IBC Lab · Educational sandbox
Pressure-test the Infinite Banking Concept with your own numbers.
Interactive model of a participating whole life policy designed for policy loans — premiums, paid-up additions, dividends, 7-pay MEC approximations, and direct vs. non-direct recognition loans.
Cash value is the policy's surrender / collateral value. Net cash value subtracts any outstanding policy loan.
What these results actually mean
A plain-English read of your current design, the actions it implies, and which assumptions are doing the heavy lifting.
1. Commit $12,000 per year — and know which part is flexible
$6,000 is the base premium (contractually required to keep the policy in force) and $6,000 is the paid-up additions rider (50% of your outlay). The PUA portion is the dial you can turn down in a bad year; the base premium is not. Over the 30 modeled years this design puts $240,000 into the policy.
2. Actual MEC status is unknown — obtain carrier limits
The teaching comparison is $16,970/yr; it uses simplified mortality and interest assumptions. This does not certify that a policy is not a MEC or that loans are tax-free. Obtain the carrier’s actual funding limits and tax review, including before changes or additional payments.
3. Modeled breakeven in year 3 (age 42)
This compares net cash value with premiums only. It excludes loan proceeds, principal repayments, interest cash flows, tax, and opportunity cost; it is not economic breakeven. Review liquidity needs separately.
4. Use the policy as collateral, not a piggy bank
You haven't modeled a loan yet. A policy loan is a carrier loan secured by policy value; dividend treatment, loan interest, and benefits depend on the contract. Action: enable the policy loan panel and test the purchase you'd actually finance — a truck, a roof, a rental down payment — at a realistic rate.
5. Take one illustration to a licensed agent and compare it line by line
This model is an approximation. Ask a carrier for an illustration with the same $6,000/$6,000 split and compare the guaranteed column (not the projected one) to what you see here. If the guaranteed column doesn't work for you, the policy doesn't work for you.
Which assumptions move the outcome most
Each row changes one assumption and re-runs the projection. The effect is on year-30 net cash value (currently $974,966). Comparisons are omitted when a run stops early or has invalid inputs.
| Change one assumption | Net CV impact | % | New breakeven |
|---|---|---|---|
| Reserve credit 5.5% → 6.5% | +$232,552 | +23.9% | Year 3 |
| Reserve credit 5.5% → 4.5% | −$186,818 | −19.2% | Year 4 |
| Start 5 years earlier (younger issue age) | +$74,752 | +7.7% | Year 3 |
| Fund PUAs 3 more years | +$74,205 | +7.6% | Year 3 |
| Shift $1,000/yr from base premium into PUA | −$16,639 | −1.7% | Year 3 |
The additional reserve credit is a hypothetical modeling input. A carrier dividend interest rate applies to its own formula and cannot be substituted here as a cash-value return. Obtain a current carrier illustration. Talk it through with a broker →
Compare scenarios side by side
Save the current assumption set, change the sliders, then save again to compare modeled outcomes and assumptions. Compare equal horizons and review any stopped runs. Saved scenarios stay in this browser only.
No saved scenarios yet. Save the current design, adjust your assumptions, and save a second one to compare them here.
Risk review & common criticisms
Sanity-check the design against your cash flow, time horizon, and financial baseline. This heuristic flags assumptions to review; it does not determine suitability, affordability, or tax treatment.
Red flags (2)
Strengths
- 20-year horizon is long enough for the design to compound.
Common criticisms of IBC — and what the model actually shows
- "Returns are mediocre." True in early years. Whole-life IRR is back-loaded; the simulator's breakeven year and net cash value curve make that visible — compare against your own opportunity-cost benchmark.
- "You're borrowing your own money — and paying interest." Policy loans are collateralized against the death benefit; the cash value keeps crediting. Direct-recognition carriers offset dividends on the loaned portion, which the recognition toggle models.
- "It's a tax shelter that can blow up." Over-funding can affect MEC status and the tax treatment of distributions. The indicator above is only a model flag; verify actual MEC status and funding limits with the carrier.
- "Commissions are huge." First-year cash value is depressed because base-premium commissions and acquisition costs come out early. PUA riders carry far lower loads — that's why IBC designs lean heavily on them.
- "Term + invest the difference wins." Often true on a pure expected-return basis. The honest case for IBC is the combination of guaranteed cash value, creditor protection (Tex. Ins. Code §1108.051 in Texas), tax-deferred growth, and a collateral pool you actually use — not raw return.
Modeling assumptions
Methodology reviewed October 8, 2026. The hypothetical reserve credit is additional to guaranteed reserve growth and is not a carrier dividend interest rate. Compare a zero-credit run with your chosen assumption; review loan effects on the benefit. This is not a carrier rate or illustration update. IRS seven-pay test explanation.
- Mortality: unisex Gompertz approximation. Real carriers use sex-distinct, smoker-distinct, fully underwritten tables.
- Cash value ≈ terminal reserve at the assumed interest rate of 4%. This reserve approximation is not a contractual cash or surrender value.
- Base premium loaded 10%, PUA premium loaded 5%. Actual loads vary by carrier and rider.
- Additional reserve credit is hypothetical, applied to average modeled cash value to buy PUAs. It does not reproduce a carrier dividend scale.
- The seven-pay threshold is a net-level approximation of IRC §7702A. Actual tests use contract-specific actuarial inputs and can be affected by changes; this model cannot certify tax status.
Want a real proposal with a specific carrier's current dividend scale and underwriting? Book a 20-minute call →