Have you ever been stressed with your poor financial management? Well, there is hope for you. It is suggestable to employ tried-and-tested strategies for tracking down your inflows and outflows of cash. In this article, I have discussed one of the basic strategies for you.
What is Infinite Banking?
The Infinite Banking Concept (IBC) encourages individuals and businesses to take control of their financial future. It empowers them to “become their own bankers”. Infinite banking means you are the borrower, lender, saver, and banker of your financial institution.
History of Infinite Banking Concept
In the early 1980s, R. Nelson Nash unfolded the Infinite Banking Concept (IBC). He wrote the best-selling book titled Becoming Your Own Banker. He had taken out high-interest loans from commercial banks. He learned the process of whole life policies while finding a solution for his financial needs. To take control of his financial world, he decided to fund whole life insurance which allowed him to save and withdraw cash on his own. It saved him from external moneylenders and high-interest payments. Nash emphasized putting money for the long term to gain potential benefits.
How Does This Method Works?
Infinite banking fully supports the idea of dividend-paying whole life policy. It enables individuals to manage their cash flows without gaining help from financial institutions or commercial banks. They can build up a huge sum of money in one or more whole life insurance policies. So, they can withdraw cash for massive events, such as buying a new car, funding tuition fees, funding a wedding, or getting a house. People availing the infinite banking strategy will contact the life insurance advisors to take out the side loan as collateral. Moreover, this policy covers the entire life of an individual to support his family in the event of his death. These service providers offer flexible term loans. Infinite banking helps you achieve your financial goals-regardless of your age, educational background, level of income, and level of financial literacy.
The Pros of Embracing Infinite Banking Concept
Nash’s whole life insurance policy is a total blessing for its practitioners in the following ways:
- Liquidity of Cash: Liquidity means the policy is readily convertible into cash. You can access cash without any prior notice. Moreover, IBC does not require any structured repayment plan to ease your financial activities. For Example; in the hour of a medical emergency, you can speedily withdraw cash to pay for treatments and medicines.
- Tax-Free Policy: It means you are placing your equity in a tax-free storehouse. As a result, your equity grows at a compound interest rate. In case of your death, whole life insurance will take care of your family’s financial needs with minimum government intervention.
- Waiver of Premium Rider: This insurance policy plans to waive premium payments for its policyholder in case he is unable to work, seriously ill, or disabled.
- Non-Correlated Asset: Whole life insurance policy is a non-correlated asset. It means the asset is not directly tied up with the stock market. Your money is safe from the unexpected shocks in the financial market. It is a safe bucket to put your cash in for a longer period of time.