Cash value build up via credit cards?

khang.mis

Expert
69
I have been entertaining the infinite banking concept idea and was thinking would it be possible to fund life insurance policies with credit cards...

1) Purchase whole life policy
2) Pay annual in full with a credit card
3) Create instant cash value
4) Pay back credit cards minimum due or greater
5) Rinse and repeat

Do people do this???
 
Only those who want to go to jail.

Not sure what is illegal here, at least as a policyholder or cardholder?

It won't work though. Very few companies accept credit cards for payments, in fact I was told by the Life President of a regional P&C company it is illegal to accept them. Although I do know of other companies that do, so not sure there.

There are several reasons it won't work. First, most companies won't accept it so you would have to do a cash advance which would incur a fee and immediate interest which would be greatly in excess of any gains.

Second, regardless of whether it is whole life or universal life, you will not have 100% cash value, much less positive to offset any interest and fees.
 
Not sure what is illegal here, at least as a policyholder or cardholder?

No problems for the policyholder or cardholder... but I certainly wouldn't want to be the agent that would recommend this. No way.

There are already plenty of "funny tricks" out there that to introduce credit card debt to do it... is just plain dumb and generally shows a lack of understanding of basic finance and how most life insurance policies are structured.
 
No problems for the policyholder or cardholder... but I certainly wouldn't want to be the agent that would recommend this. No way.

There are already plenty of "funny tricks" out there that to introduce credit card debt to do it... is just plain dumb and generally shows a lack of understanding of basic finance and how most life insurance policies are structured.

Gotcha, I took this as someone thinking to do this personally, not recommend it as a concept. That would be completely different.
 
If the OP only had a couple of posts, then I'd wonder if it was a consumer asking. But with 68 posts... this has to be an agent asking and considering a viable way to sell permanent life insurance.
 
I was told by the Life President of a regional P&C company it is illegal to accept them

1 - "I was told" is the most dangerous phrase in the English language.

2 - Next time anybody tells you that something is illegal or "it's the law" ask them to cite you a statute number. They invariably won't be able to which will cast considerable doubt on the accuracy of the assertion.
 
I know Assurity Life accepts Visa/MC for all policies except annuities and (I think) single premium WL.

The truth is that accepting credit cards directly increases the cost of servicing policies. Using cash advances to fund a policy... is just plain dumb, and would be criminal for the agent to recommend the initial funding of a policy in this way.
 
Now personally, I'd have no problem selling a term life policy being paid for via credit card. If I sold FE, I wouldn't mind doing that with a credit card either.

But for major premium cash value policies... they should never be funded by credit card. Either they have the cash flow or they don't.
 
Now personally, I'd have no problem selling a term life policy being paid for via credit card. If I sold FE, I wouldn't mind doing that with a credit card either.

But for major premium cash value policies... they should never be funded by credit card. Either they have the cash flow or they don't.
You would not make enough money selling FE with credit card pyment methods to cover the time you would spend trying to keep the business on the books. 1st, most FE folks do not have credit cards and the ones that do tend to keep them maxed out. You have to run them down every time the old card expires,etc. That is the reason most companies that accept CC, pay as earned only on that business.
 
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