With financial news reporting higher inflation due to our over-inflated government and too much money being printed, it is understandable that many people are seeking ways to personally combat the effects of inflation on their lives.
With concerns about the price volatility of both food and energy that we are experiencing, we should note that these price spikes have proven temporary throughout our history. So, while it may be unpleasant to live through moments of exceedingly high grocery bills and gasoline purchases, it's highly doubtful that they will remain high over a long period of time. We must think about how we protect ourselves from the collective efforts of our government that has gone on a spending spree. Complaining about it is not a strategy that gets us anywhere.
Now, let’s dive into Infinite Banking and high inflation.
Infinite Banking (IBC) policies possess reasonably good protective measures against inflation in general. As a place to store your cash that has high liquidity, the product provides an incentive to seize certain investment opportunities that might arise during this period. It is also true that these types of high cash value life insurance policies will likely benefit from a period of high inflation as the mechanism used to combat it, higher market interest rates, will most likely result in higher rates of returns and higher dividends payable on these products.
As previously mentioned, IBC policies provide a reasonably good hedge against inflation. These products have a history of returns that do exceed the rate of inflation. They provide principal preservation and liquidity with bond-like returns. This means you can ratchet down your risk profile while ratcheting up your rate of return expectations.
Cash values in IBC policies are denominated in U.S. dollars, so they are not immune to temporary devaluation when inflation spikes. Nevertheless, like we said earlier, they will most likely benefit considerably from rising interest rates as that tends to be a primary driver of cash value rates of return. In addition, IBC policies hold on to those higher returns even after market rates have come down. From 2008 through roughly 2015, IBC policies maintained much higher than market average rates of accumulation on cash value despite rates having dropped considerably and remaining lowered around 2008.
IBC policies can also provide the emergency capital you might need at this time. One of the best hedges during high inflation is simply having enough cash on hand to weather the storm. Large balances in a savings account might have an appeal due to their safety and ease of access, but IBC policies display similar attributes with considerably higher returns and in a tax-free environment.
So yes, IBC policies can work as an excellent hedge against some of the pain people are experiencing during these inflationary spikes.
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 http://InfiniteBankingSimplified.com/ or feel free to email us your questions at ContactUs@InfiniteBankingSimplified.com or call us toll-free at 1-844-443-8422.
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 http://InfiniteBankingSimplified.com/ or feel free to email us your questions at ContactUs@InfiniteBankingSimplified.com 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
We are experts in designing high cash value dividend-paying whole life policies.
