FlexVault Leverage Strategy
How Dual Growth Creates 12%+ Returns
The secret to FlexVault's 12%+ target returns: strategic leverage that creates two simultaneous growth engines—your money working twice as hard. Your cash value continues growing at 6-8% inside the policy while borrowed funds grow in external investments. Both pools compound simultaneously, creating the 'spread' that targets 12%+ combined returns.
FlexVault Leverage Benefits
At a Glance
Strategy Type
Strategic Leverage
Target Returns
12%+ Combined
Component 4 Boost
+1-4%
Leverage Timing
Year 3+
Risk Level
Managed/Moderate
Key Mechanism
Dual Growth Engines
Why Your Money Should Work in Two Places at Once
The Power of Dual Growth
Traditional financial advice says don't borrow against your retirement savings. That advice makes sense for 401Ks and IRAs—those loans cost you compound growth.
But life insurance operates differently. When you borrow against a properly designed IUL policy:
- Your full cash value keeps growing—the insurance company doesn't reduce your account balance
- Borrowed funds can be invested elsewhere—creating a second growth engine
- Loan interest is often lower than investment returns—creating positive arbitrage
This is the foundation of FlexVault's Component 4: Portfolio Integration. It's not magic—it's math. And it's why FlexVault can target 12%+ returns when traditional IUL delivers 6-8%.
Inside vs. Outside Your Policy
How the Leverage Mechanics Work
| Feature | Inside Policy | Outside Policy (Borrowed) |
|---|---|---|
| Your Cash Value | $500,000 | $300,000 (60% LTV) |
| Growth Rate | 6-8% (index-linked) | 8-10% target |
| Risk Protection | 0% floor | Diversified portfolio |
| Tax Treatment | Tax-deferred | Managed for efficiency |
| Year 1 Growth | +$35,000 | +$9,000 net |
The Math Behind Dual Growth
In this example with $500,000 cash value:
- Inside Policy: $500K grows at 7% = $35,000
- Outside Policy: $300K borrowed at 5.5%, invested at 8.5% = $9,000 net
- Combined Growth: $44,000 on $500K base = 8.8%
Add the other three FlexVault components (strategic guidance, tax planning, base policy returns) and the target of 12%+ becomes achievable.
Strategic Growth vs. Simple Borrowing
FlexVault vs. Traditional IUL Leverage
| Feature | Traditional IUL | FlexVault with Leverage |
|---|---|---|
| Base Policy Returns | 6-8% | 6-8% |
| Leverage Strategy | None (loans for spending) | Strategic (loans for growth) |
| Dual Growth | No | Yes |
| Active Management | Minimal | Comprehensive |
| Target Returns | 6-8% | 12%+ |
| Breakeven | Year 10-15 | Year 3 |
How Leverage Fits the System
The Four Components Working Together
Component 1: Well-Built Policy
The foundation: 6-8% index-linked returns with 0% floor protection. This is where your cash value lives and grows regardless of what you borrow.
Component 2: Strategic Guidance
Active management that determines WHEN and HOW MUCH to leverage. Loan-to-value optimization, timing decisions, and risk management.
Component 3: Tax Planning
Ensures leverage strategies remain tax-efficient. Coordinates policy loans with overall tax situation to maximize after-tax returns.
Component 4: Portfolio Integration
The leverage component itself. Strategic borrowing that creates dual growth engines and the additional 1-4% return boost.
How FlexVault Protects Your Wealth
Risk Management in Leverage
Leverage amplifies returns—but it also requires careful management. FlexVault's strategic guidance (Component 2) includes comprehensive risk controls:
Loan-to-Value (LTV) Monitoring
We never leverage to the maximum. Typical LTV ratios stay at 50-60%, leaving substantial buffer for market fluctuations. This protects against policy lapse risk.
0% Floor Protection
Your policy cash value has downside protection—in down market years, you don't lose principal inside the policy. This asymmetric risk profile makes leverage safer than in traditional investments.
Active Rebalancing
Annual reviews assess whether to increase, decrease, or maintain leverage based on market conditions, policy performance, and your personal situation.
External Investment Selection
Borrowed funds aren't thrown into speculative investments. Strategic guidance ensures appropriate risk-adjusted returns on the external portfolio.
The FlexVault Timeline
When to Introduce Leverage
Phase 1: Investment (Years 1-2)
Focus on premium funding and cash value accumulation. No leverage during this phase—building the foundation.
Phase 2: Breakeven (Year 3)
Four-component returns offset costs. Leverage can be introduced strategically. Cash value has built enough cushion for safe borrowing.
Phase 3: Building (Years 4-9)
Optimal leverage phase. 12%+ target returns through dual growth. Regular rebalancing and optimization of the leverage structure.
Phase 4: Income (Year 10+)
Leverage strategy may shift from growth to income optimization. Tax-free distributions begin while maintaining strategic leverage positions.
Understanding Strategic Borrowing
Common Questions About FlexVault Leverage
Advanced Leverage for Accelerated Growth
The LIFT Connection
FlexVault's leverage strategy is powerful on its own. But for those seeking even more accelerated wealth building, LIFT (Leveraged Insurance Financial Transformation)takes it further.
LIFT applies the same dual-growth principles with more aggressive leverage ratios and investment strategies—targeting the upper end of the 12%+ return spectrum.
Deepen Your Understanding
Related FlexVault Articles
Income Planning
Learn how to convert leverage-enhanced growth into tax-free retirement income.
Tax-Free Distributions
Understand the Section 7702 mechanics that make FlexVault distributions tax-free.
FlexVault for Business
See how business owners use FlexVault leverage for capital access and growth.
Ready to See How Leverage Works for You?
In a complimentary FlexVault Strategy Session, we'll model your specific leverage potential and show you how dual growth could accelerate your wealth building.