The longer you let compounding work for you the better it gets, especially at the upper-right-hand side of the graph. You see, if you withdraw rather than borrow from your infinite banking Whole Life insurance policy you would be removing assets that could’ve kept compounding on your behalf. Remember how I said that continuous compounding is the most important ingredient of the infinite banking concept? Borrowing against your infinite banking life insurance policy is exactly how you maintain the compounding of your cash flow and liquidity while still funding major expenditures, emergencies, and other investment opportunities. Let’s discuss an infinite banking “loan”, even though it’s often thought of as a 4-letter word. However, our deep-dive into the last 42-years can demonstrate how an infinite banking policy responds to fluctuating interest rates for both dividends & loan rates. One problem with infinite banking is the inability to illustrate what happens to a Whole Life policy in a rising interest environment. Nevertheless, the dividends paid during the low-interest era were often more than double what was originally projected thanks to their continuous compounding after that early spike. What’s interesting is how dividend rates spiked initially and then plummeted far below what was originally illustrated. The study shows the policy’s initial dividend projections side by side with the actual dividends paid over the last 42-years. In fact, we did an entire study using an actual overfunded Whole Life policy from 1980. Infinite banking whole life insurance can benefit greatly from the interest rate volatility we’re experiencing today. Don’t forget that this happens in a tax-exempt environment so that may feel more like 6%-9% depending on your tax bracket. Projections for infinite banking Whole Life insurance today currently projects a long-term internal growth rate of between 4%-5%. This would entitle you to a bigger cut of future dividend pools, which increases the future guaranteed cash value, and increases your cut of future Whole Life dividends, and so on. When you elect to roll these higher dividends back into the policy, they become part of a new guaranteed cash value calculation. But underwriting profits from all their other insurance lines contribute to your dividend, which is why Whole Life even outperforms in low-interest eras. These dividends from an infinite banking policy often rise with prevailing interest rates you share in the yield of their entire investment portfolio. These Whole Life policies offer guaranteed growth between 2-3% in addition to annual dividend payments, which aren’t guaranteed but have been paid every year for over 150 years by the strongest mutual companies. So not only do you become a customer when you buy an infinite banking whole life insurance policy, but you also become part owner of the underlying insurance company. You are the product!Ĭonversely, mutual insurance companies are actually owned by their whole life policyholders, hence the word mutual. Whatever taxable savings rate big banks pay to their depositors pales in comparison to what they’ll charge you to take a loan for the exact same amount.Īt a traditional bank they may call you a customer, but have no illusions. Similar to how big banks have both savings and lending capabilities, so too does a participating Whole Life insurance policy.
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