Infinite banking: Not many people are aware of this concept. Many people may have never even heard the time before, and that means they’re likely missing out on the benefits infinite banking can bring to one’s life.
So what exactly is it and how does it work? What are the pros and cons? Here’s everything you need to know about the world of infinite banking and how it can help you.
It is the process by which you create your own banking system through the use of a permanent life insurance policy that pays out dividends. With this in place, you essentially become your own banker so that you can borrow from yourself and pay yourself back on your own schedule.
it is reliant on the whole life insurance policy, which is much different from the life insurance policy. Whole life insurance is guaranteed for a lifetime as long as the premiums are paid on time. On the other hand, a life insurance policy only lasts for a period of time, usually about 20 years. Keep in mind that premiums for whole life insurance are much higher, but those costs do go into death benefits, fees and operational costs, and a cash portion that is held in a savings-type bank account.
The majority of people’s income goes to paying off debt each month, and it can be a struggle to get out from under it. So what are the advantages of infinite banking?
Not everything is perfectly rosy when it comes to infinite banking, so there are some disadvantages you should be aware of before you decide to jump in headfirst.
On average, the process might not work for everyone because it requires serious financial commitment as well as enough earnings in order to be able to afford the monthly premiums. However, there are some steps you can take to make things easier for you. For one, you can start a policy when you’re younger, as the premiums will be much lower then and are locked in for life.
You should also choose a policy that has a cash value rider that benefits your loved ones. This prevents the cash value from being absorbed by the insurance company.
Infinite banking can be a powerful tool for those who have higher net worth and want the freedom to borrow money quickly without the hassles of a bank. The money can be used to finance almost anything you can think of, but be aware that it does require a large investment over time for it to work.