Infinite Banking Life Insurance

Infinite banking life insurance allows you to become your own bank. By borrowing against the cash value in your whole life insurance policy, you can avoid high-interest rates on traditional loans. You must qualify for a whole life insurance policy first before putting infinite banking into action. You can find great life insurance companies online.

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Natasha McLachlan is a writer who currently lives in Southern California. She is an alumna of California College of the Arts, where she obtained her B.A. in Writing and Literature. Her current work revolves around insurance guides and informational articles. She truly enjoys helping others learn more about everyday, practical matters through her work.

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Laura Walker graduated college with a BS in Criminal Justice with a minor in Political Science. She married her husband and began working in the family insurance business in 2005. She became a licensed agent and wrote P&C business focusing on personal lines insurance for 10 years. Laura serviced existing business and wrote new business. She now uses her insurance background to help educate...

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Reviewed by Laura Walker
Former Licensed Agent

UPDATED: Jul 22, 2021

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The Rundown

  • Infinite banking is not a type of life insurance but a personal finance concept
  • Infinite banking life insurance allows you to borrow against yourself and avoid high-interest rates on traditional loans
  • Infinite banking works best with a participating whole life insurance policy

The concept of infinite banking life insurance is rising in popularity. If you’re curious about this concept and want to know if you can secure affordable life insurance with infinite banking life insurance, you should start with the basics.

If you’re excited to get started with infinite banking life insurance, life insurance quotes are just a click away. You can shop online to find the best life insurance to fit your needs.

Enter your ZIP code to receive free life insurance quotes from insurance companies near you.

What is infinite banking?

Infinite banking, created by financial theorist Nelson Nash, refers to a process by which you can become your own banker. The strategic use of your life insurance policy is essential to this concept.

The idea is that you can dictate the cash flow in your life by borrowing money from your life insurance policy rather than reaching out to lenders or banks for loans, thereby securing financial freedom for yourself.

Becoming your own bank by borrowing from yourself enables you to avoid high-interest rates from traditional loans. Now, if you would like to put infinite banking to work for you, you need to purchase life insurance.

Curious to learn more about infinite banking? You can always make use of a free online infinite banking concept calculator to learn more.

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Which life insurance is best for infinite banking?

The best type of life insurance to put infinite banking into practice is whole life insurance. As the National Association of Insurance Commissioners states, term life insurance only provides financial support after death and has a set timetable.

On the other hand, whole life insurance can provide financial support for your entire life while allowing you to benefit from it while you’re still alive.

Bear in mind that infinite banking is not whole life insurance in and of itself but a concept, and the concept of infinite banking operates at its best when a properly structured whole life insurance policy allows you to act as your own banker.

Why does whole life insurance work for infinite banking?

Whole life insurance policies come with a cash value, which is the amount of your death benefit that you can access while you are still making payments on the policy.

The cash value that builds up within a whole life insurance policy can be used for a wide variety of things.

You can use it to take on new enterprises like funding business expenses, launching entrepreneurial ventures, taking advantage of investment opportunities, getting out of debt, purchasing real estate, and more.

Of course, if you want to partake in infinite banking life insurance, your life insurance rates should be affordable so you can always make your premium payments on time and be able to pay back whatever you borrow from yourself.

If you were to cancel your policy, the cash value would typically be paid out to you; however, as long as the policy premiums are paid, the cash value of your policy can be used for personal and business loans, with your policy used as collateral.

What is the best type of whole life insurance for infinite banking?

If you want to begin your journey with infinite banking life insurance, it’s recommended that you buy a participating whole life insurance policy.

Like it says in its name, a participating whole life insurance policy allows you to participate. This means that you receive dividends based on the insurance company’s profits while you own the policy.

If you were to purchase a non-participating policy, you would not receive any dividends and would miss out on accruing a large cash value amount.

Now, when using a participating whole life insurance policy for infinite banking, your cash value will increase every time the insurance company pays you dividends.

Essentially, when partaking in infinite banking, your “bank” consists of these elements:

  • A portion of premiums paid by you
  • Guaranteed interest earned
  • Potential dividends paid by your insurance company

The cash value will also rise as you pay your policy premiums. It earns a guaranteed interest rate as well. Simply put, the best whole life insurance for infinite banking is a policy that you can invest a great deal of money in and receive profits in return.

Of course, the first thing you must do to put infinite banking to work for you is to find a great whole life policy that has affordable rates and great coverage to boot. Below are some of the top life insurance companies worth taking a look at:

Top 7 Life Insurance Companies' Sample Annual Rates by Age, Gender, and Marital Status
Age, Gender, and Marital StatusNew York Life Average Annual RatesLincoln National Average Annual RatesPrudential Financial Average Annual RatesMassMutual Average Annual RatesAegon/Transamerica Average Annual RatesJohn Hancock Average Annual RatesState Farm Average Annual RatesAverage Average Annual Rates
Single 25-Year-Old Female$158.00$187.00$195.00$132.00$164.00$172.50$143.00$144.07
Single 25-Year-Old Male$152.00$231.00$237.00$147.00$176.00$178.30$164.00$160.19
Married 45-Year-Old Female$262.00$239.00$314.00$209.00$229.00$241.50$238.00$213.50
Married 45-Year-Old Male$245.00$283.00$378.00$230.00$255.00$292.10$239.00$240.44
Single 65-Year-Old Female$924.00$903.00$941.00$763.00$1,139.00$937.30$684.00$801.04
Single 65-Year-Old Male$1,416.00$1,577.00$1,412.00$1,049.00$1,367.00$1,380.00$955.00$1,171.57
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For infinite banking life insurance, a life insurance company that offers great rates and a participating whole life insurance policy may be the best fit for you.

Infinite Banking Life Insurance: The Bottom Line

While infinite banking allows you to become your own bank to avoid paying high amounts of interest on traditional loans, the concept is not without its negative aspects.

You need to qualify for a whole life insurance policy before you can put this concept into practice, and even once you do qualify, you need to be financially solvent enough to afford the premium payments for the policy.

If you’re willing and able to make a long-term financial play, purchasing infinite banking life insurance could be the right step for you. Luckily, you can find great life insurance coverage to suit your needs at the click of a button.

Enter your ZIP code to get free quotes from life insurance companies today.

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