Frequently Asked Questions FAQ
Questions and Answers Q&A
Frequently Asked Questions (FAQ) we often get about our services, life insurance and Infinite Banking.
FAQ – Questions and Answers
We provide an entire Q&A section on the Infinite Banking Concept (IBC) further down this webpage. You’ll also find an entire page on Annuity questions on our website here.
Based on our experience, these are the most frequently asked questions we receive about the products and financial services that we offer.
Who is Legacy?
Legacy Insurance Agency, PLLC was formed in 2004 to provide value and results to those seeking financial freedom and security. Our specialty is IBC and building family based financial plans that reduce risk and increase cash-flow. We serve families and businesses by providing proven financial strategies and solutions.
What is the differences between Term and Whole Life Insurance?
Term Life provides temporary protection at an affordable rate over a specified period of time. Whole Life offers permanent protection and coordinates with your other assets by providing protection, growth and significant tax benefits.
How do retirement income streams work?
Retirement is typically a time in life when a person determines they no longer have to work and they have sufficient resources available to fund their lifestyle and enjoy life with their family. Our philosphy is that you should want tax-efficient income streams at this time.
We think differently about the subject, and offer strategies to maximize the quality of life during this period. Retirement planning doesn’t have to be complicated, we’ve made it simple. It’s not how you will spend your time… But how you will spend your money.
How does life insurance benefit you during retirement?
Life insurance offers many benefits, tax advantages and can be a buffer against risk during retirement. These benefits are not offered with financial products like CD’s or stocks, and allow more flexibility than traditional retirement accounts.
Life insurance retirement planning allows more options, freedom and peace of mind. Learn about the LIRP.
Questions about the Infinite Banking Concept® (Q&A)
What is the Infinite Banking Concept?
The Infinite Banking Concept (IBC) is a process that works through a custom designed, dividend paying, participating whole life insurance policy from a mutual life insurance company. IBC was created by R. Nelson Nash, author of the bestselling book, Becoming Your Own Banker.
“The Infinite Banking Concept is not a bank; it is a thought process that represents a major paradigm shift.” ~Nelson Nash
These specially designed policies function like a “bank” via you making deposits and loans, and by giving you access to capital. IBC teaches people to become their own banker, allowing use, and control of the banking function avaialable in cash-value life insurance.
The policyowner becomes the banker in this situation by controlling the banking function inherently built-into these specially designed policies. IBC Authroized Practitioners are skilled at designing these polices.
IBC is a way to recover the interest and fees that one is paying to banks and finance companies for the major items we finance over our lifetime. This cost recovery allows for more efficient long term wealth building.
More Frequently Asked Questions about IBC
Which are the best Insurance companies to use for Infinite Banking?
IBC works through a custom designed, dividend paying, whole life insurance policy from a mutual life insurance company. There are only a handful of mutual companies that offer these types of participating policies for use with IBC.
Although many assets can offer with banking functionality, Nash recommended traditional whole life insurance because of the guarantees. Other life insurance products like UL, VUL and IUL are not recommended.
If you already own life insurance, we offer a no cost policy review to help you determine if IBC is an option.
Every case is different and the policy(s) should be designed with the policyowner’s goals in mind. Consult an authorized IBC Practitioner to see which company and policy(s) works best for your situation.
What are dividends and (PUA) Paid-Up-Additions?
Dividends are excesses or surpluses of capital. And, because they are considered a return of premium, it is not considered a taxable event according to IRS rules.
Participating, whole life insurance policies offer guaranteed growth even without dividends. When dividends are paid, the policyowner has the option of having of using them to purchase PUA’s or paid-up-additional-insurance.
A PUA rider, often called by other names, allows the policyowner to purchase additional insurance in addtion to the base policy, with the emphasis being on building cash-value in the policy.
How can I accelerate cash-value growth?
Properly designed policies are designed to accentuate cash-value growth, especially in the early policy years. Traditionally, life insurance policies do not pay a dividend for the first couple of years due to the additional expenses incurred when a policy is created.
Once a policy has been in force for a few years it starts to grow more rapidly as dividends are paid and accumulate. The PUA rider is not as important in later years, but can allow for flexibility and additional contributions that allow even more growth within MEC guidelines.
What is a MEC?
MEC stands for Modified Endowment Contract. By law, the Internal Revenue Service limits the amount of cash that can be paid into in a life insurance policy. A MEC does require extra attention by the agent and owner of the policy because of these tax guidelines.
Why should I borrow my own money?
This question usually comes from those who have been through debt management programs or had someone manage their money. The money that is borrowed comes from the life insurance company, the policy is used as collateral. This allows the policy values to continue to grow and compound.
The very first principle that must be understood is that you FINANCE everything that you buy – you either pay interest to someone else or you give up interest you could have earned otherwise.”
~R. Nelson Nash
Problems with Traditional Financing
The problem is that all these items are financed by other banking institutions. This means that the interest portion of every dollar spent is perpetual. The volume of interest is the real issue, not the annual percent rates.
When you finance using a properly structured IBC policy, you can recover the costs normally associated with financing, and have your money continue to grow uninterrupted.
Do I have to repay policy loans, and what happens if I don’t?
A loan uses the death benefit as collateral, so it does not require repayment. You are in control of the payment schedule should you decide to repay the loan. Interest accumulates and is due on the policy anniversary.
The IBC strategy recommends repayment, just like with any other financial institution, especially during the growth years. Loans are not taxable under current tax law. There are stipulations based on your cost-basis and how you take the loans, but you remain in control.
Can I use IBC during retirement?
IBC comes alive during retirement, or passive income time. Traditional retirement plans depend on guesswork. Monte Carlo simulations prove that traditional financial planning can fail most of the time. IBC plans provide safety and more predictable tax-free income with less stipulations and worries.
How can I find out if Infinite Banking is right for me?
The best way to find out if practicing the Infinite Banking Concept is tright for you is to schedule a discovery call at your convenience. Anyone can become their own banker if they have the desire to take control of the banking function in their life.
Thank You!
Thank you for visiting our Frequently Asked Questions (FAQ) page. Check back often, as this page will be updated as more questions and answers are added.
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