Why would someone consider Infinite Banking for a business owner?
There are many reasons you might want to consider Infinite Banking (other names for this strategy or concept go by the names ‘High Cash Value Whole Life Insurance’, ‘The AND Asset’, ‘Your Warehouse for Wealth’, among others), below is a list, though not exhaustive, of many of the benefits. A lot could be said about each of these, and a more thorough explanation is likely needed for those not well versed in the area, but this will hopefully be a reasonable introduction.
I personally spent the last 7 or 8 years practicing Infinite Banking myself and found it to be the best financial decision I’ve ever made. And I’ve watched others who I introduced it to, and others who discovered it on their own, have the same experience as me, thus I decided to take my passion and make it into my career, and to help others discover what this strategy can do for them and their families.
If you would like to learn more, or have any questions, feel free to reach out.
The benefits of a properly designed, high cash value, whole life policy with a top-rated mutual company:
- Capture the future compound growth of more income/revenue – The way the Cash Value (CV) works inside a policy allows you to access the cash but never break the compound growth of those same dollars. The CV continues to grow even as you use it for business expenses/investments. Allows you to capture hundreds of thousands or more in savings over time, with the same out of pocket that you otherwise would experience.
- Each dollar does two jobs at once – Allows you to save for your retirement or a rainy day, capture the growth on those dollars, and also serve the needs of your business.
- Tax benefits – The CV grows tax free within the policy, can be accessed tax free, and can be withdrawn, if done correctly, in retirement, tax free.
- Higher return than in a typical high yield savings or money market account – Returns on CV over the medium/long term of around 4-5%, tax free (meaning you would need to experience a typical return of 5-6.5% in a typical account to net the same return), in a much safer vehicle than a typical bank account.
- Helps manage cash flows – Allows you build up a sizable pool of capital for unexpected hard times that you can quickly access.
- Create a private line of credit for your business – Allows you to build a line of credit that isn’t dependent on the whims of banks or financial institutions. Low interest loan rates (currently between 5-7% depending on the company), unstructured loans that can be paid back whenever, or not at all*. Line of credit cannot be decreased or taken away.
- Unreported loans – Loans are private and not reported to credit agencies.
- Creditor protection (depending on state) – some or all of the CV and Death Benefit (DB) are protected from lawsuits in most states.
- Create a tax free income stream in retirement – Turn your CV into a tax free private pension for yourself and spouse, if done correctly.
- End of life and long term care coverage – Policy lets you use up to 75% of your death benefit if there is a critical health event or long term care event.
- Employee benefit and employee retention – Can use policies, if done properly, to structure employee benefits and create incentives for employee retention, with low risk to the business.
- Key man coverage, and improved ease of ownership transition upon death – DB can be used as key man coverage, and buy out of a partner, among other things.
- Can be used as a volatility buffer – help ensure your market-based assets are more efficient by using your CV to prevent the need to eat your principle in investment accounts during down periods in the market.
- Can be used as the conservative portion of your investment portfolio – historic returns are better, and safer, and not as correlated with the stock market, than bonds. By shifting those safe assets into a properly designed policy, it can let you be more aggressive with the assets still in the market.
- Protect your loved ones if something happens to you – Death benefit is paid out tax free to your beneficiaries, replaces your income that would be lost upon your passing.
For the same monetary outlays, why not give yourself these other benefits?
*Technically it would be paid back upon death using your death benefit. So, your beneficiaries would receive the NET death benefit. This strategy—of not repaying policy loans until death—is generally not recommended until retirement, and needs to be carefully considered.