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What is a Business Cash Value Line Of Credit?
A business cash value line of credit is a loan or line of credit in your business name, borrowed against the equity or cash value inside of a properly optimized whole life insurance policy, designed for maximum cash value. The insurance policy allows you to create a saving space or an invisible vault inside of it which has guaranteed growth plus dividends from 5-7%. The money in this contractual space, when designed and optimized properly allows you to apply between 70-90% of your premium towards the saving space. Your business can then borrow a loan or line of credit against the cash value of the policy. The line of credit is collateralized by the policy death benefit which covers the balance of any unpaid portion of the line of credit on the event of your timely or untimely demise. The loan or line of credit's monthly payments are a tax deductions to the business and even while a policy loan or line of credit is in play, the cash value continues to grow tax-free uninterrupted. Your money in the cash value is also protected from any litigation. There is no credit check. No minimum monthly payment, No due date. You have complete control and flexibility. You can tell the banks to take a hike redirect your interest payment back to your policy.
Infinite Banking is a popular term commonly used to reference the practice of saving money inside of a strategically designed whole life insurance policy with a major mutual company that share its dividends with their policy holder's cash value stored inside of the policy.
It was made popular and first presented by Nelson Nash in his book Become Your Own Banker. Respect due! It has been practiced in some capacity however as far back as the as over one hundred years. It has since then evolved both in practice and in what the insurance companies are now offering. It can be combined with other strategies to create a perpetual wealth system.
There is only one place in the entire IRS Tax Code that allows you to pay no taxes on a compound interest baring account. IRS Tax Code - Section 7702 Spoiler alert, it's in life insurance, but not just any life insurance. A properly designed plan that creates the space for maximum cash value to be stored with minimum insurance costs. Your money will then grow between +/- 3-6% compound interest which is tax-free and can be borrowed against from the policy to invest or to use for any reason.
These accounts offer guarantees. The policy protects you from losses. It keeps your money safe, liquid, and accessible. This is not meant to be nor should it be sold as an investment strategy. It is a strategy that magnifies and amplifies the common use of a savings account. Your savings account now sits in the cash value of the policy. It can be a useful tool to an even more successful financial portfolio.
Alert, there are armies of really good sales people some with really good intentions that are either uninformed and/or are being led by someone who knows better, but cares more about making profits than presenting the facts about all of their offering. They will come selling you on practicing infinite banking using index universal life insurance policies. Do not do it if your plan is to be able to remain as liquid as possible while protecting and growing your money.
By using a whole life Insurance policy with a major mutual company and properly designing the policy for maximum early cash value, you are able to achieve a savings space within the policy where you can let your money sit and grow instead of in a bank's savings account offering nothing except losses and vulnerability. Even if you can find an interest baring savings account, you will pay taxes on the gains. Instead create your own personal bank, the bank of __, whatever your name, your business's name, or your trust's name is. Lear more about trusts here.
Your cash is now
1. Guaranteed Compound Interest Tax-free Growth
2. Dividend Share Compound Interest Tax-free Growth
3. Self Fulfilling Policy Loans
4. Liquid and Accessible
5. Protections From Litigation In Most States
6. Currency Standard Protection
7. Retirement Income
8. Generational Wealth
9. Early Dispersement of Death Benefits For Chronic Illness, Specified Medical, and Terminal Illness Policy. This can be a life saver.
Max cash value
Most insurance polices are not designed to give the policy owner access to as much possible cash as possible. The insurance policy has a an allowable yearly premium which gets divided into different uses within the policy. A poorly designed policy for this strategy would allocate 90% towards insurance costs and only 10% of the the allowable cash value. Many go with 40/60 and maybe 30/70. The best properly designed strategic saving policy will allocate 10-20% towards costs and 80-90% of the allowable cash value. That is your savings space which determines how much money you can save in the policy.
Death Benefit pays off any unpaid loan balance. This is why there is no due date on the balance. You decide if and when to pay. The plan should however be to always pay it back as soon as possible and here you decide when that is not another institution. This relieves the pressure to have to meet minimum payment requirements. Now you do pay interest on the loan and that is something I advise, recommend, and strongly urge you to pay no matter what. This will prevent any negative compounding against you. You can borrow up to 90% of your cash value at anytime. To help ensure a positive arbitrage between the compounding interest growth in the policy and the simple compounding potential of the policy loan interest if gone unchecked, I recommend only borrowing against 60-80 % of the cash max. If you have to, you can borrow up to 90%.
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