Yes, the concept of infinity banking works quite well assuming you have a properly structured whole life insurance policy and execute the strategy correctly. Similar to how large banks have both savings and lending capabilities, so does a participating whole life insurance policy from a mutual insurance company.
Reading: What is infinite banking life insurance
However, unlike how banks offer low-yield savings accounts, mutual insurance companies offer guaranteed 2-3% growth, plus unguaranteed annual dividend payments. You see, mutual insurance companies are actually owned by their policyholders for life, hence the word mutual.
Projections in the current low interest rate environment produce a long-term domestic growth rate of around 4.5%. However, unlike buying a bond or CD today, where you would lock in a low growth rate, higher interest rates in the future can equate to higher future dividends on a whole life policy. properly structured. when you choose to reinvest these higher dividends into the policy, they become part of a new guaranteed cash value calculation.
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This would entitle you to a larger share of future dividend funds, increasing future guaranteed cash value and increasing your share of future lifetime dividends, and so on.
click to see how dividends from an actual 1980 whole life policy combined to be much larger than expected from an initial rise in rates, even though the dividend rate plummeted much more than expected. which was originally illustrated. Upgrading and maintaining compound interest within your infinity banking life insurance policy is the key factor in your success, despite the clever arguments you’ll hear about ibc.
A final feature of the savings component of a whole life policy is the fact that it is tax-free as long as you keep your bank infinity life insurance active until a death claim is paid. Don’t get me wrong, you can use your lifetime cash value for your entire lifetime. You can even withdraw everything you invested without paying any taxes, but to access the excess growth tax-free, you have to borrow it.
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This is a good time to discuss the “borrowing” component of all life, even though it is considered a 4-letter word. but do you remember that I said that compounding is the most important ingredient of the concept of infinite banking? Borrowing against your infinity banking life insurance policy is exactly how you keep your assets compounded safe and liquid while still using them to fund major expenses, emergencies, and other investment opportunities.
You see, if you withdraw instead of borrowing from your infinity banking whole life policy, you’d be eliminating assets that might have continued to grow on your behalf. the longer you let compounding work for you, the better it becomes, especially on the top right side of the chart. By extracting the cash value of your permanent life insurance policy, you rewind your composite curve to a lower position, not to mention that you stop future growth by receiving a smaller share of any future dividend pool.
Conversely, if you borrow against your continuously compounding cash value, you never miss a beat on that steepening compound curve while maintaining your place in line for those bigger future dividends.
click to watch a simple 6 minute video that visually explains the key compounding ingredient of the infinite banking concept.
Regardless of all the gimmicky rhetoric you read or hear about how infinite banking works, this is the real scientific answer. Are there certain ancillary products, features and strategies that can further optimize the compound effect of IBC? Sure, but make no mistake about it, maintaining continuous compounding is the most important factor in how the infinite banking concept works.
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