Infinite banking is more than a concept; it’s how you take control of your wealth and financial independence. Until today, you may have relied on traditional banking but felt that you were not in control of your money. Perhaps there was a time you needed cash for an important purchase, but were limited by the loan criteria or options from the banks. With the Infinite Banking Concept, you essentially become your own banker, using your whole life insurance policy to accumulate a cash value that you can borrow from. It’s like becoming your own banker.
Keep reading to discover how infinite banking works in concept and practice and learn how Ascendant Financial can help you understand and implement this strategy in your life.
Infinite Banking Basics 101
The Infinite Banking Concept is for those who want financial independence by creating a self-sustaining financial system without relying on traditional banks and limited cash flow. It starts by obtaining a participating whole life insurance plan.
Your policy builds cash value over time, and you can borrow from this cash value to meet your financial needs today, like purchasing a car, investing, and paying for business expenses. You can borrow this money without interrupting the money’s growth in the policy.
Think of it as creating a personal lending pool by controlling your cash flow.
Why Whole Life Insurance?
Whole life insurance builds value over the life of your plan. It offers you stability, growth, liquidity, and control over the money you’ve already invested (your premiums). Dividends you earn on your policy can be reinvested to offset your premiums or as additional deposits, helping your money grow faster through uninterrupted, compounding growth. Another benefit of borrowing from your policy’s cash value is that it is tax-deferred.
However, it’s important to note that if you decide to cancel your policy to access the full cash surrender value, this is now considered “income” rather than a loan may be taxed. While not usually recommended to surrender your policy, there are cases when it may be beneficial. Learn more about the pros and cons of accessing the cash surrender value of your policy.
A Real-Life Infinite Banking Example
To help you understand how Infinite Banking with whole life insurance works, here’s an example of a typical client:
Meet Sarah. Sarah is a 40-year-old professional looking to build her family wealth and create financial security. Ascendant Financial helped her set up a whole life insurance policy with customized premium payments and details about how she wants her death benefit used. We helped her understand the importance of paid-up additions (PUAs) to maximize her cash value. She appreciated the education component of our services so she could fully understand how to maximize her policy potential.
She chose a $10,000 annual premium policy and added paid-up additions (PUAs) to accelerate her cash value accumulation. A PUA is when you reinvest earned dividends into your policy or make additional payments into your policy to help accelerate your policy growth. Without the PUAs, it would have taken her longer to build up enough cash value of the policy to borrow from later.
Here’s how her policy did over the first few years:
- After 5 years, she accumulated a cash value of $45,000.
- After 10 years, she had a $100,000 cash value thanks to reinvested dividends and PUAs.
- In year 7, she borrowed $50,000 from her cash value to purchase a much-needed new vehicle. She borrowed at an interest rate of 5% and planned to repay the loan within 5 years. (Note: even though she borrowed from this cash value, her policy continued to grow within the plan.
- Over the life of her policy, she’ll accumulate over $300,000 in cash value, including a $1.2 million death benefit for her beneficiary.
Everyone structures and uses their whole life insurance policy differently, and your results may vary. Sarah’s story includes common actions taken on a policy (paying premiums, adding PUAs, borrowing from the cash value). She follows the advice of her financial advisors and continues to invest in her premiums, put extra cash and dividend reinvestments into her plan, and borrow from the cash value as she needs it, all while getting uninterrupted, compounding growth.
Another Infinite Banking Concept Example
Another family started their infinite banking journey with a $24,000 annual premium. After 30 days, they could access a $11,906 cash value for a loan, allowing them to pay off their credit card balance. Over the next 2 years, they used their policy’s cash value to eliminate four other debts, including a motorcycle and their line of credit.
Ready to take control of your financial future?
Speak with an Ascendant Financial Advisor today and start building a strategy that protects your legacy.
Key Takeaways from Sarah’s Infinite Banking Example
The basis of success in the Infinite Banking System is education and dedication. Sarah took the time to educate herself about infinite banking and dedicated herself to seeing her policy through to completion. Here are the top reasons this strategy is successful for clients like Sarah:
The power of compound growth
Uninterrupted, compound growth is the key to faster growth in many financial tools and systems.. Sarah used her dividends and extra cash to pay into her policy, compounding its growth potential and growing its cash value.
Flexibility and control
Sarah wanted control over her finances, and that’s exactly what the Infinite Banking Concept gave her. She wasn’t at the mercy of banks and the market. Her money grew uninterrupted throughout the life of her policy, even when she borrowed $50,000 to purchase a car.
Consistency and dedication
Sara understood that this was a long-term financial strategy. She was dedicated to making consistent premium payments and understanding the benefits of borrowing from cash value and paying herself back. This allowed her to leverage the maximum benefits of her policy without risking her beneficiaries’ death benefits.
How to Apply This Example to Your Own Life
Think about your life plans and goals. How will you pay for them and live your best life without sacrificing your family’s generational wealth or leaving your loved ones without a much-needed death benefit upon your passing?
We’ve worked with so many individuals and families and helped them understand how to “become their own bankers” with the Infinite Banking System. While Sarah’s example above is a typical example of how clients use this system, your policy and implementation of the system will be different. That’s one of the reasons Infinite Banking is so popular: it’s flexible and effective if you take the time to understand it and dedicate yourself to keeping up with your policy over its lifetime.
Infinite baking is for you if you:
- Want to take control of your finances: You can borrow cash value from your policy and set your own repayment terms and interest rates. . While you may have some negotiation room for lender interest rates if you have excellent credit, this flexibility isn’t usually possible with bank or traditional loans.
- Want flexibility with your cash without sacrificing its compound growth: It’s your money, and you can use it for emergencies, debt payments, or any expense without worrying about losing out on the uninterrupted, compound growth potential.
- Want the tax advantages: Your policy growth is not tied to market performance or volatility. Borrowing your cash value is considered a loan and is typically tax-free. Taxes may apply when you surrender your policy and withdraw the cash surrender value. Always consult your tax advisor for details.
- Want to protect your assets: Your cash value may be protected from lawsuits, creditor collections, and bankruptcy. Be sure to check the laws in your region for eligibility.
- Value estate planning and building generational wealth: Your policy provides a tax-free death benefit to your beneficiaries. It can also be used to fund your favorite charities or a trust.
Next Steps to Financial Independence and Wealth Management
Has Sarah’s story inspired you to take control of your wealth today and for future generations? Your next step is to learn more about the Infinite Banking Concept to see how you can make it part of your life.
Then, we invite you to book a call with an Ascendant Financial Advisor specializing in the Infinite Banking Concept. With their professional guidance, they can help you structure your whole life insurance policy to give you the peace of mind you need today and generational wealth for tomorrow. They can answer your questions or help you become your own banker.
Let’s start planning a financial future where you’re in control and have the flexibility you need. Book a call today.
Take control of your financial future.
Schedule a consultation with Ascendant Financial and ensure your financial choices align with your long-term goals — before it’s too late.
Infinite Banking Examples FAQ
How much money do you need for Infinite Banking?
There are no minimum income requirements for Infinite Banking, but you need enough money to afford your premiums. The Infinite Banking strategy is scalable, meaning individuals can start with a policy that fits their current financial situation and expand over time.
The cash value of your policy (the money you can leverage for loans) will be small to start, as most of your premium payments go towards paying for your policy. But, with time, reinvested dividends, cash top-ups, and uninterrupted compounding growth, this accessible cash value will grow over time and can be borrowed against.
How does infinite banking work?
The Infinite Banking Concept is a long-term financial strategy that uses the cash value of a whole life insurance policy. Your policy builds a cash value over time, and you can borrow from this cash value to help you meet your financial needs today, like purchasing a car, investing, and paying for business expenses.
What insurance companies offer infinite banking?
Not every insurance plan will benefit your Infinite Banking strategy. To find a participating plan and insurance company, consult a financial advisor who specializes in Infinite Banking.
Did the Rockefellers use infinite banking?
The Rockefeller family (known for their wealth and philanthropic legacy) used Infinite Banking strategies (although the term wasn’t coined until the 1980s by the late Nelson Nash) to help build and secure their generational wealth. The death benefit from their whole life insurance policies helped the next generation fund their life insurance policies, kickstarting generational wealth for the family.
Book a Call with an Advisor at Ascendant Financial
Contact Ascendant Financial today to review all of your financial options.
Popular Posts
- Infinite Banking Examples: Understanding the Concept and Its Real-World Application
Infinite banking is more than a concept; it’s how you take control of your wealth and financial independence. Until today, you may have relied on… Read more: Infinite Banking Examples: Understanding the Concept and Its Real-World Application - Is Infinite Banking a Scam? The Truth Behind the StrategyIs taking control of your finances important to you? Being curious and discerning about what financial strategies you implement is a good thing; in fact,… Read more: Is Infinite Banking a Scam? The Truth Behind the Strategy
Share This Post
Categories & Tags
