"I Can Get a Better Rate of Return"
IBC isn't about rate of return. It's about controlling the banking function — and the math is more nuanced than you think.
From Becoming Your Own Banker, Chapter 16
The most common objection: "Whole life returns are only 4-5%. I can do better in the stock market." This fundamentally misunderstands what IBC is about.
IBC is a banking strategy, not an investment strategy. Comparing cash value growth to stock market returns is like comparing your checking account interest to rental property returns — they serve completely different functions. Your policy is your banking system: stable, liquid, and guaranteed. The stock market is volatile and illiquid for specific needs.
More importantly, the rate-of-return comparison ignores the banking function. When you finance through your system, you recapture interest you'd otherwise pay to banks — potentially 34.5 cents of every dollar over a lifetime. That doesn't show up in the policy's rate of return, but it shows up dramatically in your net worth.
The person earning 10% on investments but paying 6% to banks has a net of 4%. The person earning 4% on cash value but paying 0% to outside banks keeps the full 4% plus whatever they earn on investments funded through their system. You can practice IBC and still invest in stocks, real estate, or anything else. Banking and investing are separate disciplines.