The phrase ‘Banking with Life’ was coined by Nelson Nash, a renowned economist that was closely associated with the Austrian School of Economics. Nelson’s conceptual leanings definitely influenced the “Banking with Life” model. No matter what your economic beliefs are, you should ask yourself whether Banking With life is right for you.
Creator of: Banking with life, Nelson Nash and Ascendant Financial Inc president Jayson Lowe
One major unique selling point for life insurance is the fact that the holders of the policy can at any time get a loan with the cash surrender value acting as collateral. Whether you want to purchase a piece of land, fund a wedding, or pay school fees, you can use the cash surrender value to borrow money against the policy. Banking without Bay St is a term we haved coined for financial freedeom and control.
Nelson Nash stated that a person with sufficient cash in their whole life insurance can continually take a loan on himself with the policy acting as security. Under such an arrangement, you would literally never get a loan from traditional lenders again. You’d instead borrow from your policy and repay yourself later. This is what “Banking with life” is all about
The word ‘infinite’ in the term ‘infinite banking’ makes reference to the life insurance amount payable after your death. Whole life insurance doesn’t fail to pay (provided the premiums fully paid), so an individual can continually borrow against their own policy for the rest of their life. Once they die, the insurance policy’s payout goes directly to the beneficiaries and gives them an opportunity to bank peacefully on themselves.
The family’s bank could be created where your beneficiaries (usually your kids) can make the same arrangement for themselves.
Generally, this arrangement is ideal when an individual banking with Life has a very good cash flow. The typical whole life insurance policy costs hundreds of dollars each month. Moreover, it takes a number of years to accumulate cash value so one needs commitment so that Banking with Life can work. A secret to making Banking with Life work is to try and “superfund” your cash value without going against tax regulations on Modified Endowment Contracts (MEC).
Another condition that must be fulfilled when it comes to Banking With Life is definitely a productive environment. The majority of policies of life insurance invest in traditional investments, like government and corporate bonds. As of now, the above investments usually trail inflation translating to a loss of cash value depending on the rate of inflation.
Schedule a call with one of our financial experts to see how we can change the way you think about insurance policies and infinite banking.