Infinite Banking?

PDF: http://www.infinitebanking.org/IBC%20-%20How%20It%20Works.pdf

<p ="-text">The Synopsis below is from

Infinite Banking - How It works by Gary Vande Linde

essence of the Infinite Banking Concept is how to recover the interest
that you normally pay to a banking institution through the use of
dividend paying life insurance, so that the policy owner makes what a
banking institution does. Earnings grow within the policy tax deferred.
You are both reducing your tax burden and capturing monies for yourself
that a banking institution normally would receive. And by the way, you
have a death benefit thrown in on the side!



Anytime you can cut your payment of interest to others and direct that
same market rate of interest to an entity you own and control, which
are subject to minimal taxation then you will have improved your wealth
generating potential significantly.



The Infinite Banking Concept is not about investing, it is about
financing, and financing is a process not a product. Financing involves
both the creation of and maintenance of a pool of money and its use.
However, when a financing system is combined with an investment system
the combination of the two will always out perform an investment
system. When the system combines reduced tax liability with a financing
engine and allows complete control over your investments there appears
to be no system capable of generating wealth with as much consistency
or speed.



A primary concept or principal is that you finance everything. You
either finance by: Paying interest to someone else - a bank, lender,
etc. Or giving up interest you could have earned otherwise. (When you
pay cash the interest the money could have earned is forfeited).For
these reasons when we are discussing investment alternatives we must
not only weigh the return we will receive but we must also evaluate
what we are forfeiting or giving up. This mind set will become more
important as we evaluate the "Infinite Banking Concept.” For all of the
reasons mentioned above every person should be fully engaged in two
businesses - Your occupation and Banking.

I read that already. I don’t need a commercial. What’s the real deal? “recover the interest”, “capture monies”…what the hell is that supposed to mean anyway?

taken from the PDF:

To make the insurance plan work the owner (you) must make payments into
the company (insurance company) and the insurance company must put this
money to work in order to produce the benefits promised. This is usually done
in conservative financial instruments such as bonds, mortgages, etc.
Sometimes an insurance company will invest in speculative investments such
as real estate or joint ventures but this is usually a small part of the investment
portfolio.

5) Now since you are the owner of the policy and not the insurance company you
outrank every potential borrower who wishes to use the money in your policy
that is available to be lent.

6) Since you are the owner of the policy and you out rank every other borrower
you have absolute control over the equity (cash value) that has accrued in your
account.

7) In essence the insurance company can only lend the equity (cash value) in your
policy to other places if the policy owner (you) does not exercise his option to
use the money at the interest rate agreed.
8) By investing the premiums paid the insurance company creates an ever
increasing pool of money to service the policy.

9) Now at the end of the year the directors call in the accounts and ask “How did
we do on John Doe’s policy in comparison with the assumptions made by the
actuaries and the rate makers?”

10) Based upon this comparison a dividend may be declared.
-------------------------
1) Usually a life insurance policy will grow the cash value in a policy account in
three ways. These are:
a. Premium payments are credited to the cash value of the policy.
b. Interest Payments are made on the cash value in the policy.
c. Dividends payments are made based on the cash value of the account.

2) As a rule of thumb, a policy will have a blended internal rate of return (the rate
of return – before tax - based upon the net effect of both the interest and
dividend payments to the policy holder) of approximately 6 % to 8%.

3) Interest payments are usually based upon the cash value in an account.
Usually the insurance company will establish either a fixed or a minimum and
maximum interest rate that will be paid on the cash value in an account.

4) Dividends payments are once again a function of the cash value of the policy
and calculated as discussed above.

5) When you borrow from your policy your dividends continues. The reason your
dividend continues is because borrowing from your policy does not decrease
the cash value in your policy. Rather, the cash value in your policy is used to
collateralize your loan.

6) The insurance company loans the monies to you at some rate of interest they
deem necessary to make the policy work. This is what you are paying for the
use of the money.

7) If you decide to pay extra interest on your loan the difference between what the
insurance company expects and what you pay goes straight to increasing the
cash value of your account.

8) This extra money grows your dividend payment and helps to create an ever
growing pool of money for your “banking system”.

9) Remember that all growth within the policy has occurred tax free and these
cash values and death benefits can be passed onto the next generation with no
or limited tax implications.

Something to be aware of with this strategy:
http://www.latimes.com/business/investing/la-life-story2,1,3308159.story

Thanks for the LA Times article. Interesting read.

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Fud,

I’ve had some slimy whole life salesmen roll through my town with this concept.  I have never understood what people are thinking when they do this sort of thing. 

1) You already saw what happens when you blow the plan up (LA Times article).  It’s bad, and if you have insurance guys telling you to leverage yourself to pay for your home, car, etc… by borrowing on your whole life plan, then you can bet they don’t stick around long.  Sell the policy and get out of town. 

2) Tell me what insurance company is not making a spread on the loan?  Let’s pretend that you’re making 4% on the cash value.  Well, if they are charging you 6%, they tell you you’re only paying 2% then!! That’s a good deal right?!!

This happened all the time when people borrowed on their fixed retirement plans.  The insurance company would still pay you the fixed % (4% in this case) on the borrowed amount, but they would charge you 6-7% on it as well.  You are still being effectively charged 6%!

Why not just go to a bank, take out a loan at 5-6% (and earn the full amount on the retirement plan / and or whole life plan), and then be able to deduct interest on the loan (can’t deduct on the life/retirement plan). 

Is that crazy?

While I’m a whole life “salesman” (because I do SELL the whole life insurance), let’s look at the basics of this:

Let’s also think about the SERVICE work for such an agent when you have a lot of policies that need to be monitored to be sure it doesn’t “blow up” on your client.

“The real value in a life insurance policy is the DEATH BENEFIT,”

Bank on yourself provides you all with all important financial investment techniques where you can safely invest your money.

The real value in a life insurance policy is the DEATH BENEFIT, not the cash value. If you need to access the cash value, you access it depending on the nature of your needs. If it’s for an opportunity, take out a loan. If it’s an emergency, surrender a part of the policy.

Banks make money based on the total deposits maintained and loans issued. Consumers have many banks and credit unions to choose from, all competing for their checking, savings and lending needs. In highly competitive markets, banks must utilize strategies for acquiring and retaining assets from new and existing customers.

Does anyone in Australia do this Bank on yourself concept with whole life insurance?