A question that you may have, if you’re thinking about implementing the infinite banking concept, is why on earth would I be paying interest to access my own money?
When it comes to the infinite banking concept, the traditional design is a life paid-up at age 100 or 121 with a 40/60 split, 40% base policy, and 60% to paid-up additions. But sometimes we think it can make sense to do a limited pay policy, whether that be a 10 pay, a 20 pay, or a paid-up at age 65.
Are you nearing retirement and considering implementing the infinite thinking concept, but have the feeling that it’s too late?
Do you realize that we finance every single purchase that we make, whether we pay cash or borrow? Conventional wisdom has taught us that debt is bad and should be avoided at all costs. So what’s the difference between financing and debt?
Do you have a Ferrari in your garage, and you’ve never driven it? Someone recently reached out and they had a 12-year-old life insurance policy sitting doing nothing. This means they had cash value in the policy that’s accumulated over the last 12 years, and they’ve never put that money and deployed it in their financial system before. So we were able to create a plan for them to get out of debt.
You see when I started in financial services, we were told that all debt was bad. But it wasn’t until I put things into practice that I realized, there’s actually good debt and bad debt.
I got my first life insurance policy as soon as I graduated from college. Now, this may seem counterintuitive to some people because I had just graduated college, and I didn’t have a family. What need did I really have for life insurance at that time? Well, I use that policy as a savings account, a savings vehicle, so I can accumulate wealth and keep control of it without the risk of losing any money.
As you go through life, everything changes. The only thing certain in life is, in fact, change. So when you first get a job or you first start in business, your goal is to create 100% of your earned income to support your lifestyle. And as time goes by and you evolve towards retirement, your reliance on earned income will go down and you will transition to 100% of your lifestyle being funded by passive income. And as we’re evolving from 100% earned income to 100% passive income, there are various stages.
I recently had a conversation with a longtime client who had some life insurance set up prior to his retirement. He’s now ready to retire and he called me to discuss his options for his pension. He has a defined benefit pension plan through his employer. And he wanted to know which was the best choice for him as far as leaving survivor benefits for his spouse.
You hear us talk all the time about using life insurance cash values to finance the things of life. Recently, we had a client who used her life insurance policy values in order to finance a home purchase.