What are your thoughts on Infinite Banking Concept?

[Kyle Keller]

I'm looking at IBC and it seems like a really good long play for wealth building. It won't hurt me in the short term to start it, what are your thoughts?

[John Perrings]

Originally posted by @Kyle Keller:

I'm looking at IBC and it seems like a really good long play for wealth building. It won't hurt me in the short term to start it, what are your thoughts?

My advice is to look at this with a long-term mindset and not get caught up in the noise about cash value ratios and break-even points. There are no deals in the insurance business and any policy design trait has a corresponding tradeoff.

Two primary points for building capital using life insurance:

1. You'll have a liquidity gap in the first several years of the policy, meaning you won't have as much cash value as what you've paid in premium. This can create an early delay in buying assets. The delay is very temporary, but this is the hardest thing for many real estate folks to get past.

2. Once you close the liquidity gap, the cash value of the policy will turn into a liquidity rocket engine. At that point, every dollar you pay in premium will start to create $2, $3, $4 in cash value. The longer you can pay a premium, the better it gets. You'll more than make up for the short delay in the early years.

If you can look past the first few years, you'll have a cash creation engine that will perform for the next 50.