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Since this is a life insurance contract, a policy can only be started with a person in which you have an insurable interest. This can be you, your spouse, your child, or your business partner. When this contract is starting that person must be insurable. Age and medical conditions can change during the contract. If you would like to grow into other policies in the future, that person, most likely needs to meet insurability standards again. Rest assured, there are strategies out there to take that into account if the situation arises.
For those people that choose IBC as a path for their finances, you may also have to practice patience. This is not a get rich quick plan. This is good, old fashioned money savings and compound interest building. The companies that we use do build cash value quickly, but it seems we live in a “want it now world.” So be prepared for some delayed gratification. As you will read in one of the books available on the "Books" tab, there is a need to be an honest banker. This means if you borrow money from your policy to buy that new car, make payments to yourself, just as you would to the bank. That takes discipline, also. If you couldn’t borrow it from a bank and pay it back, then you should not be borrowing against your own policies.
IBC is a relatively new idea to the general public. Nelson Nash wrote his book, Becoming Your Own Banker, in 2000. It is an idea that seems to fly in the face of conventional financial wisdom. We were all taught to store and invest our money...and this is where we lose control of it. The IBC concept in unique because You are the one who retains control over your money. Conventional wisdom has us putting our money in “securities” ...where it is invested in stocks that can lose all of their value, or in a fund that makes a decent return that then gets eaten up by fees.
To begin, you need a place to store and build up your cash. That is called Capitalization. Right now you probably use a checking or savings account. Utilizing an IBC strategy means you would save up a pool of cash, borrow it from yourself (instead of the bank) to buy something you were going to buy anyway (a vehicle, for example), then repay yourself the same monthly payment (including interest) you would have paid otherwise.
Throughout Nash’s time of building the IBC strategy, he figured out that there is a better place to store your cash than a savings or checking account at the bank. The safest, most efficient way to store cash is by using a specially designed dividend-paying whole life insurance policy from a mutual company. This asset is what makes IBC really attractive. The dividend-paying whole life insurance policy adds a guaranteed growth rate, a death benefit, and a non-guaranteed dividend.
Once you have built up a pool of cash that you control using a dividend-paying whole life insurance policy, you now have some options:
--pay off debt
--finance items you were going to purchase
--fund investments or opportunities that come along
Down the road when you’d like to exercise one of these options, you request a policy loan against your policy to access the cash, and then begin making payments back to yourself just as though you had borrowed the funds from a bank. Because you control the asset, you control the payment schedule. You make your own repayment schedule.
As I previously mentioned, the process of funding is called capitalization, and there are a variety of ways to do this. I think that while each situation is unique, everyone may have leaks in their cash flow system simply because we have been taught so little about money. It also doesn’t hurt to have a fresh pair of eyes looking at your situation.
Once you begin learning how to think like a banker, we can begin to show you how to be more efficient utilizing your existing cash flow and make some suggestions. It might surprise you where you may have money lingering, just waiting to be utilized. Some of these sources of income may come from investments, tax refunds, bonuses from a job, cash savings, windfalls, etc...These are some places where you can help create a place to put those dollars to work other than their original intent. This is how you can get more work out of that dollar other than just spending it once. If you are curious at all about trying to get your money to work more than just once for you... let’s have a visit.
As Certified IBC Practitioners, John and I believe that it isn’t our job to sell anyone on this concept. If you do the reading and the learning, we will help you discover how using dividend-paying, permanent life insurance can meet your needs. We are here to talk about this and guide you and your family or business partner through this process. We are fortunate enough to be connected with some very experienced and talented people that help us facilitate this. This is intended to be a lifelong strategy that bridges generations and sets up a legacy for anyone in any walk of life.
First of all, we all have gotten used to financial institutions playing fast and loose with money looking for the quick buck with the high return... or high-risk ventures. We need to understand that the life insurance industry is not a product of the market. Dividend paying whole life insurance is not tied to the market at all. Also, life insurance companies are state regulated and must have 100% or more reserves on hand at all times to pay claims. There are several companies out there that exceed that percentage. These companies have made conservative investments over that last century or more and it shows in their financial statements.