One of the advantages of owning an IBC policy is that it will provide you an extremely secured and stable source of cash to supplement your retirement income when you decide to slow down. This security and stability compare extremely well with 401-K and any other tax-qualified plans.
If your initial intent when you purchased your IBC policy was to obtain high early cash values to invest in real estate projects or any other cash generating enterprises, you should plan on paying your outstanding loans before you decide to start receiving cash from your policy to supplement your retirement.
It is always a good idea to maximize the cash value of your policy before you are ready for retirement. Our eBook “The Best Guide To Infinite Banking” has great information on increasing the capacity and efficiency of your IBC policy. Notice that we also have “The Best Guide To Infinite Banking” as a video in our YouTube channel.
In general, we recommend that if you need cash early in your life (not at retirement age), it is a better option to obtain a policy loan than request a policy withdrawal since the loan does not reduce the capacity of your policy forever as a withdrawal does. Don’t be fooled by the idea that by taking a withdrawal you are avoiding the payment of interest on your loan since by taking a withdrawal you are possibly also surrendering the service fee that you already paid for those Paid-Up Additions. Don’t forget that the interest on your loans should be paid annually to avoid increasing your loan balances.
Later in life, when you are using cash from your policy to supplement your retirement income, the most financially efficient way – to legally avoid paying income taxes – is to start by taking withdrawals from your IBC policy down to your cost basis (the total premiums you have paid into your policy) and then switch to policy loans.
As a rule of thumb, if you wish to obtain a supplement to your retirement for 20 years, let’s say from age 71 to age 90, the annual income that you will receive is approximately 6% to 7% of the net cash value of your IBC policy at age 70.
As you can see, owning an IBC policy provides you with high early cash values to take maximum advantage of generating cash flow opportunities early in your life and peace of mind in the knowledge that you will have enough cash in your policy to supplement your retirement later in life. The equivalent of having your cake and eating it too.
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.