What would you do if you never had to visit the bank again?
You depend on banks for your car loans, house loans, student loans, and so much more. They are in control of how you access your money and set the interest rates on any debt that you have.
Have you ever heard about infinite banking? Would you like to be in control of your money?
Keep reading to find out what is infinite banking and learn more about the benefits and drawbacks:
What Is Infinite Banking?
The concept of infinite banking is to allow people and businesses to become financially independent by becoming their own bankers. Through this process, one can take control of their savings and debt.
The infinite banking concept was first created by R. Nelson Nash, who was a financial expert in the 1980s. He was in financial trouble and realized that he could never be in control when he was continuing to pay on interest rates to banks. He decided to make a change that involved a whole life insurance policy.
Whole life insurance policies have high premiums but the money you pay into them is the money that you can borrow from later on. You can access the money at any time. Since the money is yours completely, there are no credit checks or income verifications needed to withdraw it.
Benefits of Infinite Banking
There are many benefits of infinite banking.
You can borrow the money at any time. No age, credit, or income restrictions.
The money that you borrow is not considered income by the IRS. The cash value accumulates tax-free, allowing you to focus on building cash flow without worrying about the taxes on the money.
The interest rate will not change and there are no required monthly payments like you would have with a car or home loan.
The loan is private. It will not show up on your credit report.
No collateral or assets needed to get the loan. Most loans will require you to give up your vehicle or home if you are not able to make the payments.
The death benefit allows you to leave the money to someone upon your death.
Drawbacks of Infinite Banking
There are a few drawbacks to infinite banking.
You must qualify first. This is important because the entire concept depends on you being able to get the whole life insurance policy.
Financial discipline is required for you to be successful. If you are not making payments, you will not have much to borrow from.
It takes time to build up the cash. You won’t be ready to borrow money to buy an entire home in the first few years of having the policy. You must build up the amount of cash before you can borrow for big purchases.
There is no diversification. Unlike with other financial investments, all of your eggs are in one basket.
Contact Us Today
Visit our website for more information on what is infinite banking and feel free to reach out with any questions. We have wealth creation resources listed on our website for you to check out as well!
Tamila McDonald is a U.S. Army veteran with 20 years of service, including five years as a military financial advisor. After retiring from the Army, she spent eight years as an AFCPE-certified personal financial advisor for wounded warriors and their families. Now she writes about personal finance and benefits programs for numerous financial websites.
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