Flow of capital – Income policy discussion continued
What This Covers
This session builds on concepts from the Mark Benson video by walking through a real-life income policy illustration. It explores how to manage premium contributions, loan repayments, and capital flow through a high-cash-value policy over time. The focus is on how ongoing income can be structured inside the IBC system, both during active funding years and in periods of reduced contribution or policy offset.
Why Clients Use It
To visualize real policy mechanics when flowing income through the IBC system
To learn how to balance premium payments vs. loan repayments strategically
To see the power of capitalizing early and managing a long-term system
To clarify policy offset, efficiency, and the flexibility that IBC policies offer
Key Insights by Timestamp
(00:00–01:30)
Illustration based on an income of $18,000/month ($216,000/year)
Minimum required premium: $92,999/year
Accelerator deposit (PUA rider): $123,000/year
Discussion focuses on a 45-year-old male, non-smoker policy design
(01:30–02:30)
Premiums are fully funded for 5 years
From year 6 onward: only the minimum premium is paid
Offset strategy begins in year 20
Builds efficiency by front-loading capital, then shifting focus to managing loans
(02:30–04:05)
In early years, policy may not yet cover full living expenses via borrowing
Key concept: use multiple policies as a system (some already seasoned)
When funding drops after year 5, excess income can shift toward loan repayment
Same energy (income) stays in the system, just reallocated
(04:05–06:08)
Owners control the format of capital inflow: premium vs. loan repayment
Nelson’s rule: “Don’t steal the peas” Always have a plan for repaying loans
Examples:
Front-load with premium, then repay loans
Use other assets or future income to repay loans
Or start a new policy with that same capital flow
(06:08–08:04)
Year 6 shows cash value growing faster than the minimum premium live steam
Once efficient, you can:
Continue full funding
Repurpose accelerator for loan repayment
Start a new policy/system
Nelson’s book shows different designs for different use cases No one-size-fits-all
(08:04–09:56)
Emphasizes Parkinson’s Law . Control lifestyle creep to enable saving
It’s okay to use policy loans early. It’s part of the learning curve
Nelson’s quote on starting a new policy:
“As soon as my feeble brain could envision doing so.”
(09:56–11:56)
Comparison: offset in year 6 vs. continuing full funding
If dividends can’t cover premium, PUAs are sold to maintain the base
But with large loan repayments, debt can be crushed quickly
Once debt is reduced, the policy can resume full premiums, supercharging growth
“We gained the advantage of time.”
Client Reflections & Discussion Themes
Cash flow control: IBC isn’t about infinite cash, it’s about intentional capital management
Loan repayment options are flexible, and planning is key
Clients appreciated the honesty around tradeoffs and timing
Reinforced the idea that IBC systems evolve. They’re not static designs
Core Takeaways
Even high-income flows require planning when capitalizing a policy
Learn to control capital flow formats, premium vs. loan repayment
Efficiency builds over time; early capitalization unlocks flexibility later
You don’t need “perfect” designs, just purposeful action and commitment
The goal isn’t a rigid formula. It’s adaptive thinking with financial energy