The Benefits

IBC affords policyholders many benefits. The key benefit is improved cash flow. However, we at IBC Financial have identified many other benefits of IBC. Here are the six benefits of IBC.

1. Increased access to cash: There is no credit check for policy loans, unlike traditional loans. Once your cash value has accumulated, you can borrow without stress. You can use the money as you like, such as an emergency fund for unexpected expenses like medical bills.
2. Provide you more financial Control: This strategy helps you gain control over your cash flow. Here, you do not rely on a bank or traditional lender. You take money against your own money (cash value). In fact, you become your own banker. This is a major benefit of IBC. Overall, it aids financial planning.
3. Allows for Cash Value growth: your monthly premiums are saved as cash value and accumulate over time. The good thing is that it keeps on growing even when you take loans. You will continue to receive interest and dividends, increasing your liquid assets.
4. Lowers taxes obligations: A personal loan you take out is not taxed and does not impact your credit score or history. Also, the life insurance allows for tax-free growth of the cash value balance. The interest and potential dividends are not taxable, contributing to the cash value growth. However, upon cash surrender, you will pay taxes on any outstanding loan and interest. This also is one of the biggest benefits of IBC.
5. Helps in retirement planning: Most insurance policies usually focus on the benefit to beneficiaries. They often neglect the policyholder. IBC will help you save enough money you save enough money from which you can borrow and benefit in retirement.
6. Protect your assets: Your credit history does not affect your cash value. The funds in your account cannot be accessed by creditors in many legislations.

Potential Downsides

IBC, although beneficial, comes with some drawbacks. These challenges of IBC need to be considered before making investment decisions. Here are the four drawbacks.

1. Can be costly: Dividend-Paying Whole Life Insurance is expensive. The premiums are more expensive than other basic insurance policies. Ideally, you will need to contribute 10% of your income or monthly premium payments of at least $300. This is a major discouraging factor.
2. Requires financial discipline: It is not easy to keep up with the timely payment of policy premiums, especially if you are not disciplined. Maintaining a whole life insurance requires a life-long commitment. These include up-to-date payment and repayment of loans. Also, you will have to wait for a few years to allow your cash value to accumulate.
3. Can reduce your death benefit: If you have unpaid loans before your death, the insurer will deduct the amount from the remaining funds in your policy. This will reduce the death benefit to your beneficiaries.
4. Requires qualifications: Aside from the high monthly premiums, even getting a Whole Life policy requires that you meet some criteria. Some factors that are considered include your current finances, age, health condition, and lifestyle. Deficiencies in any factor reduce your chances of getting a policy.