The more you know…
The Infinite Banking Concept
The Infinite Banking Concept (IBC), created by R. Nelson Nash, is a personal finance strategy that helps individuals take control of their wealth. It begins by recognizing the challenges in growing and managing your money, despite having a good job and a small business. You may have wondered why it’s hard to get ahead, considering the taxes, fees, and interest on loans, mortgages, and credit cards that consume a large part of your income you can begin to see why it’s hard to get ahead. If you’ve ever thought there must be a better way, IBC strategy offers an alternative approach that isn’t promoted by mainstream financial institutions. And that’s on purpose.
Nash developed IBC in the 1980s when he was struggling with high interest rates and significant debt from real estate investments. He realized that by redirecting money toward the cash value of his Whole Life Insurance policies, instead of paying large sums to banks, he could eventually build enough cash value to pay off his debts. Over the next 17 years, he used this method to get out from under that debt and become financially independent.
IBC is based on using the cash value of a Whole Life Insurance policy as a personal banking system. This allows policyholders to borrow (OPM) against their policy’s cash value, rather than relying on traditional banks. While you might still use traditional banks in the beginning, the goal is to eventually “Become Your Own Bank,” gaining full control over your financial resources.
How the Infinite Banking Concept Works
When a policyholder pays premiums into a mutual whole life insurance policy, a portion of that premium builds up as cash value over time. The speed in which it does this is of course largely up to you and how we decide to custom design it, and capitalize it for you and the future you envision.
This cash value grows tax-deferred and can be accessed through policy loans. These loans are collateralized by the death benefit, and the insurance company charges interest on the borrowed amount. However, the policyholder can repay the loan on their own terms. This gives you total control.
How the Infinite Banking Concept Can Work for You…
Meeting Your Financial Goals
We work with you to create a tailored financial strategy that builds wealth and secures your long-term success.
Tax Advantages
The cash value grows tax-deferred, and policy loans are not considered taxable income.
Cash Value Growth
Policyholders can use the loans for any purpose, such as purchasing a car, funding education, or investing in a business.
Legacy Planning
The death benefit of the whole life policy provides a legacy for beneficiaries, as it transfers from your estate to beneficiaries tax free
Risk Management
Minimize risks while maximizing growth by creating a financial strategy that protects your assets and future security.
Long-Term Stability
Achieve financial security with a personalized plan that ensures consistent growth and stability for the years ahead.
Retirement Plans
Secure your future by building a retirement plan that grows your wealth and provides financial peace of mind.
Considerations of IBC?
Navigating the Complexities of the Infinite Banking Concept
Cost
Some people will say that whole life insurance policies are expensive compared to term life insurance, but that’s a horses to zebras comparison.
They are very different animals…
Term insurance means term – a limited term of coverage, or renting your life insurance. If you outlive that term, coverage will expire and you will get nothing.
The insurance company knows the chance of you dying within a given period. They are masters of risk management using one tool call actuary (Science, math and life style) science, and know with little deviation, approaximately when you will pass.
Yes, such a policy is less expensive to start, but the likelihood of getting any money back is small, so it depends on how you define “expensive.”
Complexity
Understanding and effectively implementing IBC requires an understanding of both life insurance and personal finance and the ability to save.
IBC is a very simple concept, but complete understanding of the mechanics of how it works and how to leverage it effectively may take some time. The sooner you start, the sooner these intricacies become clearer. And while you are learning, the passage of time compounds and grows the value of your new bank.
Risk of Over-Borrowing
It’s true that excessive borrowing against the policy without proper management can lead to policy lapse and loss of coverage, yet we will walk beside you every step of the way and guide you in how to avoid this.
Still Have Questions About Whether IBC is the Right Choice for You?
For more in-depth answers and insights into how the Infinite Banking Concept (IBC) can align with your financial goals, visit our FAQ page and explore how IBC can work for you.
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