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 limits, and direct vs. non-direct recognition loans.
Educational only. This is a simplified actuarial model — not a quote, illustration, or recommendation. Actual carrier dividends, loan rates, and underwriting will differ. Talk to a licensed agent and tax professional before acting.
Initial death benefit
$407,612
7-pay MEC limit / yr
$18,667
Within limit
Breakeven year
Year 3
Net CV ≥ premiums paid
Year 30 net CV
$974,966
DB $1,689,425
Cash value is the policy's surrender / collateral value. Net cash value subtracts any outstanding policy loan.
Risk, suitability & common criticisms
Sanity-check the design against your cash flow, time horizon, and financial baseline. Educational scoring only — not a recommendation.
$120,000
3 mo
20 yrs
0%
Premium of $12,000/yr is 10.0% of gross household income.
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 past the 7-pay limit creates a MEC and forfeits the tax treatment. The MEC indicator above flags it before you commit.
- "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
- Mortality: unisex Gompertz approximation. Real carriers use sex-distinct, smoker-distinct, fully underwritten tables.
- Cash value ≈ terminal reserve at guaranteed 4%. Carrier non-forfeiture values are usually a bit lower in early years.
- Base premium loaded 10%, PUA premium loaded 5%. Actual loads vary by carrier and rider.
- Dividend rate is hypothetical — not guaranteed. Dividends here buy paid-up additions.
- 7-pay MEC limit is a net-level approximation of IRC §7702A.
Want a real proposal with a specific carrier's current dividend scale and underwriting? Book a 20-minute call →