What is Infinite Banking and How Does it Work in Canada?
The Infinite Banking Concept is a unique financial strategy that allows you to use your own money to grow your wealth and achieve financial independence through whole life insurance. It is based on the idea that you can create a personal banking system that provides you with a variety of benefits, including tax breaks, opportunities for investment growth, and more!
To get started with Infinite Banking in Canada, you will need to purchase a whole life insurance policy from a participating life insurance company. Once you have done this, you will need to build your policy’s cash surrender value by aggressively contributing into the policy for between 7 to 10-years, until you have enough cash inside our own bank, you can then start using your policy as a collateralized loan account. This means that you can borrow money from your policy at any time, without having to go through a bank or other lender. By that time, you become your own banker, so instead of borrowing money from another bank, you borrow money from your own bank, each time you need to finance something.
This means that you participate in the interest earnings of your policy, allowing your capital inside the policy to grow further each time you borrow from your own banking system.
Advantages of Infinite Banking
There are many advantages to using the Infinite Banking Concept in Canada. One of the biggest advantages is that it can help you save on taxes. When you make regular contributions to your policy, the cash values and death benefit of the policy grows tax-free. Additionally, if you use your policy to finance a business or investment venture, the interest you pay on the loan is tax deductible!
Another advantage of Infinite Banking Concept is that it can provide you with opportunities for investment growth by giving you the opportunity to earn interest on your own loans, so technically, instead of paying interest to another bank, you pay yourself interest by borrowing your own cash values inside your whole life insurance policy.
Finally, Infinite Banking can help you create a safety net for yourself and your family. If you were to pass away, your policy’s death benefit will be paid out to your beneficiaries tax-free. This can help them cover expenses like funeral costs, outstanding debts, and more. And if you live long, you will be able to leave a good amount of legacy for your next generation, even after borrowing funds from your own banking system multiple times in your lifetime.
Disadvantages of Infinite Banking Concept
There are a few disadvantages to using the Infinite Banking Concept in Canada. One of the biggest disadvantages is that participating whole life premiums can be expensive to fund. In order to purchase a whole life insurance policy and start building your policy’s cash surrender value, you will need to contribute a higher amount amount of money than when you simply purchase a life insurance policy. Additionally, you will need to continue contributing to your policy for between 7 to 10-years, in order to have enough cash inside your own bank to start borrowing from your own banking system.
Another disadvantage of Infinite Banking is that you will need to repay your own loans and pay interest on them to make the system work. If you’re not committed to paying your loans back because of the “it’s my money” mentality. The infinite banking system will not work toward your advantage and you will self-sabotage the wealth system that you have built for yourself. This puts your wealth and policy at risk.
Note that with a whole life insurance policy, if you cannot repay the loan on your policy, the outstanding balance will be deducted from the death benefit of your policy, which could leave your loved ones with less money than they expected.
Why Use Participating Whole Life for Infinite Banking?
There are a few reasons why using participating whole life insurance for infinite banking can be an excellent choice. First, whole life insurance combines two sub-components that are ideal for this type of strategy: the death benefit component and the cash accumulation component. The death benefit component protects your beneficiaries should you pass away, while the cash accumulation component allows you to generate cash value over time. This is important because it means you can start enjoying the wealth building benefits of your life insurance policy while you’re alive and leverage your policy for tax-free cash utilization.
Second, the cash value generated through whole life insurance policies compounds over time, pushing both death benefit and wealth accumulation higher throughout your lifetime.
Also, borrowing from your own banking system is relatively easy compared to financing with other lending institutions, to top it up, you benefit on the interest of your own borrowing, instead of the banks. The interest earned by your policy pushes your cash accumulation further. This is a key benefit of using whole life insurance for infinite banking, as it allows you to access your funds quickly and build a higher net worth by financing your own loans.
How to Get Started with Infinite Banking in Canada
If you’re interested in getting started with Infinite Banking in Canada, you can work with a licensed insurance broker who have access participating whole life policies and one who can help you choose the right policy that can support your infinite banking goals. If you’re not working with an advisor who is familiar with setting up infinite banking in Canada, you can book an initial consultation with us here, and we will help you with developing a financial plan with a focus on infinite banking.
Mutual Life Insurance Companies in Canada
Mutual life insurance companies in Canada are the largest providers of participating whole life insurance. These companies pay dividends to participating policy holders. In exchange, the policy holders own the company. Equitable Life is one of the biggest mutual life insurance companies in Canada, but there are many other life insurance companies that offer participating whole life policies. Examples of such companies include Sun Life, Canada Life, and Manulife.
The benefits of infinite banking extend beyond the financial aspect. Whole life policies are an asset that protects your funds inside the policy against liquidation in case of credit issues or lawsuits. It’s also an effective estate planning strategy that helps you leave wealth to your next generation, and do it tax-free, leaving more to your loved ones compared to when you leave wealth in other asset form.
Mutual life insurance companies in Canada supports the long-term benefits of the infinite banking concept. Infinite banking relies on the cash value accumulation of an insurance policy, which allows you to take loans against it and increase your wealth over time. You can then borrow against the cash value of the policy, avoiding paying interest to someone else, and instead, using your own interest payments to build your own wealth and legacy. You can transfer wealth across generations only using the power of participating whole life insurance and the infinite banking concept.
Infinite Banking - Becoming Your Own Banker
Becoming your own banker is based on the idea of infinite banking, in which a person has the ability to spend, invest, and borrow money to fund his or her needs. The key to this system is to use the money you borrow to fulfill a specific purpose. This way, you can generate income while you are spending it.
Infinite banking begins with the purchase of a whole life insurance policy, which provides death benefits as well as a savings component. The money stored in the policy receives regular boosts through annual dividend earnings.
The interest on your loan also helps your wealth grow as your policy participate in interest earnings each time you borrow from your own bank. The cash values you build in your policy will eventually allow you to become your own banker.
One disadvantage of the infinite banking concept is the fact that you can’t borrow money from your policy right away. This is because, you don’t have enough cash values in your policy yet, technically, there’s really nothing to borrow or use as a collateral for a policy loan. There is a need to build your bank first, before you can use your policy to finance high-ticket purchases as an infinite banker. With that said, the infinite banking concept is not recommended for people living paycheck to paycheck or who do not have enough money to put aside for a rainy day.
Is Infinite Banking Worth It?
There is no one-size-fits-all answer to this question, as the infinite banking concept may or may not be worth it for you based on your specific financial situation. However, if you’re looking for a way to grow your wealth and achieve financial independence, and you can commit to a long term wealth accumulation, then the infinite banking concept could be a good option for you.
With a participating whole life insurance as your foundation, you can use the cash value accumulation to borrow money from your own banking system. This can help you generate income while you are spending, and over time, the interest on your loans will help your wealth grow even more.
The key is to use the power of infinite banking to its fullest potential. This means borrowing money wisely and investing funds into whole life policy in its early years. If you do this, then you could see significant growth in your wealth over time.
As mentioned earlier, it’s important to note that the infinite banking concept is not for everyone. You need to have enough money put aside in order to build your own mini-bank, and you should be cautious about borrowing money recklessly – yes, even if you’re borrowing from your own bank. This goes without saying that you have to pay your policy the same interest rates that you would pay a third party lender such as your local credit union or a bank.
If you can manage your finances responsibly and use the power of infinite banking to your advantage, then it could be a great way to build multi-generational wealth.
Infinite Banking Inventor - R. Nelson Nash
Infinite banking is a revolutionary financial concept that was created by R. Nelson Nash in the 1980s. Basically, this concept allows people to become their own bankers, and eliminates the need to rely on banks and financial institutions. This new approach also enables people to finance equipment and other expenses. If you are unsure of how to get started, learn more about the program and how it can help you.
Infinite Banking was developed by Nash as an alternative to banks, and as a way to privatize family wealth. Unlike traditional banking, this system utilizes dividend-paying participating whole life insurance policies. This way, people can invest in the future and enjoy the benefits of both current and future dividend income. This concept has been referred to by different names over the years, including Cashflow Banking, Becoming Your Own Banker, and Infinite Banking.
Infinite banking is an extremely tax-efficient way to save money. It utilizes a dividend-paying whole life insurance policy to create a pool of money that grows tax-deferred and compounded. Infinite banking has several advantages, including the ability to build wealth for generations. If you are considering the idea of infinite banking, click here to book an appointment with us, and we’ll help you get started on your infinite banking journey.
If you have a high enough income, infinite banking may be the perfect solution for you. You will be able to grow your money exponentially by paying off your debts and paying back what you borrow. The only downside is that it may not be feasible for everyone, as putting away ten percent of the total income can be quite prohibitive for most people. But the benefits are clear: infinite banking has the potential to be a life-changing concept. And it will allow the wealthy to build their wealth tax-free.
This approach to financial freedom is a step in the right direction. By taking back the banking function, individuals will be more likely to have a greater sense of personal freedom.
He has since written books on the subject and helped millions of people around the world take control of their own financial future.
If you want to learn more about this concept in your own phase, you can grab a copy of R. Nelson Nash’s book, titled Becoming Your Own Banker.
Alternatively, you can book an initial consultation with us and we will help you design a plan that supports the infinite banking concept.