There is a saying when it comes to investments, don’t fall in love with them. Just because a particular stock has done right by you in the past, does not necessarily mean it should be a permanent relationship.
However, when it comes to the infinite banking concept … I gotta say I am quite smitten. And as for Whole Life Permanent Cash Value Insurance … It’s a forever love story. Literally a “to death do us part.”
And while not officially an investment, this strategy helps your financial life in so many ways. Here are just some of the Advantages of Whole Life and the Infinite Banking Concept.
- Reduced Taxes – Using the Infinite Banking Concept I am building up tax free access to cash values through policy or collateral loans. Others who save in RRSPs or Pension plans have taxable assets that are at the mercy of taxation rates at the time of withdrawals. RSPs do not avoid tax … they only postpone them. But they also postpone the tax calculation. And I know governments are in trouble and increasing tax rates are a real risk for RSP investors. I have the advantage of having less income coming from taxable sources.
- Inflation Protection – Along with increasing tax rates, governments are printing money devaluing our dollar and its purchasing power. I borrow against my policy using the Infinite Banking Concept to invest in real assets. In addition, with the guaranteed growth of cash values and death benefit, my policy offers solid inflation protection.
- Safe Money for Capital Opportunities – GICs and bonds are safe money sure. But currently earning less than 2% and often taxable. And don’t forget this rate is significantly less than the rate of inflation, so you are actually falling behind. Based on average life expectancy, the death benefit typically earns the equivalent to a taxable 6 – 8%. But I earn much more as I have used the policy to purchase investment properties and invest in stocks at opportune times. It’s a flexible source of capital that I have a contractual right to access through policy loans – no application – no credit check.
- Truly the “And Asset” – Are there assets out there that will outperform Whole Life? Yes, there are. But with a well-designed Infinite Banking Policy you don’t have to choose. You can do both through accessing the guaranteed cash values.
- Paydown Versus Interest Only – In retirement I can live off the capital and the interest of my assets. I know that if I live beyond life expectancy, my capital will be replaced by the growing and guaranteed cash values in my policy. Those without Whole Life will have to live on much less – perhaps the interest only proportions of their investments.
- Reduced Pressure on Assets – I don’t need to save nearly as much as those who do not have Cash Value Whole Life Insurance – and therefore do not need to take on the same investment risk. This is because I can create a much greater income stream from the same wealth compared to those without a Whole Life Policy.
- Less Worry About Investment Fluctuation – In retirement when the market has a pull back … I don’t have to worry … as I can rely on my guaranteed cash values in my Infinite Banking Policy. Others will have to adjust their income down significantly or run the risk of running out of money as the same income will encroach on a larger percentage of wealth in a down market. I can wait for things to rebound.
- Although I don’t have to die to benefit from my Whole Life Policy, on death it provides a tax-free benefit to heirs which can be used to offset capital gains taxes and help beneficiaries to keep assets like rental or cottage properties.
Are you ready to fall in love with your financial plan?