These words were said by Nelson Nash, the father of the infinite banking concept, author, and financial adviser. In the case that a life insurance policy has never occurred to you as a business opportunity, then you might be drawing a blank concerning how you can benefit from infinite banking, which is also referred to as your personal bank.

“Whenever you buy a life insurance policy, you’re starting an enterprise from scratch.”

Infinite banking is one of the most efficient strategies to use.  By utilizing your own cash, you can create a massive net worth, enjoy a stress-free life and give your loved one’s something to inherit once you are no more. The infinite banking method involves using your life insurance’s cash value, to borrow loans that are tax free and are at a lower interest rate.

By practicing the infinite banking concept(IBC), you say goodbye to high-interest loans from conventional banks, agents, private lenders and other creditors.  By using IBC you get the sharks out of the equation. You can now fund day-to-day life, investment opportunities, retirement, as well as other high-income investments like real estate. In other words, you are simply a business owner- running your dream business.

Before we look at the reasons, why infinite banking might just be the key to your financial breakthrough, let’s briefly look at how the infinite banking concept operates, how you can start one, and whether it really works.

How Infinite Banking Works

At the center of the Infinite Banking Concept sits a participating whole life insurance policy. Upon securing such an amazingly well structured policy, you can easily loan yourself some bucks using your whole life insurance policy’s cash value as collateral. By that, you evade paying exaggerated interests to lenders because you, as the policy owner, have your own personal bank. You can now quickly access extra cash by just contacting your insurance carrier.

A well structured participating whole life insurance policy drives the infinite banking concept. When you have recieved a well structured participating whole life insurance policy from a reputable insurance agent who is well versed with the IBC concept, you are one step closer to becoming your own banker in Ontario.  Which means you will earn dividends and interest from your policy, which enables you to increase your policy’s cash value as well as paying a portion of your insurance premiums.

Starting Infinite Banking

Before you become your own banker, you must first approach a liscenced insurance broker.  The broker must be familiar with settting up the infinite banking concept who you can work with.  They will help you access several whole life insurance policies where you can choose the best that matches your needs (ability to earn dividends, coverage rate, premium rate). Your insurance broker will come up with a financial plan centered on infinite banking and work hand in hand with you for the entire process to ensure your policy is set up correctly.

Does Infinite Banking Concept Really Work?

This is a common question that the majority of individuals ask, bearing in mind the many get-rich-quick schemes that are present in the financial market today. Before you get a yes or no answer to this query, it is important to have this in mind- infinite banking will not make you wealthy overnight. You need to put a lot into it.

Now back to our question: does Infinite Banking Concept really work? Many wealthy individuals use the concept to create generational wealth. That means that the answer is definitely a big yes! Infinite Banking in Ontario is very practical if you meet several critical requirements.

Among some of the requirements that you need to fulfill, you need to get an appropriate whole life insurance policy at reasonable rates. In case the rates are very high (for instance, as a result of your health condition) you may not benefit from the concept.

Also, you need to be financially stable and with a strong income stream, since whole life insurance policies attract hefty premiums to keep it afloat. In many instances, you are advised to put aside a minimum of 10 percent of your income to take care of your whole life insurance.

You need a strong financial knowledge of the major financial elements linked to infinite banking (for example, how dividends operate and contribute to your whole life insurance, how compound interest functions, etc.) as well as you need to have proper financial discipline.

Infinite banking comes with a wide range of benefits. That’s why it is something worth giving your best effort. The following are the ten benefits of infinite banking:

10 Benefits of Infinite Banking

• Tax Advantages

A properly structured whole life insurance policy saves you the hassle of paying taxes when making contributions or withdrawing.

Your insurance policy’s cash value grows from dividends and interest, tax-free every year. If you borrow cash against your policy, you are not taxed. In other instances, you are not taxed even upon taking a distribution.

Upon your demise, your family or other beneficiaries are not required to pay income taxes on your death benefits. The only tax they are required to pay is estate taxes if the estate is more than the estate tax exemption. Even if the estate is above the figure, you still have an option of helping your beneficiaries avoid paying taxes.

• Liquidity

Since you have the freedom to take a loan fast against your cash value whenever you want, minus a lot of paperwork or a credit check. Your liquidity can be compared to that of a money market fund or a super savings account.

In other words, the whole life insurance policy can also operate as an emergency fund. Consequently, there is a potential of earning more positive returns with handsome tax benefits, compared to a regular account, which does not offer a death benefit payout to your loved ones.

With that in mind, not every whole life policy enables you to start borrowing against your cash value immediately. That’s why you need to have a properly structured policy, of course, with the help of an IBC expert.

• Non-Correlated Asset

With infinite banking, your whole life policy is a non-correlated asset—it is not impacted by the stock market or real estate.

Compared to other investment mechanisms that change rapidly, whole life insurance enjoys a higher level of stability. Its cash value does not experience fluctuations or decreases.

This is a great benefit, especially when you are looking forward to utilizing your policy as a supplement to your retirement income.

A bad year in the stock market is capable of taking a huge chunk out of your retirement basket. However, when you have a whole life insurance policy, you can sleep peacefully and deeply being sure that your retirement income is guarded against the ups and downs of the stock market.

• Guaranteed Return on Investment

As opposed to stocks, there is no volatility linked to whole life insurance benefits. You come to an agreement, based on terms with an insurance firm in advance: your monthly payment, the rate of your cash value growth, as well as the death benefits passed to your loved ones. No monkey business, you only need to sign a contract with them and make your premium payments.

• Flexible Savings for Retirement

Even though whole life insurance isn’t a form of investment; you don’t earn returns from it the way you do with real estate or stocks. It acts as your savings vehicle giving you higher returns than a money market account or a savings account. After several years of your cash inside the policy compounding, tax-free, your cash value will offer you a huge sum of cash that you can borrow against and continue the compounding, uninterrupted.

Again, since you have the freedom to withdraw it in the form of cash, without any risk, you can use it to manage and evade a series of return risks early upon retirement. In the event that the stock market crashes, you have the option of waiting as you simultaneously take loans or distributions from the policy.

In fact, it is very flexible; you don’t have to repay it. It basically reduces your death benefit that will be passed to your loved ones when you depart if you fail to repay.

• Asset Protection

It is common knowledge that lenders cannot take hold of your whole life insurance policy. There is no way they can coerce you to borrow against it or to surrender it. The same case applies to bankruptcy proceedings within the majority of states and provinces, too.

In case you pass away and the policy pays the death benefit out to your estate- instead of directly to the beneficiaries—lenders could get access to it.

However, sometimes asset protection becomes complicated very fast. That’s why you need to involve an attorney whenever you think of linking your whole life insurance to an asset protection mechanism.

• Non-Stop Dividends and Interests

When you take a loan using your insurance policy’s cash value as collateral, you continue earning dividends on the cash deposits whole amount, and the interest you pay still remarkably belongs to you.

That means that technically, no money is moved out of the policy. It is the life insurance firm that lends you money, and the balance is basically the collateral. Therefore, it continues to attract and gain cash flow.

• Guarded Against College Financial Aid Applications

The FAFSA (Free Application for Federal Student Aid), does not require parents to disclose their life insurance policies” cash value. That is an advantage for parents who are intending to borrow cash against them to settle their children’s tuition fees.

Other parents take advantage of infinite banking as a way of saving for college, and upon paying back the balance into the life insurance policy. There is also an option of withdrawing money during retirement tax free when there is a need.

• Freedom

The moment you are not beholden to traditional banks, you become a free man or woman, able to make your own financial decisions.

Infinite banking offers you an opportunity to borrow cash against your cash value at any time, and you can use the cash to accomplish whatever you want. You don’t have to disclose the loan purpose for you to qualify. Furthermore, the loans don’t have any impact on your credit score, as is the case with borrowing from conventional banks.

• Apart from being your own bank, you can lend out cash

Infinite banking is not only about you as your own banker. You can also lend cash to others, which will earn you interest. This offers you a chance to recapture the cash you borrowed against your policy as well as interest. Through this, you can build and sustain more wealth.

Conclusion

When everything is done well, the infinite banking concept enables you to feel the impact of your cash, as it works for you in various ways concurrently.

However, as opposed to your other personal finances, you actually need the services of an expert to help you get the best experience out of infinite banking.

It is also worth noting that the infinite banking concept works better for people with financial conviction as well as the ability to think straight into the future. You should also be financially sound and willing to make a long-term financial sacrifice to enjoy the fruits of this concept. It’s critical to take all the mentioned factors into consideration before opting to become your own banker.