium for 20 years, and you get nothing beyond that.
You are looking at a cheap way out for protection, not the logical choice.
Term life insurance is a product for people who want protection at an affordable price, it has nothing to do with investing, the whole thing about buying term at an affordable price and invest money in something like stocks, well, its all design to keep you chasing a carrot, dangled in front of you. Truth is, if you have money to invest, and understand how “Whole life” works, why buy something cheap, and then invest in an unsafe product like Stocks? Whole life is a good way to invest, if you have the money to invest, and don’t want do it cheaply. Folks are afraid of what they don’t understand. Of course the financial gurus will all “pooh pooh” something the can’t make money off of. So, before you go demonize a product you don’t understand, take a peek at it from an unbiased stance. You’ll be surprised what you find. But, if you wanna do it cheaply, buy your “term” life, and follow the crowd to wall street, they got it down pat on how to fleece you with a smile.
Term is straight life cover at the lowest cost – If you want Insurance it is the best way to go.
WOL is not an investment – it is overpriced life cover with a pittance of a return that make it a pseudo investment. If you want an investment that pays – which you do not have to wait for 10 to 20 years before breaking even do not buy WOL or Endowment Plans – You can buy a vary of alternative real investments – starting with Real Estate, Stocks or if you want to invest via a Life Office buy single premium insurance bonds, which can be unit linked, fixed interest or Capital Guaranteed. The more guarantees you want the lower the returns – but at least those policies are honest and clearly state the basis of the returns – not like WOL which are deceptively marketed and the commissions are hidden.
Before mouthing off about something you clearly do not understand – such as how “Whole life” really works get educated!
Cash value can be built up in the first year if the plan is written the right way. it involves cutting the agent commission and putting money toward cash value through paid up additions. It is actually cheaper than term in the long run because the longer you have the policy the more cash you accumulate. The cash value can be more than the premium you pay.
Are you kidding!!! I was an agent for over 5 yrs. I left the industry because I was expected to sell whole life. It cost 10 -20 times term when it is really needed (young families) for protection of those you might leave behind. Can you imagine buying any other insurance, such as homeowners, that way? Pay 10 times as much and your premiums will never go up. Rubbish!
David Chilton: The Wealthy Barber: Pay yourself. Same thing.
Ditto what tomtom73 stated.
Good review in general, but there a few things that are not 100% right.
Arguments against getting this account:
First argument: “it takes ten years or so (that’s an average number I’ve heard, not a promise) before the cash value of whole life insurance starts to work for you (and not for the insurance agent).” – if it is structured correctly, it should take from 4 to 8 years; that is depending on your age/health and contribution amount per year. After that, the rate of return will be around 5-6% tax-free.
Second Argument: “that it requires discipline because you can lose the asset or the tax benefits if you don’t keep up your payments or repay your loans”. That can be a true statement, depending on the policy structure and policy year. I can’t go on details here, but if the policy has been “capitalized”, you don’t HAVE to repay your loans. I took multiple loans on my own policy, and I didn’t pay those back for more than 8 years, and the policy didn’t lapse.
Third Argument: “and that the whole system is complex and opaque and non-standardized, so it can be very hard for consumers to set it up properly or to compare whole life plans across companies or providers, let alone the more complex riders that maximize the value…” – YES, it can be complex and opaque, more because you have to go through a mutual company, and those mutual companies do not work directly with consumers. So you have to go through a life insurance agent. And YES, it can be complex… that is why you need to work with an experience agent that has the knowledge structuring these type of policies (with the right options and riders). But if you are working with a good agent, you don’t have to worry about it.
And LAST Argument – “can be hard to compare”. That is very true! That is why I would like to offer you my help. If you are currently working with an insurance agent, and your goal is to maximize your cash value (or the living benefits instead of the death benefit), then send me the illustration/contract before signing it, and I will give you an unbiased opinion about it. In a few minutes, I can see if the policy has been structured to maximize your cash value, or to maximize the agent’s pocket. Free of charge. Why? because as a Christ follower, I see this as my ministry. Send me an email to edgar@arceofinancial.com , or send us a message through our website http://www.arceofinancial.com
Is there no spam button on this website? I’m new.
Also: is 7. vivian accurate in her description of Arceo’s website? Troublesome implications.
Been to the website (main page only) I found no glaring disrespectful content.
In our ‘phobic’ society it’s easy to jump.
I’m retired, not meeting the criteria to benefit, so have no standing to + or – the website.
Great reply, does Edgar ever hear about Judas?
Yes, These plans are very hard to compare. A case in point my son’s grandfather paid into one of these plans soon after he was born. When he passed on my wife and I maintained the plan. Except for recession years where we had to add to the seed the plan earnings maintain the plans and grow, a little bit better than inflation. When my son began working (about 16-yr later) I started funding a little bit into IRAs for him about $500 based on his wages. When he went into the military and did Iraq and Afghanistan ( no taxes) I converted his funds to a Roth and continued small investments. The premiums and IRA investments corrected for inflation are about the same, The insurance (with a 16-yr head start) is worth about $60,000 the Roth about $85,000, as pointed out neither has a tax consequence. I’d say random investment beats the insurance, but neither is in the $1M range.
Lol – Edgar Arceo you are a load of crap pushing your own wheel barrow – openly attempting to mislead and defraud the public. You should go to jail for your comments!!
Edgar Arceo sells mutual life insurance. Is he cheaper or fairer to policy holders than others? No way to know. I am not sure if he is a real reader of stockgumshoe or merely someone who spotted that his business is being discussed. I visited the site and all I can
say is that it is full of New Testament quotations, presumably to make up for the odor
of sulphur about the whole whole life business as cited by Travis in his current write-up.
If you are Jewish or Muslim or atheist you might feel unwelcome with all those bits of
St. Paul’s writings to the Corinthians, etc.
Vivian, exactly, brilliant. If you want to invoke religion to justify being greedy, mysogynistic and somewhat likely to kill innocent people to get the 72 virgins and everlasting orgasm, you’re not an insurance agent I’d deal with.
It’s my first post, and I need to learn about investing (I have none), but the site has no equal, as far as I can tell, and the cumulative brilliance, insight of people that comment is outrageous.
Next, i’ll look for a primer on what this ‘stock’ thing’s about…….buying puts?
Thank you everyone/longer days/we exist Har
Yes, I consider my business a Christian Ministry – that doesn’t mean I will just help Christians, but I help people with a christian perspective.
Now, If I said something wrong, then tell everyone here what was wrong; but if the things I said are right, why do you judge me as a greedier or a scam artist?
I posted this in another feed, and I want to post it again:
If you are thinking about doing this, make sure you are getting the best policy for you. It is a big commitment – be wise! Here are some pointers: Make sure you are going through a Mutual Insurance company that is rated – AT LEAST “A or A+”. Check their dividend rate against their loan rate. If they are charging you a loan rate (2015) of 6-7% or more, that is probably a little too much.
And finally (VERY IMPORTANT!): You should be able to break even in no more than 8 years. I have seen MANY policies where they break even in 4 years – so it all depends on your age/health and contribution amount. But if it is taking more than 9 years, you are probably not getting the right policy. After breaking even, you should be getting a rate of return of 4-6% tax-free (current dividend scale – 2015).
If you have questions, or if you would like me to check an illustration/contract for you, send me an email or contact me via my website. It will just take me a few minutes to see if you are getting a good policy that will maximize your cash value, or if you are getting a policy that will maximize an agent’s cash value! Free of charge. Why? This is my ministry, and I want everybody to get the best policy they can have. I am tired of bad insurance agents getting rich at other people’s expense.
edgar@arceofinancial.com or http://www.arceofinancial.com
With so many insurance salespeople going for the maximum commission, this is why whole life was pushed almost exclusives for decades, so the advice given is spot on, so perhaps some insurance people are ethical to the maximum allowed by the companies they work for, but like many, they do not do their due diligence when choosing a proper plan. The tips provided are good ones, so thank you,
It’s true…whole life is like a religion!
Travis doesn’t have life insurance Vivian, where does he say that? Convertible term or Universal life automatically lowers the agents commission, I was both a customer & vendor later on. Sulphur odor is a bit dramatic, even for you my dear.
Perhaps best to place your money into one of the BEST Dividend stocks of all time MO , and just let it ride. No complicated nonsense!
I think “Babylon” might be a typo…for Mr. Dyson, it seems to be the “Babble-on” code.
Funny, took the words right out of my mouth as I had listened to this babble on. lol
I applied for this 770 account, “bank on yourself” plan last year. I went through a medical exam, blood test, urinalysis and went thru all my medical histories. The insurance company stopped evaluating my application since my medical records seem to be incomplete. I have a heart murmur since I was a child. This probably bothered the underwriters. They want me to go thru an ultra sound testing of the heart, with me footing the bill. So I told my agent, never mind.
I am just going to invest in my ROTH. Withdrawals are tax free after 701/2 and could earn more than 4-6 %. I am 74 now
Agreed Alice,
And if you use a self-directed ROTH investment fund, you can invest in stocks, bonds, etc. A few years back I converted a 401K to a self-directed ROTH at TD Ameritrade and its given me a steady 78% return invested in only 4 solid stocks.
Ron please share! What are your 4 solid stocks??
Hey Travis, great job on an old idea. I know this strays off of this subject, but any new info on another oldie…hopto? Thanks…
Hopto has just had a run up these last few days. Any news as to why?
For the most part ,as I see it, Life Insurance is for protection not an investment vehicle. You buy insurance to provide the funds in early years to provide what you haven’t yet been able to save to provide for family in case of your death. It can also be used to protect what you have saved later in life from estate tax issues if you don’t want the tax man dipping into inheritance you leave. Iam a former Life Insurance Agent and believe in buying term life and investing the rest. Whole life premium are much larger than Term premiums so in your early adult years you would probably end up buying a lower amount of coverage than needed for your situation due to affordability, if you bought Whole life. The motto I heard and like is buy Term and invest the rest.( ie determine what the premium for Whole coverage would cost and subtract the premium amount for Term Life you pay for same amount of coverage the answer equals the amount you invest.) You will be miles ahead in the long run. (here, here, to Gerald’s above suggested investing in the best dividend producing shock). Whole Life or there is a product called Universal Life used in certain business and high income earner situations for some tax and saving benefits, however in our low interest rate environment that probably has limited benefits right now.
Whole Life is an old product. There are much better products out there today, such as universal life. FYI if you go to an agent and he submits an application walk out. In full disclosure I am an underwriter working for an agent. It takes 3-6 months to place a policy. We do not subject clients to an insurance exam until we have multiple offers from insurance companies. We do this for a $500,000 twenty year term policy or a $10,000,000 universal life policy. Make sure YOU get the best rate no matter where you shop. Don’t accept that you are a standard risk because one insurance company says you are so. Seriously, I’ve had a company decline a client and another offer the best rate. It should be an exact science but it is not. Sorry to go on and on about this, but I try to get the word out to people to be sure your agent is shopping informally for you before filling out an application.
Listen to the spiel until you’re bored. Try to exit from the site. A window will appear asking you to stay on that same page. Tap on that and see the text of what you’ve listening to. Scroll down to the bottom and you’ll see that this is another ‘subscribe with me and get rich’ plan. Thanks anyway.
Travis, have you taken a crack at “Income Extermination”? The Palm Beach folks also touted Teeka Tiwari’s “Income Extermination”, which was to happen on June 17, 2014. That date came and went without the occurrence of the predicted event, so the date changed to September 17, 2014. Again, the predicted event didn’t occur so it’s been rescheduled to March 17, 2015. The Palm Beach stuff is so tiresome that I’ve unsubscribed to it. Mark Ford sits on his high horse with his plus $50 million wealth that gives him all the answers to any issue you face, such as whether and how you should support your children. Enough is enough.
Palm Beach Letter? Hey where’s my little umbrella in that ‘Lie’…bation? Should be called the B.S. Chute Sheet. Every man knows the value of his own fertilizer? When you can’t get a license to sell stocks and bonds and the Fed Things dreams are made of, sell subscriptions. These people should get a reservation on the first flight of the ‘X’ rocket to Mars. BOL
Moderation of what, Palm Beach nonsense?
In 1949 I purchased a $25000 whole life policy. Today the dividend accumulation is
about $275,000.00. This dividend accumulation has grown in large measure because of the compounding of the 6% interest that I receive on the dividends. The policy is now “paid-up” so that total value upon my death is about $300.000. I continue to receive 6% interest on my accumulated dividends.
Interesting, those numbers are uncannily close to inflation ($25,000 in 1949 has about the same purchasing power as $250,000 now, roughly speaking). Has it been a fixed 6% the whole time?
I do not understand your math. 250,000 growth from 25,000 is only 3.55% compounded growth per annum over 66 years. Where the 6% comes from?
Thank you Leslie for your comment. That is a nice testimony that this works – more because you get an “uninterrupted” compound interest in your policy – something you don’t get with mutual funds, etc. And by the way – with a better policy structure, your policy would have received a lot more dividends and death benefit – but a 6% interest (tax-free) on your accumulated dividends is phenomenal! Congratulations!
That’s not a great return. It’s about 10:1.
You barely managed to stay ahead of inflation if at all.
Some may argue that you lost purchasing power.
Look at the price of gold in 1949 and look at it now..
I’d prefer to buy gold and real estate.
So I understand, are you saying that the payout on your death is $300,000, or that you could cash out now with $300,000 ? And I guess how much did you invest all those years? At a glance I don’t think we have enough information to determine if this was a wonderful investment. For example, last night I saw a presentation regarding the Templeton Growth Fund, where a $10,000 investment in 1954 is worth over $8,000,000 today – this may be in Canadian funds, not sure – but the fact remains that we need more information as there is more than one way to skin a cat.
And, I would be delighted to pay capital gains tax on $8 million, than receive $300K tax free.
I got the Palm Beach Research Groups “Babylonian Money Secret” email and I am glad I read this article. I don’t waste my money on buying that type of money method hype stuff anyway. Myself, I believe in offering a useful upfront product that people can use right away instead of stringing them alone with fancy long direct copy.
As a wholesaler of Indexed Universal Life, I can attest that the claims and “theory” about the tax-free retirement are correct. I personally own an IUL policy and have seen double digit returns the past few years. The key to success is having a positive arbitrage between the loan rate and the interest credited. Edgar is correct in that there are SEVERAL ways to structure these policies. I did mine so that I built cash value starting day 1, but this required commission being spread out over a 5 year period instead of traditional lump sum. Also, you need to have patience. The compounding factor needs to have time to work for you. I would never recommend anyone marketing life insurance as an investment. That is just one facet along with several other tools they now have (living benefits, guaranteed income riders, etc). It’s not your momma’s life insurance anymore.
Leslie,
If you had taken the monthly or annual premiums you were paying for your $25,000 whole life policy from 1949 to present and put it into Coca Cola or Pepsi stock, You would probably have over 5, 10, 20 million dollars…pick your number, not $275,000. The Insurance company has taken your premiums and invested it at higher returns and given you a pittance….over 66 years ( 2015-1949).
Buy term insurance and invest the difference in stocks, gold/silver, real estate, diamonds, art, scotch etc. than investing in a life insurance policy.
Life insurance companies win because most people will cancel their policy between 5-15 years…all the premiums gone…bought you no asset.
All too true.