Blog #10 – Every Business Owner Is Plagued By Wealth Transfers

First of all, let me explain what wealth transfers are. This is money that is being spent and can never be recovered. The major wealth transfers are:

• Taxes
• Interest paid to others
• Investment losses

Here is how a Dentist, one of our Infinite Banking clients, dealt with these wealth transfers through the use of his Banking Policy:

While working with another advisor, he had lost about 40% of his investment and retirement accounts in the market crash of 2008. While some investments bounced back eventually, most have not and his overall portfolio has never reached anywhere near its previous high levels. The Dentist knew that any money he directed to his retirement account could not be withdrawn without penalty until age 59½, and he anticipated that he would most likely be in a higher tax bracket due to tax rate increases.

In order to be able to retire at some point in his life, the Dentist felt that he had to increase the revenue that he was getting from his practice. He had the idea of financing the equipment some of his younger colleagues needed to start or expand their practices. By doing this, he calculated that he would increase his revenue stream substantially.

Finance companies were lining up to lend to his young colleagues, but they would charge them 18%.

He proposed to offer these colleagues financing for the equipment and practice at a substantial discount of 12%, or 6% less than what the financing companies were offering them.

Here is how the Dentist’s Plan unfolded:

  • He redirected his investment accounts and retirement contributions to capitalize his Banking Policy.
  • He set up an over-funded, dividend-paying whole life policy to hold the capital not currently being used for financing.
  • He would be using the cash value in his life insurance policy as collateral for the money he would be borrowing to provide his colleagues with their loans and the insurance company would charge him a 5% interest on those loans.
  • The Dentist would then charge his colleagues 12% interest on their loans and retain a margin of 7% which would be reinvested back into his policy to build more capital.

As a result of implementing his Infinite Banking policy:

  • When his practice has financing needs, his Banking Policy will allow him to obtain loans while pocketing the profit that third party lenders would have made.
  • By stopping the funding of his qualified retirement plan, the Dentist doesn’t have to worry about deferring money at lower tax rates, then having the government tax a bigger share when he finally takes distributions.
  • He has liquidity, use and control of his money.
  • He stopped losing money on his investments.
  • He increased his revenue and diversified his practice.
  • He diverted the money he and his colleagues would have paid to a third party finance company into his own bank through the use of his dividend paying whole life policy.
  • He has a guaranteed minimum retirement fund.

If you would like to learn how you can grow a substantial amount of cash that you have access to at any time without penalties, is unrelated to the stock market, and will generate income that is not included in your tax return, visit our website at / or feel free to email us your questions at or call us toll-free at 1-844-443-8422.

Isis B. Palicio, LUTCF, MBA
Pedro A. Palicio, MBA, Ph.D.
Infinite Banking Concepts® Authorized Practitioners

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