Infinite Banking concept

[Kevin Richard]

I love this blog and I'm always so impressed with the high quality of your posts (that you put out EVERY DAY. How do you do that and stay sane???). It's always a treat to read your blog in the morning before I tackle my day as a stay at home mom of four young kiddos. Thanks for helping me stay sane!

️

Texas Republic Bank

 

[Allstinite]

Hello guys, this is my first post and forgive my ignorance on the subject.

I'm currently reading Becoming Your Own Banker by Nelson Nash and I'm trying to understand the Infinite Banking Concept. Can you guys explain to me some details (and correct me I'm wrong):

You get a Whole Life Insurance and deposit a yearly amount. Let's say $10k
1) After 5 years do you have $50k as your cash value?

2) Do you receive interest/dividends from that money? In that case will you have more than $50k after those 5 years?

3) Let's say I want to borrow $20k. Do I continue to receive dividends on my $50k cash value?
What are the rates for borrowing the $20k and what are the rates based on?

4) What I'm more concerned is about the insurance as a retirement vehicle. How and when can I start receiving a fixed amount + death benefit for my beneficiaries?

 

[DHK]

First, are you an agent?

#1) No. You'll have at least 50%+ of available cash values compared to premiums paid. But there are different contracts with different structures depending on objectives and policy design (and agent expertise/ignorance of the subject).

#2) Interest/dividends on cash values in the contract.

#3) You will continue to receive dividends on your cash values. The rates are set by each company.

#4) After you have funded the contract and determined a loan capital transfer strategy for your life expectancy.

 

[Allstinite]

No, I'm not an agent.

I don't plan on making big purchases (car/house) in the near future. I'm a 37yo male, non-smoker and I can save around $10k/year for investment purposes.

The insurance method looks safer than the stock market. I wonder if I should invest in insurance (as a retirement vehicle) instead of putting money in the stock market.

 

[DHK]

No, I'm not an agent.

I don't plan on making big purchases (car/house) in the near future. I'm a 37yo male, non-smoker and I can save around $10k/year for investment purposes.

The insurance method looks safer than the stock market. I wonder if I should invest in insurance (as a retirement vehicle) instead of putting money in the stock market.

I can't advise you specifically on that. However, you may find this book to be of great interest to you:

Amazon product ASIN B0842YHBT6

 

[Allstinite]

Thank you. I will check that book.

 

[Lloyds of Lubbock]

No, I'm not an agent.

I don't plan on making big purchases (car/house) in the near future. I'm a 37yo male, non-smoker and I can save around $10k/year for investment purposes.

The insurance method looks safer than the stock market. I wonder if I should invest in insurance (as a retirement vehicle) instead of putting money in the stock market.

Why dont you do both...it is not an either or situation.
The whole Life cash values will soften the blow of a down market.
Integrating both of these strategies will be better than choosing one or the other.
I do strongly suggest you work with an agent.

 

[pfg1]

Why dont you do both...it is not an either or situation.
The whole Life cash values will soften the blow of a down market.
Integrating both of these strategies will be better than choosing one or the other.
I do strongly suggest you work with an agent.

I agree 100%

Long term returns of stock market are historically very good, but you will have risk and ups/downs along the way. Having a max funded WL policy is a great way to diversify and create some supplemental tax free income down the road. I would not put all my money in either, having both is best imo.

Be careful with Nelson's book, the numbers are really out of date... back when interest rates (and ins company dividends) were much higher. Today's illustrations won't look nearly as good, however the concept is the same... and likely at some point in the long game, div's will rise again.

 

[marindependent]

I will keep my opinions of Infinite Banking to myself. But I do wonder how someone who flips homes is going to feel about the slow and complex process of Infinite Banking.

• Most infinite banking programs I am familiar with take a long time to generate enough cash value for them to be of any significant value to take a loan out against.
• Most people I know that flip homes are constantly moving around large sums of money on a moments notice.

Not sure how this would/could work. Maybe I a missing something.

 

[DHK]

Policy design and setting client expectations are the key components.

I didn't time-stamp the exact part, but Emily Prendiville sold a 10-pay life policy to a real estate investor for a $2 million capital transfer program ($200,000/year premium or there abouts).