Knowledge Vault – IBC Global https://old.ibcglobalinc.com Infinite Banking Specialists Mon, 18 Jul 2022 18:59:39 +0000 en-US hourly 1 https://wordpress.org/?v=6.9.4 https://old.ibcglobalinc.com/wp-content/uploads/2020/06/websitefavicon.png Knowledge Vault – IBC Global https://old.ibcglobalinc.com 32 32 Policy Design -Knowledge Vault https://old.ibcglobalinc.com/policy-design-knowledge-vault/ https://old.ibcglobalinc.com/policy-design-knowledge-vault/#respond Thu, 14 Jul 2022 17:52:06 +0000 https://old.ibcglobalinc.com/?p=503004

Policy Design -Knowledge Vault

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Every individual is going to have different needs and abilities when it comes to a cash value policy. What many are not aware of is that one can choose where your money goes in a life insurance policy. You may direct dollars toward base premium (insurance expense) or a PUA Rider (cash dump-in). Money that is directed toward Base Premium first satisfies the Death Benefit and eventually builds cash value. Money that is directed toward the PUA Rider is allocated toward cash value and is available immediately. This also purchases us additional life insurance as well and is still classified as a “Premium” from the insurance industry standards
]]> https://old.ibcglobalinc.com/policy-design-knowledge-vault/feed/ 0 Direct vs Non-Direct Recognition https://old.ibcglobalinc.com/direct-vs-non-direct-recognition/ https://old.ibcglobalinc.com/direct-vs-non-direct-recognition/#respond Thu, 14 Jul 2022 16:00:43 +0000 https://old.ibcglobalinc.com/?p=502960

Non-Direct Recognition companies operate this way:

  • A Non-Direct Recognition company does not recognize that a loan has been taken and will credit the current dividend rate to any money that is in a policy’s cash value AND outstanding in loans (amazing, but true). Here is an example:
  1. Cash Value: $100,000
  2. Dividend: 6.00%
  3. Loan Rate: 5%
  4. Cash Value: $50,000
  5. Dividend Credit to unborrowed funds: 6.00%
  6. Loan Balance: $50,000
  7. Dividend Credited to borrowed funds: 6.00%

Direct Recognition companies operate this way:

Direct Recognition companies operate this way:

    • A Direct Recognition company will recognize that you have pulled a loan and adjust the dividend credited to borrowed funds. This is often labeled as “bad” by many agents that prefer Non-Direct Recognition companies. It is important to study the individual insurance company’s loan treatment. It is not uncommon for an insurance company to lower, or raise, the dividend rate on borrowed funds. This functions very similarly to a Non-Direct Recognition company/policy. Here is an example:
  1. Cash Value: $100,000
  2. Dividend: 5.65%
  3. Loan Rate: 6%
  4. Cash Value: $50,000
  5. Dividend Credit to unborrowed funds: 5.65%
  6. Loan Balance: $50,000
  7. Dividend Credited to borrowed funds: 5.65%
]]> https://old.ibcglobalinc.com/direct-vs-non-direct-recognition/feed/ 0 Current Policy Update https://old.ibcglobalinc.com/current-policy-update/ https://old.ibcglobalinc.com/current-policy-update/#respond Thu, 14 Jul 2022 15:14:58 +0000 https://old.ibcglobalinc.com/?p=503000

Current Policy Update

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Let our expert designers analyze your existing policy to see if you are set up for maximum cash value growth!

  • Upload pages of your policy
  • Our Innovative Life Insurance Specialists will carefully analyze and rate the cash producing power of your policy
  • You will receive a detailed analysis confirming that you are on the right track, or we will give you our expert recommendations on improvements needed to fully maximize your cash growth.

HERE IS HOW IT WORKS: SIMPLY UPLOAD THE MAIN PAGES OF YOUR POLICY, AND ONE OF OUR INNOVATIVE LIFE INSURANCE SPECIALISTS WILL OPTIMIZE IT FOR MAXIMUM CASH GROWTH AND THEN EXPLAIN ALL THE IMPROVEMENTS TO YOU – AT NO COST!

]]> https://old.ibcglobalinc.com/current-policy-update/feed/ 0 Can it be completely tax free? https://old.ibcglobalinc.com/can-it-be-completely-tax-free/ https://old.ibcglobalinc.com/can-it-be-completely-tax-free/#respond Thu, 14 Jul 2022 14:57:27 +0000 https://old.ibcglobalinc.com/?p=502957

It definitely CAN be! As long as the policy is set up correctly and everything is done properly, you can absolutely avoid paying any taxes. However, it is possible to trigger a taxable event.

There are 2 taxable events to avoid:

  • Triggering a MEC / exceeding the IRS’s limit on the total amount you can put into a policy annually
  • If this does occur, the policy will act very similarly to a 401K. The cash grows tax-deferred, but if you take any cash out, you will have to pay income tax and a penalty tax of 10% if you are under 59-½ years old, on any dividends you’ve earned.
  • Having a policy lapse or cashing out
  • If you loan out too much of the cash and the policy lapses, or you are done with the policy and you take out 100% of the cash value, you would receive a 1099 and the amount of interest earned throughout the policy will be taxed as regular income.
]]> https://old.ibcglobalinc.com/can-it-be-completely-tax-free/feed/ 0 All About The MEC https://old.ibcglobalinc.com/all-about-the-mec/ Wed, 13 Jul 2022 20:04:41 +0000 https://old.ibcglobalinc.com/?p=502956

MEC Limit: The MEC Limit is the maximum amount of money you may deposit to a policy per year. This is an IRS limit. If we exceed this limit, our policy becomes classified as a MEC, and we have to deal with taxes. Did you know that you can set the MEC limit wherever you want? Below are a few bullet points that you may find helpful:

– The MEC Limit directly relates to your Age, Death Benefit, Gender, and Guaranteed Rate on a policy.

– Another name for the MEC Limit is the “7-Pay Premium test”. This has to do with the first seven years of a life insurance policy. If you have a $10,000 MEC limit policy, the maximum amount you can pay each year is $10,000 for the first seven years. Beginning year 8, the MEC limit will reset. The limit resets based on your age, death benefit, and cash value at the time.

– If you don’t use it, you don’t lose it. Any unused MEC space will roll over year-to-year. For example, if you have a $10,000 MEC Limit, you can pay $10,000 per year. If you pay $5,000 in year 1, you can pay $15,000 in year 2 to make up for the $5,000 you did not pay in the first year. Unused MEC space will continue to roll over as the years pass.

– What if you exceed your MEC limit? Not to worry. If you exceed your MEC limit, it is straightforward to reverse. Insurance companies will notify us, and we quickly reverse it.

  • Definition:

A MEC, or Modified Endowment Contract, is a policy in which the premiums paid have exceeded the amount allowed to keep the full tax treatment of a cash value life insurance policy. Distributions of cash value are taken from taxable gains first, as compared to distributions taken from non-taxable contribution. In other words, withdrawals will typically be taxed as ordinary income (typically the highest rates for investments), instead of treated as non-taxable income.

  • History of the MEC:

Modified endowments were created in the Technical Corrections Act of 1988 in response to single-premium life (endowments) being used as tax shelters. This established the 7-Pay Test, which is a stipulated premium that would create a guaranteed paid-up policy within 7 years from policy inception. If premiums paid to the contract go beyond the premium amount stipulated, then the contract has failed the 7-Pay Test and is reclassified as a Modified Endowment Contract.

  • Tax rules:

Distributions will switch from a First-In, First-Out (FIFO) basis to a Last-In, First-Out (LIFO) basis. For example, if you contribute $100,000 into a policy and have $150,000 in cash value, you will be taxed on the $50,000 gain first.

Policy loans will be realized as ordinary income to the policy owner and could be subject to income taxes in the year the loan is made. Distributions (either withdrawals or loans) that go beyond the policy basis will be subject to a 10% penalty tax for policy owners under the age of 59-1/2.

Transferring funds from a Modified Endowment Contract to a new life insurance policy via the 1035 exchange privilege will render the newly issued contract as a Modified Endowment Contract as well.

Source: https://en.wikipedia.org/wiki/Modified_endowment_contract

CLICK HERE for More Videos on the MEC Limit
]]> How can a policy be used to eliminate debt? https://old.ibcglobalinc.com/how-can-a-policy-be-used-to-eliminate-debt/ Wed, 13 Jul 2022 18:35:51 +0000 https://old.ibcglobalinc.com/?p=502962

A policy can be used very similarly to a line of credit. The one catch is that the policy has to be reasonably funded first to build up the cash value so that you have enough to borrow from.

If you pay a debt in a typical way just using cash, you may not have the debt anymore, however, you will have what is called a Lost Opportunity Cost. The money you paid the debt off with is gone. The cash you put into a life insurance policy works a little differently. Whether you leave the cash in the policy or take it out to pay off a debt, it earns the same interest! Your cash will always be working for you, even if you have to take it out of the policy.

Shown in the video is an example of a policy with cash being taken out as a loan compared with a policy where no cash is borrowed. The earned dividends are dollar for dollar across both policy examples. Insurance companies are able to do this by using the Death Benefit as collateral. If $200K is loaned out of the policy, the Death Benefit will be reduced by $200K. If you choose not to pay back a policy loan or you die before the loan is paid back, your Death Benefit will be paid out minus the amount owed for the loan.

So, even if you choose to pay the loan back to the policy after paying off high-interest debt, that money was still working for you the entire time you had it loaned out. No lost opportunity cost! Once a loan is fully paid back to the policy, your cash value and death benefit are fully restored as if it was never touched in the first place.

]]> How Corporations Use Cash Value Life Insurance https://old.ibcglobalinc.com/how-corporations-use-cash-value-life-insurance/ https://old.ibcglobalinc.com/how-corporations-use-cash-value-life-insurance/#respond Wed, 13 Jul 2022 18:35:51 +0000 https://old.ibcglobalinc.com/?p=502963

Top US corporations and America’s largest banks have already put BILLIONS into these products! Disney, JC Penny, Starbucks, Panera Bread, Nike, and Verizon are just a few examples of these who own and use high cash value life insurance policies to better their businesses.

Many corporations and major US banks have cash value positioned as a top-tier asset on their balance sheet. In addition, many corporations are attracted to the SERP (Supplemental Executive Retirement Plan) benefits life insurance provides.

If you would like to see more videos on how large corporations use cash value life insurance click below:

CLICK HERE
]]> https://old.ibcglobalinc.com/how-corporations-use-cash-value-life-insurance/feed/ 0 How do agents get paid? https://old.ibcglobalinc.com/how-do-agents-get-paid/ Wed, 13 Jul 2022 18:35:51 +0000 https://old.ibcglobalinc.com/?p=502964

We get paid directly from the insurance carrier. There is no extra cost to you as the policyholder for using an agent to help set up your policy.

]]> How do I use a policy to buy a car/house/large purchases? https://old.ibcglobalinc.com/how-do-i-use-a-policy-to-buy-a-car-house-large-purchases/ Wed, 13 Jul 2022 18:35:51 +0000 https://old.ibcglobalinc.com/?p=502965

See How Do I Use a Policy to Eliminate Debt? The concept is very much the same. Borrowing money from your policy for any reason, whether it is to pay off a debt or make a large purchase, can be very beneficial since the money that is borrowed is still earning dividends for the policy. This means no lost opportunity cost, and if you pay it back, your death benefit and cash value will be fully restored as if you never took a loan out at all!

]]> Loan Interest Rates https://old.ibcglobalinc.com/loan-interest-rates/ Wed, 13 Jul 2022 18:35:51 +0000 https://old.ibcglobalinc.com/?p=502966
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