Here’s a shocking fact about money – the average American spends about 60% of his or her lifetime earnings on taxes and interest payments. That means that for every $100 you earn, $60 of it is never really yours. It’s paying the government, the bank you borrowed money from, and any other institution to which you’re paying interest.
You may be thinking, “Well, that’s just the way it is.” But it doesn’t have to be. With the Infinite Banking System you can break the cycle of paying money to someone else, and start paying it to yourself.
What Is Infinite Banking?
The Infinite Banking System is a financial philosophy of being your own bank. It means taking more control of your financial dealings, not just handing them over to some financial advisor or institution. Infinite Banking takes structure and discipline, but the rewards are numerous.
Let’s start by discussing the financial “norm”. Most people, when seeking a mortgage or financing the purchase of a new car, will turn to a bank or other financial institution. In the traditional banking system, there are three major players: the Saver, the Borrower, and the Banker.
The Saver deposits money with the bank and earns interest on his or her money; the Borrower borrows money from the bank and pays interest on the money borrowed. The Bank is just the intermediary. For its effort, the bank charges higher interest to the borrower than it pays to the saver. This is called the spread, and is how banks make their money.
What the Infinite Banking System does is make you the bank. You will save with your bank, you will borrow from your bank, and when you pay interest on your personal loans, you’ll be paying yourself – because you’re the bank.
Sound complicated?
It’s not! The infinite banking concept predicates on the idea of cutting out the middleman – the bank. With Infinite Banking you can save with and borrow from yourself. And when you pay yourself back, you are paying back your personal loan plus the interest to yourself.
Getting Started with Infinite Banking
So how do you become your own bank and begin financing yourself?
With whole life insurance. Specifically, it’s a dividend paying whole-life insurance policy. The Infinite Banking system is built on this financial tool and it allows many possibilities for financial stability and success.
To start, whole life insurance has been a proven winning financial tool since the inception of life insurance. Whole life insurance policies are carried by:
-the wealthy to protect their estates
-ordinary families to protect their assets
-corporations, and
-almost every major bank.
In fact, in 2008, bank owned life insurance (BOLI) grew by $126.1 billion. So the product is a proven winner.
When using whole life insurance as a personal banking system, the policy is structured differently. The Infinite Banking system’s whole life policy is structured to maximize liquid cash values instead of concentrating on the death benefit. Which means you can enjoy your money now and still leave a financial legacy for your heirs.
The Benefits of a Dividend-Paying Whole Life Policy
A dividend-paying whole life insurance policy allows you to take policy loans from the cash values within your policy. You control these funds and dictate the re-payment terms. That means you set the interest rate, the amortization period and other loan terms. It might be tempting to think that the best thing about this is no paperwork! (Have you applied for a loan lately?). But in fact, the best thing about this is that when you borrow from yourself, you also pay yourself back. You pay back the loan, you pay yourself interest, and you do it all on your schedule. There are no penalties for a late or missed payment. And there are no loan fees or other transaction fees. Remember, you are now the bank!
There are numerous other benefits to the infinite banking concept. A properly structured dividend paying whole life insurance policy offers tax-deferred growth of money, and tax-free distributions via policy loans. Non-loan withdrawals from the account are tax-free up to your basis, or the amount you have contributed into the account.
With the Infinite Banking System, cash value growth within the account accumulates tax-free. Additionally, the death benefit proceeds pass to your heirs income tax-free. In fact, with proper planning, you heirs can receive the life insurance proceeds from your policy free of estate taxes.
The Infinite Banking Concept teaches independence from the conventional way of financing, meaning you will no longer be reliant upon banks and finance companies for cash or financing. If you’re ready to be your own bank, look into the Infinite Banking Concept today. With a little planning and discipline, you’ll be on your way to financial self-reliance.