As we have discussed in previous blogs, the cash value in your Infinite Banking Concepts (IBC) policy is guaranteed to increase every single year by a contractually set amount regardless of what happens in the stock market. Those guaranteed cash value increases that you receive are based on the “worst case” income and expense scenario projected by the insurance company and assumes no dividend is declared ever again. When the insurance company’s performance in any given year is better than that, you will receive a dividend. Although dividends are not guaranteed, the companies we use have paid dividends every year for over 170 years, including the Great Depression and two World Wars.
Once credited to your policy, all cash value increases and any dividends you receive are locked in, unlike stock and real estate market gains.
As you know, you can borrow against the equity (cash value) in your policy and your policy continues to earn interest and dividends. All these characteristics make IBC policies the ideal financial instrument to receive tax-free retirement income.
But how do you receive tax-free retirement income? You withdraw cash value from your policy until your withdrawals are identical to the premiums you have paid into your policy, also called your cost basis, and then you take policy loans, which are income tax free. If you compare an IBC policy to a qualified plan, you immediately realize that when you withdraw money from your qualified plan, the amount withdrawn is not only gone and not able of obtaining potential gains, but it is also income taxable to you. For example, if you are in a 28% marginal tax bracket, and you need $X a year in retirement income, you will withdraw $X from your IBC policy every year, but to obtain $X after taxes, you will have to withdraw $1.39X from you qualified plan every year. This means that the IBC policy is a much more efficient source of retirement income than a qualified plan. Also remember that your money in your qualified plan is subject to stock market fluctuations while in your IBC policy it is not.
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.