The collaterized loan has a lower interest rate. And then just in red, again, it’s not necessarily huge cons. It should just for awareness, but you need to apply it. It could show up on your credit report from some people are being able to pull it out where it’s a business loan so it’s not showing up on their personal credit report. I’ll just highlight that. It just made sure. You need regular payments that are set by the bank and most likely, if you put up your cash value as collateral, you will lose that asset protection because now it’s seen. And if it’s there for creditors to look at. I’m not sure if you’re putting it up as the business, but what I mean, it’s usually once you collaterized portions of your cash value then it no longer falls under the asset protection caveat for the state.
I wonder if the bank is like first name or not so if there’s a creditor they’re coming after you, if they got to get aligned to the bank first, but I don’t know. Good question. I think that’s, that’s the trade-off right? When you save a percent, one and a half percent interest rate, that’s the trade-off. And you’ve got to ask yourself if it’s worth it.
For those of you guys, and this is new to you guys, I have a spreadsheet of third party loan vendors in the discord channel. There’s like about how like a dozen of these things, thanks to Nash Eric and Yang, they did the labor work for our group to figure out who were the people to work with, what the latest terms interest rates were. So we had that, that PDF for you guys in that discord channel, the IBC/whole life is where to pull that from.
And just for awareness, usually the amount of cash value you need I think the minimum has dropped maybe not an 80,000, it was hovering around a hundred thousand. A lot of the banks were recording at least a hundred thousand cash value to be put up as collateral. But I think someone’s got an $80,000 one recently.
And if we just took it from the IVC policy, you may just cannibalize from the policy. Whereas if you collateralize it and get a loan, you need to pay back the principal. Right?
Yeah. There’s usually a regular payments mandated by the bank and basically you need to ask permission. So even if you were to, um, take out say an $80,000 collaterized loan, and then you dump more P waves into your policy and you boost that cash value up now 220 and you want another $20,000 in loan just by policy loan, the bank will have to sign off on a lot of those actions or any policy actions going forward while the loan is outstanding. The bank wants to protect their assets, but don’t have a lot of say to what you do on your policy though.
If he got like half a million billion dollars of cash value in there, 1.5% for years, a lot of money. And I think what I’ve seen, some people do is they’ll buy a house cash and then not get a, a home loan because they can’t qualify for a non-qualifying mortgage. Especially if they’re a business operator who shows very low income or good real estate investor who has variable, no active income, a lot of passive income. This might be a way to use exactly what the same sense, right? Bang, cram yourself, you get a policy loan for the house or you buy the house cash but you take the loan from the infinite banking policy that you have. You can get creative with this stuff. Yeah. And just so when you take a policy loan, the interest you pay is not going back to yourself that there’s some confusion there. It is going back to the insurance company. They’re basically, collateralizing your death benefit, your cash value. Remains untouched whether it’s recognized or not, that’s more of a dividend treatment on the cash value, but your death benefit is collateralized. Your compounded growth is not interrupted within your policy.
And some people don’t like the feeling of these interest rate payments, stacking up on you. And for those people, I would say get over it. And it’s just an emotional thing! But if it really bothers you, maybe just set aside a certain year’s payments. Pay it back once a year, or just make sure you have it on the side, in a separate account, for that purpose. It’s another way of dealing with it. But it’s just truly an emotional things you said earlier that the policy kind of cannibalizes itself.