When it comes to the Infinite Banking Concept, you may be wondering, did you miss the boat? Are you officially too old to get started with this concept? That’s exactly what we’re going to talk about today.
When you think about life insurance especially whole life insurance you may be considering the cost of insurance. Quite frankly, as the insured gets older, so does the cost of insurance. So, you may be wondering: is it too late to take advantage of this opportunity?
And the reality is yes the older you get, the cost per thousand dollars of life insurance death benefit definitely goes up. For example, I’m 62. Olivia is 33. So the cost for, let’s say, $25,000 of death benefit is going to be much more for me than it is for her. And there’s a reason why.
Let’s say we’re looking at a life insurance policy that is paid up at age 100. That means the insurance company has a 38-year window to put money away for me so that the policy is fully funded by my age 100. But for Olivia, they have 67 years a much longer window. So the annual premium will be lower and the amount they reserve each year will be lower as well.
With a whole life insurance policy, any off-the-shelf policy, the insurance company is making two guarantees. First, they promise to pay the death benefit if and when the insured dies so long as the policy is in force. Second, they promise that the cash value will equal the death benefit at the age of maturity. That means by age 121, the death benefit and cash value are the same.
There’s a trade-off between cost and risk. I may die sooner than Olivia simply because I’m older, so the insurance company is taking on more risk and that’s reflected in the cost. But the trade-off is that they’re also putting more money away each year for me to meet that guaranteed cash value at maturity. For Olivia, with a longer time frame, they can rely more on compounding interest and require less annual contribution.
It’s like a compound interest curve. To get the most out of compound growth, you need two things: time and money. The less time you have, the more money you need to contribute to get the same result.
Now, let’s shift to Infinite Banking. You finance everything you buy. So the question becomes: am I too old for Infinite Banking? That depends. We always ask people: are you done buying things?
You’re either going to borrow money and pay interest, or you’re going to pay cash and give up the opportunity to earn interest. You’re either paying interest or giving it up. There’s no way around it except through the Infinite Banking Concept.
The key to Infinite Banking isn’t just recovering interest although you might recapture it through the death benefit. The real key is being in control of the financing function in your life. Once you reach that point, it truly is a different lifestyle. It’s a life with less stress, more access, and more flexibility.
Most of life’s frustrations come from not having access to money when you need it whether that’s in an emergency or an opportunity. That lack of access can be paralyzing. I once had a friend whose grandfather had the chance to buy an entire city block in upper Manhattan for $45,000, decades ago. But he didn’t have the money and was afraid to borrow. Every time my friend passes that street today, he thinks about what could have been.
That’s the power of Infinite Banking having access to capital when you need it most, through a structure that you own and control: your whole life insurance policy.
When we talk to people about setting up policies, we don’t always start with the death benefit. That part becomes a bonus. We focus on premium dollars—how much can you contribute without negatively impacting your lifestyle? The death benefit is then calculated based on what that premium can buy for your age.
The death benefit guarantees that your family or business recaptures the value of all the interest you’ve paid—or given up—over your lifetime. And it’s paid out tax-free. That’s what makes Infinite Banking such a strong strategy. And that’s why you’re never too old.
We have a client who started Infinite Banking at 83. He’s now 91 and recently built a new home using policy loans. He’s thrilled because he got the home he wanted—and his family will still receive the death benefit down the road. Plus, they’ll get the house too. It’s a win-win.
Now, age is only one factor. Insurability is another. As we age, health issues can arise. That doesn’t mean you’re uninsurable, but some conditions—like recent cancer or heart procedures—can affect whether you qualify and at what rate. In some cases, we may be able to offer a rated policy, which means the premium is slightly higher. In others, we may suggest using a spouse or child if they’re insurable and you have an insurable interest in them.
There are options. The key is starting the conversation early enough to explore them.
If you’d like to learn more about how to put Infinite Banking strategies to work—no matter your age—hop on our calendar. Visit www.tier1capital.com and click the “Schedule Your Free Strategy Session” button to get started today. We’ll help you explore your options, assess your insurability, and build a plan that puts you back in control of your money.
Remember: It’s not how much money you make, it’s how much money you keep that really matters.