Infinite banking is a financial strategy that involves using a whole life insurance policy as a personal bank. By using this strategy, policyholders can access the cash value of their policy to fund their small business ventures, without incurring any debt or interest charges. In this article, we will explain how to use infinite banking to fund a small business venture.
First, it is important to understand how whole life insurance policies work. Unlike term life insurance, which provides coverage for a specific period of time, whole life insurance provides coverage for the policyholder’s entire life. As the policyholder pays their premiums, a portion of the money goes towards the death benefit, which is paid out to the policyholder’s beneficiaries upon their death. The remaining portion of the premium is used to build up the cash value of the policy, which the policyholder can access at any time.
To use infinite banking to fund a small business venture, the first step is to purchase a whole life insurance policy. It is important to choose a policy with a high cash value growth rate, as this will help the policy to build up its value more quickly. Once the policy is in place, the policyholder can start making regular premium payments. As the policy’s cash value grows, the policyholder can access it by taking out loans against the policy.
One of the key benefits of using infinite banking to fund a small business venture is that the policyholder can access the cash value of their policy without incurring any debt or interest charges. Because the policyholder is essentially borrowing money from themselves, they are not required to pay any interest on the loan. This means that they can use the money they would have otherwise spent on interest payments to invest in their small business instead.
Another benefit of infinite banking is that it provides a source of guaranteed, tax-advantaged growth for the policyholder’s money. Because whole life insurance policies are considered to be long-term investments, the policyholder can earn a tax-deferred return on the cash value of their policy. This means that the money they earn from the policy’s growth can be reinvested in their small business, allowing it to grow even faster.
Overall, using infinite banking to fund a small business venture can be a smart financial strategy. By using a whole life insurance policy as a personal bank, policyholders can access the cash value of their policy without incurring any debt or interest charges, and can enjoy the benefits of tax-advantaged growth.