Infinite banking, also known as the “bank on yourself” method, is a strategy that involves using cash value life insurance as a source of investment and borrowing. By becoming your own banker, you can access the cash value in your life insurance policy to create a second source of income and potentially achieve financial independence.
Here’s how to use infinite banking to create a second source of income:
- Choose a cash value life insurance policy. In order to participate in infinite banking, you will need to have a life insurance policy with a cash value component. This can be either a whole life insurance policy or a universal life insurance policy.
- Make regular premium payments. In order to build up the cash value in your policy, you will need to make regular premium payments. These payments can be made monthly, quarterly, or annually, depending on your policy and financial situation.
- Use the cash value as collateral to take out a loan. Once you have built up a sufficient amount of cash value in your life insurance policy, you can use it as collateral to take out a loan. This loan can be used to invest in income-generating assets, such as real estate, stocks, or a small business.
- Use the income from your investments to make premium payments. The income from your investments can be used to make the premium payments on your life insurance policy, effectively “banking” on yourself. This will allow you to continue to build up the cash value in your policy and access additional funds for future investments.
- Repeat the process to create a self-sustaining cycle of income and growth. By continuing to invest the income from your investments and using the cash value in your life insurance policy as collateral, you can create a self-sustaining cycle of income and growth. This can provide you with a reliable source of income and help you achieve financial independence.
Overall, infinite banking can be a powerful strategy for creating a second source of income and achieving financial independence. By becoming your own banker and using cash value life insurance as a source of investment and borrowing, you can access a steady stream of income and potentially achieve your financial goals.
