What does the later half of the illustration look like? Do they withdraw contributions or take a loan? What do their taxes look like when they award this compensation? Thank you as always for the awesome content.

@IBCGlobalInc

2 ай бұрын

Great question. 1.) We take withdrawals up to our cost basis (the total amount we paid) 2.) After we reach out cost basis, we will take policy loans. In most cases, the policyholder will not pay the loan principal or loan interest. 3.) When the Corporation (policyowner) takes withdrawals/loans, they do not have to pay taxes (assuming we don't trigger a taxable event with the policy) 4.) When the Corporation compensates the retired employee, the employee pays income tax on it. Example: - Policy has cash value of $1,000,000 - The corporation takes a policy loan of $100,000. - The $100,000 loan is deposited into the Corporation's bank account. - The corporation does not pay income tax on this. - The corporation pays that $100,000 to the retired employee. - This is considered a compensation expense to the corporation. - This is taxable as ordinary income to the retired employee

@jaycox1836

2 ай бұрын

Thank you for the details! IBC is laser focused on the cash value and CV IRR. But being that this is about business owned life insurance, maybe mentioning the higher IRR on death benefit on the off chance the employee has below average lifetime. IRR on Death Benefit appears to never be less than cash value, but in 50 percent of policies, it will be higher because many of us won't make it to age 96?