DEFINITION: “Infinite” Banking?

Posted on October 19, 2023 by Dr. David Edward Marcinko MBA

By Staff Reporters

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Infinite banking is a complicated financial insurance concept.  What’s more, borrowing from a whole life insurance policy rather than a bank introduces a unique set of problems. These loans don’t have set repayment schedules but they do accrue interest. Here’s what you should know about borrowing from an insurance policy:

PROs:

  • Easier to secure than a bank loan, especially if you have bad credit.
  • May only take a few days to receive funds.
  • Interest rates may be lower than other loans.

CONs:

  • You may need to pass a physical to qualify for an insurance policy.
  • Policy loans can decrease the death benefit.
  • Premiums can run significantly higher than comparable term policies
  • Payment issues can result in losing your policy and/or paying tax penalties.
  • Interest rates may be variable and fixed rates can be high.
  • Borrowing limits are often capped at a percentage of the cash value.
  • It can take years to accrue enough cash value to take out a significant loan.

CITE: https://www.r2library.com/Resource

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RISK MANAGEMENT AND INSURANCE: https://www.routledge.com/Risk-Management-Liability-Insurance-and-Asset-Protection-Strategies-for/Marcinko-Hetico/p/book/9781498725989

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Filed under: Ethics, Financial Planning, Funding Basics, Insurance Matters | Tagged: , , , |

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