Whether you recognize it or not, you finance EVERYTHING you buy. You either finance it through a lending institute and pay them interest or pay cash for the things you buy and lose all the future value that money could have made. 

There is a better way. The wealthy have been using the strategy for more than two centuries, but R. Nelson Nash popularized the term itself in his influential book “Becoming Your Own Banker®.” 

Unlike your current retirement plan, this financial strategy offers:

  • No Market Risk- Will not lose money when the market declines
  • Guarantees- A guaranteed minimum Return
  • No Penalties- For using YOUR money
  • Liquidity- Have access to your money any time you want it
  • Protection from Creditors- in case you get sued
  • Leverage- Use it to increase your wealth
  • Tax-Deferred growth- Pay no taxes on the growth today
  • Pay No taxes on the gains- Pay no taxes on the gains when you take money out
  • Use as collateral- Use it to borrow money for other investments
  • Use to Transfer Wealth- Give your family tax-free inheritance 
  • Use in case of a disability- Use it in case you get cancer or other specific disabilities
  • Ability to create a tax-Free Pension
  • Use to pay for Long Term Care
  • Use for Estate Planning Purposes

A Bank Performs a Function

  • We all have something in our life that acts as a banking function. When we get paid, rather it is from a job, an investment, or a sale of something we own, our money must go somewhere. 
  • Most of us have been taught to hold our money in a bank. But why? What good does it do you? It does you no good once you learn how a bank operates and how you can take control of the banking function in your life. 
  • When you deposit money into a bank, the bank puts your money to work immediately. They do not leave your money sitting in your account to do nothing. They lend it out to other people and charge them to use YOUR money. By keeping YOUR money in motion, the bank is leveraging YOUR cash to create a profit. Keeping money in motion is called Velocity of Money.  
  • Do you realize how big of return banks make on YOUR money? Banks can easily make a 1,000 to 2,000 % rate of return on YOUR money. Let that sink in for a moment. 
  • Where can you get that rate of return? You sure cannot get that in your retirement plan, but you can get that rate of return through your Banking policy.   
  • We are taught that paying cash from our bank account is a great thing. However, every time you use the cash from your bank account, you lose all future earnings that money would have made through compounding interest or another investment. By keeping your money in an Banking policy, you won’t lose profit.  

You either pay someone else’s bank interest, or you own a bank and pay yourself interest.

It is Time You Take Control of the Banking Function in Your Life 

Once you learn the advantages of using an Banking policy as a place to store money, you will decide using a bank as a place to store money does not make much, if any, financial sense. By utilizing an Banking policy as the basis for the banking system in your life, you can:

  • Redirect traditional finance costs back to yourself
  • Borrow money without your money stopping the compounding growth cycle
  • Create an additional cash-flowing asset that is guaranteed to grow every year, without any risk
  • Create a way to access capital more efficiently, allowing for additional tax advantages

 You pay your bills through cashflow, not  “asset” value on paper.

What is Banking? 

It is a strategy describing how to control your finances and use dividend-paying Whole life insurance as a financial vehicle to create tax-free wealth. 

Table everything you know, or think you know, about Life Insurance and read on. This is not your grandpa’s life insurance policy.

You either actively try to avoid paying taxes by planning, or you actively try to pay taxes by not planning.

Why Whole Life Insurance?

  • Life insurance has characteristics no other financial vehicle has. It offers compounding interest, tax-free access to money, safety, and liquidity that allows us to create a system that operates more like a banking system than an insurance policy.
  • No matter what the stock market or the economy is doing, it allows us to create an additional stream of passive income that will enhance our other investments’ overall growth. It does this through contractual guarantees. The companies we use have been doing this for upwards of 160 years. 
  • Most assets are “either/or”. You can either buy a rental house OR put money into the stock market. You can pay off debt OR save money.  Life insurance is an “and/both” asset. It allows you to do multiple things simultaneously by leveraging the cash inside your policy. 
  • Not only will you have access to every dollar you put into a policy at some point, but you will have access to tax-free cash flow, protection from creditors, and a death benefit above the cash value on day one. This becomes a self-completing savings strategy. Should anything happen to you, your policy will still pay to take care of your kids or supplement your spouse’s income.  

Misinformation

  • There is a lot of misinformation and misunderstanding surrounding “infinite banking.”
  • People often confuse the term “infinite banking” with life insurance. Generally, when people think about life insurance, they are completely focused on the death benefit. The death benefit is not the primary focus when implementing this concept. The primary focus is to Maximize the cash value of a policy on day one.  
  • This is an important distinction and a big reason many people do not understand it. Those that are against it do not understand how it works. 
  • The biggest argument against life insurance is that the person against it almost always compares the low guaranteed returns of whole life (currently at 4%) to a Roth IRA’s returns. 

This argument fails for several reasons

  • It fails to address the actual concept of “infinite banking.” The idea of Banking and investing in the stock market serve different purposes. 
  • When the financial industry talks about returns, they talk about the AVERAGE rate of returns. They do not look at the TOTAL returns. Infinite banking is centered around total returns and leveraging your money to create more cash flow, which leads to more wealth. 
  • What other financial vehicle allows you to recapture all your lost interest while building wealth AND will enable you to invest your money elsewhere? NONE! And do not forget the death benefit. 
  • We are taught to think of whole life insurance policy as expensive and pay a  premium. The truth is, we pay a deposit. A premium is money we will never get back, such as the money we pay for home insurance or auto insurance. A deposit is money we will get back at some point in the future. Eventually, you will get back every penny you put into a policy, plus the growth. 

You either understand compounding interest and earn it, or you do not understand compounding interest, and you pay it. If your money is in a traditional bank, you pay compounding interest. 

How it Works

  • When you borrow against your death benefit, your cash stays in your account and continues to compound with no interruption.  You are borrowing money from the life insurance company and leveraging the life insurance company’s money to invest in real estate, to invest in the stock market, to pay off debt, or to finance your big-ticket items, such as cars or your home.
  • In addition to the returns you are receiving from the invested money, the money inside your policy is earning dividends and interest at a compounding rate. If you used cash from your bank account, that money would quit earning compounding interest, and you would have no death benefit. 
  • When you borrow against your policy, you can use the cash flow from the debt you were paying or cash flow from your investment to start paying back the loan immediately.  As you spend that down, you can use that same money again for another opportunity.
  • This ends up functioning as a revolving line of credit and continues growing because the compounding interest is never interrupted.  
  • There are other tax deduction advantages when using your Banking Strategy. 

Advantages over a bank Loan or a Line of Credit

  • It is simple. There are no qualifications, such as credit scores, collateral, proof of employment, or income for a policy loan, like a bank loan. Borrowing against your policy does not impact your credit. You simply request a loan, sign one time, and you will have your money typically in 2-4 days. 
  • When you borrow money against your policy, YOU decide on the repayment schedule, not the bank. You have flexibility. Flexibility gives you options. If you need to skip a payment, that is ok. Do you need to skip 12 payments? That is ok as well.
  • You can use the cash value inside a policy to secure a bank loan
  • Interest from a life insurance loan is charged in arrears. This means repayment of the loan goes towards the principle first, then to interest. When you borrow money from a bank, a large portion of those first payments is almost nothing but interest to the bank. Why do you want to continue giving that money to the bank? YOU DON’T
  • By borrowing money AGAINST your death benefit, the compounding interest in your account never stops. When you pay cash out of your bank account, the compounding interest rate stops. Why do you ever want compounding interest to stop? YOU DON’T!!
  • The loan rate from a life insurance policy is often LOWER than the return you receive from the guarantees and dividend you receive from the insurance company.
  • For example, in 2020, a company we use paid a 5.85% dividend. The interest rate they charged on borrowed money was 4%.  This means you still net 1.85% when borrowing money against a policy.
  • When was the last time your bank offered you a loan at a lower interest rate than what they are paying you on your savings account? NEVER!!
  • In times of credit crunch, you may not be able to borrow money from the bank. 
  • If you are a real estate investor, your LTV ratio on the property stays intact because your real estate’s equity is not being used to fund the loan. 
  • There are additional ways to keep or to create tax deductions by using this strategy.
  • A Home Equity Line of Credit may require you to build up much larger equity in your home to take a line of credit. 
  • If you do not pay back your life insurance loan, you may or may not lose your life insurance policy. If you do not pay back your loan from a bank, you will lose the asset your loan is for. 
  • A line of credit from the bank can be shut down or turned into a loan at the bank’s discretion. 
  • When your policy is used to buy Real Estate, you can reduce fees, such as closing costs, appraisal fees, application fees, and points. 

To start a life-changing strategy and begin making the returns banks make, call us today at 785-430-3717 or Contact Us Here