There are many types of Infinite Banking Concept (IBC) policies: paid in 10 years, paid to age 65, paid to age 95, paid to age 99, paid to age 120, etc. Does it really mean that you have to pay your policy premiums with out-of-pocket money for so many years? The answer is a rotund “no”. IBC policies and, in general, whole life policies offer significant flexibility in premium payments, helping you adapt your plan if your circumstances change or if you prefer different options.
What alternative options do you have?
The first option is the Automatic Premium Loan. This is an option you can request during the insurance application process, and we strongly recommend it. This option allows your policy to pay for the base whole life premium, term insurance rider, if available, and the scheduled paid-up additions rider premium through a policy loan, assuming you have enough cash value in your policy for that loan. It is an emergency option used when you are short of out-of-pocket cash or forget to make your premium payments due to an extended vacation, for example.
The second option is the Premium Offset. This option allows you to stop incurring out-of-pocket premium payments when you believe your policy is self-sustaining. The dividends and cash values in your policy pay for the base whole life premium and, if available, the term insurance rider. If the dividends are higher than the premiums necessary to pay the base whole life and term insurance, the excess dividends go to the cash value of the policy. There will not be a sudden drop in death benefit, but there will be a slight “drag” in cash value performance. This option is reversible and would allow you to continue making out-of-pocket premium payments in the future. You should request in-force illustrations regularly to ensure the policy remains self-sustaining.
The third option is the Reduced Paid-Up. This option is used when you don’t wish or cannot pay your policy premiums with out-of-pocket premiums ever again. You should not exercise this option before policy year 8 to avoid a Modified Endowment Contract or MEC and lose the tax-free withdrawal advantages of whole life policies. The dividends in your policy are directed to the cash value. There will not be a “drag” in cash value performance, but there will be a drop in death benefit. This option is irreversible, so it’s important to be fully confident in your decision before exercising it.
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.