A Pan-American Life Insurance Group Stock Company

Tips on Tapping the Living Benefits of Whole Life

You know that whole life insurance offers living benefits, and you probably have heard the term, Infinite Banking Concept, or seen the acronym, IBC. But maybe you aren't sure what this means, or if it can benefit you. Continue reading for tips on how or if you should tap the living benefits of your whole life policy.

Accessing Cash Values through Policy Loans
One major advantage of a participating (dividend paying) whole life insurance policy is that it offers guaranteed cash values and non-guaranteed dividends that accumulate on a tax-deferred basis. As a policyowner, you can access this money during your lifetime through loans, at attractive interest rates. Cash values accessed through policy loans usually will not trigger a taxable event, even though the policy may have a large gain in excess of premiums paid.*

The Infinite Banking Concept (IBC) outlines the value of accessing the cash values in whole life insurance to finance the purchase of tangible products. It shows how using cash values rather than a more traditional method of financing could help policyowners increase their net worth if they repay the policy loans at a higher rate and use the excess payment to pay premiums on a paid-up additional (PUA) insurance rider on the policy, such as MTL's Flex Pay PUA rider. Paying premiums on this rider will increase the policy's cash values and death benefit.

IBC at Work
Here's a typical example of how IBC might benefit you. Imagine you want to purchase a car and you have an MTL participating whole life policy. You could borrow against your policy and use the money to purchase the car. If you borrow against the policy rather than take a loan from the dealership, you will not be subject to a credit check, there's only one form to fill out—No. 6106—you usually get your money in a few days, and there is no fixed repayment schedule.

In addition, the guaranteed cash values in your policy continue to grow, unaffected by the policy loan. While guaranteed growth in your policy will continue to occur, the outstanding loan can impact your non-guaranteed dividends. Therefore, in order to retain your insurance protection and ensure that the cash surrender value can be restored and available again for future use, it's important to plan your repayment process at the time you borrow against your policy.

For more information on the Infinite Banking Concept or policy loans, contact your MTL Insurance Advisor or the home office.

*MTL does not give tax or legal advice. MTL clients must consult with a tax or legal expert of their choice.

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