If you should obtain such a loan this is what actually happens in layman’s terms. The financing function is made possible because the owner can take out policy loans with the surrender value of the policy serving as collateral this is a legal right that is provided to all policy owners and is spelled out in the language of the insurance contract.2 However the death benefit is the core element of a life insurance policy, and understanding its value as an asset will be essential to my analysis. INSIDE THE IBC SPECIALLY DESIGNED POLICY CONTRACTĪs every practicing owner of an IBC insurance policy knows, these are designed to facilitate use of the “living benefits” available to any policy owner, which allows the policy to be a financing instrument. Either way I will be sure to list several resources in the references section of this article that will help you continue your educational journey. You may well become motivated enough to actually get one of these important insurance policies to practice this strategy for yourself. You will still benefit from the various points being made in this article. If you are reading this and do not yet own one of these contracts don’t let that disappoint you. So clearly the ideas discussed here are not for the novice. The reason for this is because it is not possible to fully grasp the financial implications discussed here until one has become an owner of such an insurance contract and has been practicing IBC in their own life. (They can be found at: This is an absolute requirement. Who knows, you could be teaching them something they have never heard or thought of before and they might be very grateful to you for having shared it with them.įinally, this article assumes you are either an owner of a well funded dividend paying Whole Life insurance contract from a mutual or mutual holding company that has been properly designed according to Nelson Nash’s Infinite Banking Concept (IBC), or at the very least that you have studied the concept and are in discussions with someone from the Practitioner Finder-people who have passed our training course. In fact, we recommend that you discuss these ideas with your own personal tax, investment or legal advisor. The ideas presented here are only thinking exercises. So if you are a business owner and operate an LLC or a corporation this idea is tailor made for you.īefore we go further, let me also stress that this is not to be construed as formal tax or investment advice. This can include the selling of the entire business itself as a final exit strategy at some time in the distant future. This main difference is the ability to create “windfalls” through either profits or from the sale of business assets. Business owners have a unique distinction that employees on a fixed income do not have. I personally use this strategy for my own taxes, and that’s why I’m choosing this particular approach to relay the idea.Īs I said above, my discussion will resonate most with business owners.1 There is an important reason for this. This is not about “finding a tax loophole.” Rather, I am pointing out one option that people with large cashflows-such as business owners who annually make a large expenditure to the IRS-have, if they’ve been convinced that obtaining a well-funded IBC-type policy is a good idea.Īs my remarks indicate, this idea isn’t really about “paying taxes” per se it would work for any recurring expenditure that is of a comparable size, year after year. Let me be perfectly clear that my discussion does not reduce your tax liability.
In this first part, I will lay the groundwork, and then in next month’s article I will provide some numerical illustrations to show exactly what I mean. Now in order to provide this intriguing maneuver a fair disclosure, I will need to do it in two parts. I should say upfront that this discussion will make sense immediately to business owners, but I hope that salaried individuals see relevance to their households as well. But I am going to see if I can incentivize you do just that by showing you a way to fund a large Infinite Banking Concept (IBC)-type life insurance policy, while using cashflows that are dedicated to paying your taxes. It’s been said that people would rather die than think.
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