Jayson Lowe explains how to handle repayments on infinite banking policy loans in Canada. You can hold principal repayments in a separate account and send them back as lump sums, but interest keeps accruing on the unpaid loan balance.
So the question is, if it is used for private lending, can I put the principal repayment back into the policy and close the loan early, or would I just keep making payments and reuse the principal withdrawn? I think what the question is there, I'm going to see if I can put my mouse on the screen. I'm going to do a little bit of a drawing here, if I'm understanding this correctly. Here's what we're asking there. Here's the policy. We've built up a bunch of money. We've now this squiggly line is moving the money out into our world. That money is now coming to an account that we have over in our world. And there's an outstanding loan here on the policy. Okay, great. I've used this. I go in whatever, I buy a car, I lend the money to someone else. Whatever I do. So this is now dropped all the way down to zero, and I'm now getting repayments, and it's going back into this account. As this fills up, do I have to send the money back here to the insurance company, or can I just keep it in this account and let it accumulate and then put it back to work again? I'm assuming that's the question, so let me know if I'm on track. Joy, the answer to that is, yes, you can do that. You just have to be very mindful that the interest cost still accumulates on the policy loan. This is basically. This is very common. This is actually somewhat of what we recommend for people to do in that you have a separate clearinghouse account or a segregated account to manage this process. You know, you're kind of treating it like a business. And so as you're building up these payments, you can then choose when to send a payment of a larger amount or lump sum back to a policy. But you might keep a reserve here that you can, you know, you can put it back to work if you needed to right away. That way you avoid some of the lag time of sending it to the life company, waiting for them to process it. Oh, I need the money back again. Send in the form, wait for it to come back to your account. So that is extremely common. In fact, that's a recommended process.
