Basics Of the Infinite Banking Concept (IBC)

Schedule your personal consult with a Wealth Strategist by clicking here.

The Infinite Banking Concept (IBC), also known as the “Bank on Yourself” strategy, is a financial approach that uses whole life insurance policies as a platform for personal banking. This strategy involves leveraging the cash value of a whole life insurance policy to finance personal or business expenses, rather than relying on traditional banking institutions. Here are the basic principles and components of the Infinite Banking Strategy:

1. Whole Life Insurance Policy: The foundation of the Infinite Banking Concept is a dividend-paying whole life insurance policy. These policies are different from term life insurance in that they provide coverage for the policyholder’s entire life and include a savings component known as the cash value.
2. Cash Value Accumulation: Over time, the cash value of the policy grows, accumulating on a tax-deferred basis. This growth includes both the premiums paid into the policy and the dividends paid by the insurance company.
3. Borrowing Against the Policy: One of the key features of the Infinite Banking Concept is the ability to borrow against the cash value of your whole life insurance policy. Policyholders can take out loans from their policy without a credit check or approval process, and the loan isn’t reported to credit agencies.
4. Repaying the Loan: When you borrow from your policy, you’re essentially borrowing from yourself. You have the flexibility to set your repayment terms, and any interest paid goes back into your policy, not to a bank.
5. Benefits of the Strategy:
   • Control: You have more control over your loan terms and repayment schedule.
   • Liquidity: Access to cash value can be crucial in emergencies or investment opportunities.
   • Tax Benefits: The growth of cash value in a whole life policy is tax-deferred, and loans taken against the policy are generally tax-free.
   • Death Benefit: In addition to the banking benefits, the policy also provides a death benefit to the beneficiaries.
6. Long-Term Strategy: The Infinite Banking Concept is a long-term financial strategy. It requires discipline and time for the cash value to accumulate to a significant amount.
7. Financial Independence: Over time, this strategy can lead to financial independence, as individuals are able to finance their needs through their policy rather than relying on external lenders.

Schedule your personal consult with a Wealth Strategist by clicking here.