What is The Infinite Banking Concept and How Does it Work?

Called many different names including the perpetual wealth code, cashflow banking, and the money multiplier, infinite banking involves borrowing against yourself using a participating whole life insurance policy.

To go more in-depth, whole life insurance has a cash surrender value AKA a cash value. This value is the amount of money that the insurance company makes available to you if you choose to cancel the policy.

With participating whole life insurance policies, your cash value goes up every time the company pays dividends.

Even though it doesn’t sound like a big deal, these dividends add up over time. Combine this with the guaranteed interest rate and you’ve got a wealth-building vehicle. The fact that your cash value grows continually over time gives it a compounding effect.

“Ok that’s great… but how does this let me become my own bank.” Hold your horses because this is where it gets really interesting.

Insurance companies let you use your policy as collateral and borrow money from your cash value. This means that you’re borrowing your own money from yourself!

The craziest part is that when you do this, your cash value doesn’t take a hit at all. So your money continues to compound uninterrupted!

Swipe Up

for more finance, business, and real estate advice

Read More

What Is a Self-Directed 401k?

What is the Difference Between Term and Whole Life Insurance?