By Jack Carlson |Unbridled Wealth
What’s the rate of return on this investment?
This is one of the central questions people have as they consider where to deploy their capital. But a sole focus on the rate of return can limit your perspective on what’s possible with different financial vehicles.
We teach AZREIA members how to utilize the Infinite Banking Concept (IBC) in their investing strategy. This is a process that allows you to build a pool of capital that is always growing, but accessible for you to leverage for other investments. How are you able to do this?
Enter the financial Swiss army knife. This is the financial tool that fuels the Infinite Banking strategy – a specially designed, dividend-paying whole life insurance policy.
It has a rate of return associated with it, but it’s not an investment product. It’s life insurance that covers a pure risk because everyone will die. But these contracts can be structured in a way that makes them an optimal warehouse to store your money.
In the same way a business owner stores goods in a warehouse, before sending them out for their purpose. The money you store in the cash value of this policy will compound on a guaranteed basis plus dividends. And it can be deployed to other investments via tax-free policy loans without ever interrupting the growth of the money in the warehouse. This effectively allows your dollar to be working in two places at the same time.
Some other functions available within this one tool:
- Funds can be accessed via policy loans tax-free for the life of the policy, at any time for any purpose. Including as a retirement supplement. Any outstanding loans at the time of death are repaid by the death benefit before it is issued to the beneficiary.
- The death benefit is guaranteed to be paid out tax-free upon your “graduation,” making this an efficient tool for transferring wealth to the next generation.
- In Arizona, the cash value and death benefit are creditor protected. Making capital you hold in the policy exempt from inclusion in lawsuits or bankruptcy.
- In the case of critical, chronic, or terminal illness you can access a large portion of the death benefit while living to cover life and medical expenses. This is a free rider on the policy that effectively serves as long-term care.
- As you can see, judging this tool solely based on the rate of return is mostly irrelevant because it provides so many added benefits over the course of life. And notably, what it doesn’t provide are taxes to be paid at unknown future rates, investment fees, market losses, and interrupted growth when you use it. These aspects affect every other financial account you can use, but not this one.
In closing, know that utilizing permanent life insurance to its full extent is a learned skill. It takes time, education, and practice to wield it well. But once a person does, it will change their financial trajectory for this life and likely the generations in their family to come.