Over the course of the years, people have been using the Infinite Banking Concept to create better financial circumstances for themselves without traditional banks or other financial institutions. The Infinite Banking Concept is a process through which an individual can perform the banking function at the you and me level. By utilizing specially designed dividend-paying whole life insurance, policy owners are able to control the banking function. By acquiring such insurance policies that deliver dividends, you get the opportunity to dictate your own terms and leverage yourself for cash flow rather than taking out loans and mortgages.
Infinite Banking comes into the equation when we look at the cash value of whole life insurance. The cash value is what acts as the collateral for the policy, and the policyholder can acquire loans on it from the insurance company. This whole life insurance policy covers the policyholder’s life, and even in the case of accidental death, it provides financial security to the remaining family members or next of kin.
The Infinite Banking Concept can steadily change your life for the better by improving your financial situation, giving you peace of mind, and helping you achieve your goals. There are significant benefits to utilizing the Infinite Banking Concept for financial success rather than leaving your money in the hands of financial institutions. However, it is important to note that there are areas with the Infinite Banking Concept that you need to keep in mind. Mentioned below is a detailed list of the Infinite Banking Concept's Pros and Cons.
Pros
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Using the Infinite Banking Concept allows you to reduce your debts and increase your overall saving.
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You can build a college fund for yourself or the next generation without compromising on your current goals and desires.
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You can create a substantial emergency fund and have complete and immediate access to it when required.
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By using the Infinite Banking Concept, you can recapture business costs and other professional expenses.
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Not having to pay interest on traditional loans, mortgages, and other liabilities to financial institutions will also be money saved on your end.
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Considering you are securing your own retirement without having to worry about any fluctuations in the market, you can thoroughly enjoy financial freedom.
Cons
As you can see above, the advantages of implementing an infinite banking strategy using whole life insurance are many.
However, there are a few disadvantages as well that need to be addressed when considering if this is the right path for you.
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Cost prohibitive
For many people on a shoe string budget the infinite banking concept can be cost prohibitive. Although there is no set minimum monthly payment, in order to truly follow this concept and see its fruit you would need to try and put around 10% of your income into your policy, or at least $300 a month. For many people who are just getting by this can be prohibitive and it precludes many from ever attempting this awesome wealth building strategy.
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Requires discipline
The infinite banking concept is not for the faint of heart. You have to be disciplined and have a strong inner conviction that you want to see this through to the end. As Nelson Nash would say, You have to be an “honest banker.”
An “honest banker?”
The most powerful aspect of infinite banking is the long term growth that is fueled by borrowing against your policy AND PAYING IT BACK! If you don’t pay back your policy, you will slow the growth, and ultimately miss out on maximizing your policy to pass on as a legacy. Like many things in life, the best things come at a price (despite what popular wisdom tells you). With infinite banking the price is a disciplined approach to your finances. The rewards will be amazing but you must be willing to walk the road less traveled.
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Must qualify
As with any life insurance policy, you must qualify for an infinite banking policy.This means that if you have existing health problems, it might be harder for you to qualify for a policy. The good news is that whole life insurance may actually be easier to qualify for than term life. When applying for life insurance with health issues it pays to have options and choose a company that you are more likely to be approved with.
The Infinite Banking Concept can steadily change your life for the better by improving your financial situation, giving you peace of mind, and helping you achieve your goals. But at the same time, it is important to note that using this concept and seeing it yield fruit can take a lot of time and might not be for everyone.