What if you could take the role of banker in your real estate investing? Imagine not only earning returns from your investments, but also owning the system that lends you the capital for your investments. By changing where you send your money first, you can control the environment of your investing and create a perpetual tailwind in all you do financially.

Example Illustration Designed for Infinite Banking

Whole life policy structure and design is always customized based on age, health, gender and goals. With that said, this is an example of a 40 year old male in good health who would like to gain early access to cash for investments. For this illustration, we will assume a flexible 10 year premium outlay of $400,000 per year (This is a large $ amount, but principally will look the same no matter the number of zero’s). This premium is intentionally structured to not be a Modified Endowment Contract, allowing the gains to grow tax-free, but also have the highest early Cash Value possible. This is achieved by finding a specific ratio between what is called the Base Premium and the Paid-up additions (PUAs). In this example the Base/PUA split is 20/80.







Access to Cash Value

The key to understanding the Infinite Banking Concept (IBC) is the understanding of how you access your Cash Value. In a traditional bank you are required to withdraw your funds eliminating the ability to earn while you use your money. With IBC, you instead take loans using your cash value as collateral. Unlike traditional loans, though, there are little to no repayment terms, no application or approvals, and no origination or administrative fees — just a low interest rate. Most notably, because your cash value is used as collateral, the cash value continues to grow uninterrupted. Additionally, when the borrowed money is used for business or investment purposes, the interest paid is tax deductible, yet the gains on the cash value are tax-deferred and often tax-free if the policy remains in-force until the insured’s death. This Cash Value can be accessed via a Cash Value Line of Credit from a traditional bank or as a Policy Loan directly from the insurance carrier.

Positive Arbitrage Real Estate Example

Making some more assumptions, here is an example of utilizing this policy to enhance an investment and create positive arbitrage. Let’s assume in year 10, the policy owner stops making any premium payment and then borrows $4M against his Cash Value at the current Line of Credit interest rate: 3.5%. They use the $4M to invest into a Real Estate Development project and make interest-only (tax-deductible) payments each month for 10 years on the $4M loan.

After 10 years, they sell the asset and repay the $4M principal balance. Not taking into account the potential Return on Investment (ROI) of the project itself and still assuming just a 5% dividend rate on the Whole Life Policy, here would be the total cash gain and positive arbitrage of the banking system:





To learn how this strategy can work for you, reach out to jcarlson@unbridledwealth.com and schedule a free consultation. Creating a banking system to fuel your real estate investing is a long-term strategy. We look forward to being your advocate in this process as we ourselves are implementing this strategy in our personal and business lives as well.


By Jack Carlson, Unbridled Wealth