IBC - Infinite Banking Concept
Are you ready to be your own bank? The Infinite Banking Concept (IBC) is a cash flow management strategy, developed by R. Nelson Nash, that uses the cash value of a dividend-paying whole life insurance policy to become your "own banker". You fund the policy, allowing the cash value to grow, and then borrow against it (rather than from a traditional bank) for personal and business expenses, paying yourself back with interest and keeping control of your money.
How the Infinite Banking Concept Works
You start by consistently funding a specially structured whole life insurance policy with premium payments, not just as a bill, but as a "living asset".
The policy builds cash value over time, with guaranteed growth and potentially non-guaranteed dividends from the insurance company.
Borrow against the cash value:
When you need capital, you can take out a policy loan against this accumulated cash value.
You're borrowing your own money, so you don't need to go through traditional loan applications, provide additional collateral, or face restrictions on the use of funds.
You repay the policy loan and the interest to the insurance company, effectively "paying yourself" the interest you would have otherwise lost to a bank.
Key Principles and Benefits
Control:
You have contractual guarantees, safety, and direct control over your capital, rather than relying on traditional banks.
Liquidity:
Policy loans provide quick access to cash, similar to a traditional bank loan but without the same qualification hurdles.
Tax-Deferred Growth:
The cash value within the policy grows on a tax-deferred basis.
Tax-Free Loans:
Policy loans against the cash value are tax-free, though interest does accrue and must be paid.
Recaptured Interest:
By paying yourself back, you recapture interest payments that would normally go to a bank.
Long-Term Wealth Building:
The strategy is designed for long-term wealth creation and financial independence by placing the policyholder in a position of financial control.
