FAQs

There are several reasons why you may not have heard about IBC. The concept is relatively new, with Nelson Nash's book 'Becoming Your Own Banker' only published in 2000. Additionally, there's a shortage of effective IBC practitioners teaching the concept. Many people, including advisors and potential clients, often lack the time or inclination to properly educate themselves about IBC. Lastly, conventional financial wisdom typically encourages storing and investing money in ways that relinquish control, which is contrary to IBC principles.

IBC operates by utilizing a specially designed dividend-paying whole life insurance policy from a mutual company as a cash storage vehicle. This method allows you to borrow from yourself for purchases you would make anyway, such as a vehicle, and then repay yourself with interest. The policy offers advantages over typical bank accounts, including a guaranteed growth rate, tax-free guaranteed growth and death benefit, and non-guaranteed dividends. This approach provides you with control over your finances, allowing you to pay off debts, finance purchases, or fund investments on your own terms.

IBC policies are typically funded through a process called 'capitalization'. This can be achieved through various means, often by identifying and redirecting existing cash flow inefficiencies. Common sources for funding include savings, bonuses, tax refunds, investments, windfalls, or funds earmarked for specific purposes like holiday spending or repairs. The goal is to make your money work harder by giving it multiple uses, effectively increasing its utility and efficiency within your financial system.

It's natural to be skeptical about financial strategies that seem unusually beneficial. We encourage thorough research and understanding before committing to IBC. This includes reading Nelson Nash's book 'Becoming Your Own Banker' and asking questions. IBC is a long-term strategy that requires careful consideration and often agreement between spouses. Our role is to educate and facilitate, not to sell. We believe that banking, like earning a living, is a crucial financial function that merits proficiency.

Life insurance companies, particularly those offering dividend-paying whole life policies, are designed to be financially sustainable. Unlike market-tied products, these policies are backed by conservative investments and strict state regulations. Insurance companies are required to maintain 100% or more in reserves, with many holding 400-600% or more. This ensures their ability to pay claims and dividends consistently. Additionally, actuarial science allows for accurate prediction of death claim patterns, even accounting for catastrophic events. This stability contrasts sharply with traditional banks, which typically maintain only about 10% in reserves.

IBC can be an effective tool for funding college education. One advantage is that the cash value of a dividend-paying whole life insurance policy is typically not considered when applying for financial aid, potentially increasing eligibility. The policy can be used to finance education directly or to quickly repay student loans after graduation. The graduate can then make repayments to the policy. This approach offers flexibility and can be tailored to individual family situations. We can explore specific options that might work best for your circumstances.

There are several important considerations when using IBC. Policies can only be started for individuals in whom you have an insurable interest, such as yourself, spouse, child, or business partner. The insured must be eligible for coverage when the contract is created, though future insurability isn't guaranteed. Health conditions may affect eligibility or policy effectiveness. IBC requires discipline and delayed gratification; it's not suitable for those who struggle with impulsive spending or loan repayment. It's a strategy for creating savings and financing purposeful expenditures, not a 'get-rich-quick' scheme. Success with IBC depends on treating it as a serious financial tool and adhering to responsible borrowing and repayment practices.