Liquidity, Use and Control and Why It Matters Most



The three features of liquidity, use and control (LUC) are incredibly vital to the success of any financial vehicle.  Whether it is due to unforeseen hardship or an unexpected opportunity, the majority of our money should be available whenever we want or need to access it.

With the advent of the 401(K) many consumers were coaxed into funding vehicles that were, and still are, almost completely out of their control.  If you’ve got money tied up in a 401(K) or other qualified plan you have very limited ways to access it in the event that you had a lucrative investment opportunity come your way.  Not to mention that if you don’t use the money how and when the regulations outline you will be heavily penalized.

Another common place where LUC are given up is in the overpaying of a home mortgage.  When making extra payments on a home mortgage you are essentially giving up control of that money.  In order to get access to it you will need to qualify for it via a HELOC or other method, which makes getting money out in a personal or family financial crisis nearly impossible.

The following scenario comes to mind: John Doe has been making extra payments to the tune of 100 dollars per month to his home mortgage.  After 5 years of doing so he finds himself unemployed and needing some extra cash until he gets back on his feet.  First of all that $1,200 per year he has contributed has earned him zero interest and secondly he now has to qualify to get access to it.  The bank will first want to know how he’ll be paying them back the money he wants to borrow – without a job it might be tough to convince the bank.  Again he has sacrificed control of his funds.

The average consumer today goes about saving money in completely the wrong way.  The first question asked is “what vehicle gives me the greatest potential for gain?”  The factors of risk, potential for loss, LUC, and safety are all secondary considerations.  By taking the path of least resistance advisors continue to encourage this behavior only furthering our lack of financial literacy.

As you may already know the Infinite Banking Concept utilizes a uniquely structured permanent, or whole, life insurance policy to create a vehicle with full liquidity, use and control.  It is important to note that cash inside a life insurance policy is always accessible to you for whatever reason, no questions asked.

By placing emphasis on safety, no loss provisions and LUC the vehicle of whole life provides the ideal environment for saving money.  With full liquidity you always have funds available for any investment opportunity that comes your way as well as for any unforeseen hardship.  In the meantime your money grows tax free and is guaranteed never to lose.

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Nick D.

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