Blog #11 – Paid Up Additions Are Awesome

Yes, they are, but let me give some introduction before explaining why Paid-Up Additions are so great.

A properly-designed Infinite Banking Concept (IBC) or banking policy originally maximizes the cash value that you obtain for a given premium while the death benefit eventually increases to be higher than in a traditionally-designed policy. This type of policy maximizes the living benefits which is the main purpose of the IBC process.

An IBC policy is designed by adding to the base policy a Paid-Up Additions Rider which turbo-charges the growth of the cash value and by selecting the dividend option to purchase Paid-Up Additions. A term or a term-like rider could be added to increase the capacity of the policy if the client foresees a windfall or is planning to increase the premiums paid in the near future.

When you purchase additional insurance through a Paid-Up Additions Rider, you are effectively buying “mini policies” modeled after the original, base policy. The special things about these additional mini policies are that they are fully funded at inception. In effect, they are a “1-pay” insurance policy. An insurance illustration, doesn’t keep these different policies distinct, but instead lump the cash value, dividend payments, and face death benefit of all policies together into single values shown in the various columns for a particular year.

All these mini policies generate dividends which are used to purchase additional mini policies which themselves generate dividends, and the process repeats itself and therefore, the cash value as well as the total death benefit keeps growing exponentially, which means that the rate of growth is always increasing. As I said in the title of this blog, the Paid-Up Additions are awesome! They grow your cash value, your death benefit, and your dividends in an ever increasing fashion.

Now, if Paid-Up Additions are so good, why don’t we design a policy in which the base policy is really small and the Paid-Up Addition Rider is huge? The quick answer is that there are requirements pertaining the relative sizes of the base policy and the Paid-Up Additions Rider that make sure that the policy retains all the qualifications of an insurance contract and it does not become a Modified Endowment Contract. Furthermore, different insurance companies offer a variety of Paid-Up Additions Riders and they specify the minimum amount, the maximum amount, and the frequency of payments as well as the flexibility of those riders.

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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