In case it is your first time you are coming across the term infinite banking, this piece will try to explain it in the best and simplest way possible. Infinite banking is a smart financial strategy that gives you full control to manage your savings as well as your debts. This is the reason why infinite banking is said to make someone feel as if he or she is a bank. It is good to note that most of the US citizens normally spend 25-35% of their annual income paying different debts like car loan, mortgages, student loans, credit cards and more. At the end of it all, they just strive to save around 10% of what their income. This means it can take quite a long time and effort for one to realize his or her full financial potential. Note that the convectional financial strategy aims at planning the best way to save the 10%, infinite banking zeroes at redirecting the bigger portion of 25-35% of your cash that you use to pay various debts like car loan, student loans, credit cards and mortgages. For you to have the best understanding of infinite banking as well as its benefits, this savvy lead will tell it all.
To start with, it is good to note that infinite banking comes with tax benefits considering that it has a death benefit which is tax free. Other tax benefit that comes with it are tax free withdrawals, tax-deferred growth as well as policy loans which are tax free. These special advantages are not enjoyed by other ordinary types of loans.
It is also a big plus to note that with this financial strategy, you can access your cash whenever you need it. The liquidity factor of your policy makes it a superb form of investment because you are not restricted by anything to access and use your cash if need arises. Additionally, in case the policy is managed by a mutual company the policy still earns dividend. It is also good to note that infinite banking has a very good asset protection. This is because for many states, they have robust statutes that protects cash in life insurance. This is the reason why infinite banking is a very safe investment because your creditors cannot access the funds in the policy It is also good to note that even if you borrow against your cash value, your policy still continues to earn interest at 4% annually. In case the policy pays dividends, you can additionally add 2-3% to the growth. The best things about infinite banking is the control that you have with your money which is not the case with other loan types. These and more are the sound benefits of infinite banking