As we all know, capital purchases are unavoidable expenses and we define capital purchases as those that we cannot accommodate through our weekly or monthly cash flow. A typical capital purchase may be a car, a college education, a wedding, or an exotic vacation.One of the greatest living benefits of a properly-designed IBC or banking policy is your guaranteed access to credit as soon as your life insurance company allows you to take a loan, which may be either immediately after you make an initial premium payment or sometime after the initial payment as determined by the insurance company.Let’s use as an example of a capital purchase, the purchase of a $30,000 car, but before we analyze the available alternatives to purchase that car, let us make a brief detour to understand two important concepts.

Compound interest earned on a $30,000 account earning 4% for 60 months is $6,629.90.

Amortizing interest paid on a $30,000 loan at 5% for 60 months is $3,968.22.

During the first few months, the amortizing interest paid is higher than the compound interest earned, but at the end of the period been analyzed, in this case 60 months, the compound interest earned is always higher than the amortizing interest paid for the range of interests considered above.

Now, let’s consider the three alternatives to purchasing a car.

With alternative1, the Debtor finances the car with a loan through a bank or financial institution. He or she pays interest of $3,968.22 to the bank or financial institution and loses the opportunity cost of $6,629.90. Approximately 75 to 80% of Americans use this purchasing alternative.

With alternative 2, the Saver pays cash for the car, but he or she loses the opportunity cost of $6,629.90. Between 10 and 15% of Americans use this alternative.

With alternative 3, the Wealth Creator has a properly-designed IBC policy and he or she finances the car with a loan from the life insurance company using the cash value of his or her policy to collateralize the loan. This individual pays interest of $3,968.22 to the life insurance company, but his/her cash value continues compounding and earning $6,629.90. In effect, The Wealth Creator increases the long-term efficiency of his cash value by leveraging the fundamental differences between amortizing and compound interest.

To summarize, one of the great advantages of a properly-designed IBC policy is its guaranteed access to credit. We have shown the advantages of using your IBC policy for your capital purchases and how by doing so, you can optimize the cash value of your policy, allowing it to grow for your next capital purchase and eventually to increase the cash available for your tax-free retirement income.

We specialize in the optimal design of banking policies that eliminate outside financing, reduce taxes, and increase wealth.

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 Practitioner