If you want to follow along here, you have to go back several posts. The Infinite Banking Concept (IBC) or Becoming Your Own Banker is simple in so many ways, yet, there is so much involved in this strategy. That’s why I love it.
Not my broker, accountant, or any other financial wizard I know has given the IBC strategy a thumbs up.
When you know everything, there isn’t much you can learn.
If you cannot learn, you cannot teach. (Photo by Pixabay)
As a result, less than 3% of the population invest in a dividend-paying (participating) whole life (permanent) insurance policy set up properly (customized) by an Infinite Banking Concept-oriented broker through a reputable mutual life insurance company. How sad.
The IBC system is not about parking your money and hoping it grows. With IBC, your money grows when you put it in motion via policy loans. (The Hebrew word for money is “motion.”)
Say what? Paradigm shift. Let’s look at your neighborhood bank. How does it make money? Depositors, right? Nope. This money is a liability to a bank because they have to pay interest (barely) to their depositors as well as pay their money back.
So, again, how do banks make money? Right. Loans. Yes, banks use depositors’ money to lend to others, however, that money is still a liability. They make their real money by using their whole life insurance policies to take out policy loans. They then put that borrowed money in motion by lending it out and earning a boatload of interest. The real beauty of the IBC strategy is that the policy loan doesn’t touch the capital investment within the whole life policy. This means it will continue to work for them, earning compounded interest.
Imagine you own a home. You also have a savings account that is gaining interest (barely). You take out a home equity loan from your bank using your home as collateral. Your savings account continues to grow (barely) irrespective of what’s going on with your loan against the home. If you cannot repay the loan, the bank gets your home.
With the IBC strategy, you take out a policy loan (without fees or penalties) equal to the cash value of your policy. Your capital within the policy continues to grow irrespective of what’s going on with the loan. If you cannot repay the loan before you die, the amount you owe is deducted from the death benefit portion of the policy.
The difference between a home equity loan you get through your neighborhood bank, and a policy loan you take from your own whole life plan is that you are now the neighborhood bank. You borrow from yourself, pay yourself back with interest, and never, ever touch the capital that continues to compound within your policy. You also recapture the debt you incur by borrowing from others.
Life is swimming against the tsunami. Only the 3% will survive, but there’s nothing better in the world than being a trendsetter!