So you wanted to get started with the infinite banking concept and you went through the underwriting process and lo and behold, you didn’t qualify for the insurance. What next?
Not everyone who applies for a life insurance policy will qualify. There are two pieces of underwriting that you go through to get an insurance policy. First piece is financial, where they’ll look at your income and other assets to determine if you qualify financially.
The second piece is medical, where they’ll look at your overall health, maybe do a blood test, medical history, order your medical records to determine what the risk is of insuring your life, what is the risk of dying on time or prematurely from an actuary standpoint?
So you didn’t qualify medically or maybe even financial. So what does that mean? Well, it means that the insurance company won’t issue a policy on you, but that doesn’t mean you can’t get a policy on somebody else. Maybe your wife, your business partner, one of your children, and utilize the cash value in those policies. You see, all you really want to do is be the owner of the policy so that you can control the cash value and use the cash value through the loan feature to buy whatever you want, whenever you want. No questions asked.
You see, with a life insurance policy, there are two key players, the insured, whose medical information is used for the policy, and the owner, the person who has all of the benefits, the death benefit, but they’re also responsible for paying for the policy. But as the owner, you’re able to take policy loans out against that cash value, even though you’re not the insured.
So what that means is you can still implement the infinite banking concept. It just means that you’re not the insured. No big deal. You still own and control the policy and could again use it for whatever you want.
So what qualifications need to be met to ensure someone else and at the time of underwriting, that’s real simple. We need what is called insurable interest. Basically, you need to be able to suffer a loss from the insurance company’s perspective once that insured dies.
Think of it this way. I can’t insure my neighbor’s home because I don’t have an interest in that home. And similarly, I can’t insure some strangers life because I don’t have an interest in that person’s life. But I can insure my spouse, I can insure my business partners, I can insure my children or anybody else that I literally have an insurable interest in.
Other examples may be a roommate, someone that you split monthly expenses with or a cosigner on a loan. Another person you may want to consider insuring may be one of your parents. You’d have insurable interest and once they die, which statistically would be before you as their child, you would receive the death benefit. And keep in mind, life insurance, death benefits are always received income tax free.
If you are still interested in implementing this process with a specialty designed whole life insurance policy designed for cash accumulation, be sure to check out our website at Tier1Capital.com to schedule your free strategy session today.
Also, check out our free web course to see how we put this process to work for our clients. The Four Steps to Financial Freedom.
And remember, it’s not how much money you make. It’s how much money you keep that really matters.