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Started By
Message
re: Whole Life, Infinite Banking (IBC), Cash Flow
Posted on 6/5/18 at 10:46 pm to IglooTiger
Posted on 6/5/18 at 10:46 pm to IglooTiger
Every life insurance policy adheres to a Cost of Insurance. The healthier and younger you are, the lower the cost.
For cash value policies, all of the costs (cost of insurance, policy maintenance fees, etc..) are withheld by the insurance company and the remainder is typically your cash value.
You keep talking about loans. Unless you are dead set about leveraging, you don't have to use a loan to get access to funds. There are bonds paying 5% tax deferred. There are penalties for early withdrawals, but those penalties may be lower than the fees (and commissions) in a life insurance policy. Once you buy the life insurance policy, you are kissing away that money. Any change of plans is like an expensive divorce. That is the downside for the whole life option that you are considering.
For cash value policies, all of the costs (cost of insurance, policy maintenance fees, etc..) are withheld by the insurance company and the remainder is typically your cash value.
You keep talking about loans. Unless you are dead set about leveraging, you don't have to use a loan to get access to funds. There are bonds paying 5% tax deferred. There are penalties for early withdrawals, but those penalties may be lower than the fees (and commissions) in a life insurance policy. Once you buy the life insurance policy, you are kissing away that money. Any change of plans is like an expensive divorce. That is the downside for the whole life option that you are considering.
2
Posted on 6/5/18 at 10:52 pm to meansonny
If your big attraction to the life insurance is the cash value, then you may be better off with universal life insurance.
ULs generally grow your money faster and give you a lot more options towards overfunding or underfunding the cash value.
They are the luxury car of the cash value life insurance.
The upside to whole life is that it gives more guarantees (more of a guaranteed death benefit). The downside is a lack of flexibility and often a slower growth in exchange for the guarantees.
The upside to the universal life is that you can way over fund those policies growing the cash value faster. They generally pay a higher rate of return than whole life. The downside is that borrowing the funds could jeopardize the permanancy of the death benefit (if the concept of a return of premium term insurance interests you, than a universal life insurance policy could be the way to go).
ULs generally grow your money faster and give you a lot more options towards overfunding or underfunding the cash value.
They are the luxury car of the cash value life insurance.
The upside to whole life is that it gives more guarantees (more of a guaranteed death benefit). The downside is a lack of flexibility and often a slower growth in exchange for the guarantees.
The upside to the universal life is that you can way over fund those policies growing the cash value faster. They generally pay a higher rate of return than whole life. The downside is that borrowing the funds could jeopardize the permanancy of the death benefit (if the concept of a return of premium term insurance interests you, than a universal life insurance policy could be the way to go).
Posted on 6/5/18 at 10:59 pm to meansonny
quote:
You keep talking about loans. Unless you are dead set about leveraging, you don't have to use a loan to get access to funds. There are bonds paying 5% tax deferred
Yes, I’m absolutely looking for leverage. This is not an investment vehicle for me. I don’t give a hoot about the difference of 5% muni or 7% mutual fund. I want the ability get credit without question and payback without question, all while leaving the underlying compounding premium untouched.
Am I being bamboozled or does this seem right for my application?
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