Putting Your Capital to Work
Movement: The Second Step of the Banking Function
In Brief:
Storage establishes where your capital resides. Movement determines how you access it when a need or opportunity arises. You can sell an asset, borrow from a commercial lender, or borrow against your policy. Each approach changes what remains growing, who sets the repayment requirements, and how you prepare for the next purchase.
You Finance Everything You Buy
Every purchase has a financing cost: interest paid to a lender or earnings forgone when you spend accumulated capital. The method you choose affects both today’s cash flow and tomorrow’s financing capacity. Consider these three approaches.
Withdraw or Sell
Accumulate
Withdraw or Sell
Purchase
Accumulate Again
What Happens
You spend your accumulated wealth today. The amount spent no longer participates in future growth or appreciation.
Control and Accounting
You choose when and how much to rebuild. Replacing the purchase price alone does not account for forgone earnings or changes in purchasing power.
Spend Your Money Now. You are responsible for developing a repayment plan and accounting for inflation and opportunity cost.
Commercial Loan
Accumulate
Borrow
Purchase
Repay the Lender
What Happens
You spend the lender’s money while retaining the asset securing the loan. The asset can continue growing or producing income.
Control and Accounting
The lender sets repayment requirements. Payments cover principal and interest, with interest paid to the commercial lender.
Spend the lender’s money now. The purchased asset, or another asset secures the loan, and the lender establishes the repayment terms.
Policy Loan
Capitalize
Borrow Against Policy
Purchase
Repay
What Happens
You spend the insurer’s money while retaining the policy. Contract cash value grows at a guaranteed rate with dividends contributing to additional growth.
Control and Accounting
You set the repayment schedule. The loan records principal and interest. Interest is paid to the insurance company, that you are an owner of.
Spend the insurance company’s money now. Your policy secures the loan and the available cash value establishes your borrowing limit. Compounding growth is not broken. You set the repayment terms and each payment restores capital for the next need or opportunity.
How a Policy Loan Works
As you capitalize the policy and available loan value develops, you establish financing capacity. A policy loan lets you borrow from the insurer against that value without withdrawing it from the contract.
Request Funds
Submit a loan request through your insurer. No application, credit qualification, or explanation is required.
Insurer Advances Money
The insurer provides the money. Your policy secures the loan; you have not withdrawn from the cash value.
Make Your Purchase
Proceeds of the loan arrive in your account, typically within 3-5 days, and you make the desired purchase.
Access Established Before the Need Arises
Owning an asset does not mean you can automatically borrow against it when you need capital. You may still need to qualify based on income, employment, and credit—even when you have substantial equity in the asset.
A policy loan works differently. The right to borrow is established in your insurance contract. With sufficient available loan value, you submit a request without submitting an application, qualifying again or justifying your purchase.
That is why capitalization comes first: you build financing capacity before the need arises. That gives your household financing capacity established in advance, with repayment flexibility you can plan around.
One Policy. Several Jobs.
The storage decision now shows its value. Properly designed participating whole life combines contractual borrowing access with long-term accumulation and a death benefit. Borrowing against the policy allows it to continue serving those purposes while the loan proceeds meet a present need.
Present-Day Needs
Cash value is available to finance needs, wants, emergencies, and opportunities without liquidating.
Long-Term Accumulation
Cash value grows with unbroken compounding—tax deferred. That capital is accessed tax and penalty free.
Protection for Your Family
Because the storage vehicle is a life insurance policy, it also provides a death benefit to your loved ones.
Your Capital. Your Purposes.
Use your capital for a vacation, a family car, business equipment, an investment property, or everyday family needs. You decide what it will finance.
The Purchase Is the Same. The Accounting Changes.
Liquidating your capital can make a purchase feel finished. The seller has been paid and there is no outstanding bill reminding you to restore what you used. But the withdrawn amount no longer earns for you. Those foregone earnings compound over time without ever appearing on a bill.
The policy loan preserves the underlying policy and makes the unseen cost of future growth a visible finance charge. You can see the balance, interest charged and the effect of each repayment.
Visible Balance
See the amount outstanding instead of leaving the use of capital unaccounted for.
Measurable Cost
Track the cost of using your capital so it can be accounted for in your financial decisions.
Restored Capacity
Loan payments are principal first, restoring the available capital and reducing future finance cost.
That makes the cost of financing something you can track and manage. Reducing the loan balance reduces future interest charges; paying it off ends them and restores the full capital base.
Next: Repayment
Movement begins the transaction. Repayment completes the cycle.
Accessing capital funds today’s need. Restoring the financing capacity prepares your household for the next one. You are in control.
Build a Capital Base That Can Serve Repeatedly
The Infinite Banking Concept® provides a process for storing capital, accessing it for use, and restoring financing capacity through disciplined repayment.