Whole life insurance is a type of permanent life insurance that provides coverage for the entirety of the policyholder’s life, rather than just a specific term. It is called “whole life” because it covers the policyholder for their entire life, as opposed to term life insurance, which only covers the policyholder for a specific term (e.g., 10, 20, or 30 years). In addition to providing life insurance coverage, whole life insurance policies also include a savings component, known as the “cash value.”

One way that whole life insurance can be used is for a strategy known as “infinite banking.” Infinite banking is a financial strategy that involves using a whole life insurance policy as a personal banking system to fund and grow wealth. It involves using the cash value of a whole life insurance policy to save and invest money, which can then be accessed through policy loans.

Here’s how infinite banking works:

1. Choose a whole life insurance policy with a reputable insurance company. It’s important to choose a policy from a reputable insurance company with a good financial rating to ensure that the policy will be around for the long term.
2. Make regular premium payments to build up the cash value of the policy. The cash value of a whole life insurance policy grows over time as the policyholder makes premium payments. The cash value is tax-deferred, which means that any growth in the cash value is not taxed until it is withdrawn.
3. Use the policy loans feature to access the cash value. Most whole life insurance policies allow policyholders to borrow against the cash value of the policy through policy loans. Policy loans are typically available at a low interest rate, which is often lower than the rates offered by traditional banks.
4. Use the policy loans to fund purchases or investments. The policy loans can be used to fund purchases or investments, such as a down payment on a home or a new business venture.
5. Repay the policy loans with interest. Policy loans must be repaid with interest, but the policyholder has the flexibility to choose when and how much to repay. The policyholder can choose to repay the loans in full or make partial payments over time.

Infinite banking can be a powerful financial strategy for those looking to grow their wealth and have access to a source of funds for purchases or investments. It offers a number of benefits, including tax-deferred growth, low-interest loans, and the ability to access funds when needed. However, it’s important to keep in mind that whole life insurance is a long-term investment, and it’s not suitable for everyone. It’s important to carefully consider your financial goals and needs before deciding if infinite banking is right for you.

If you are in need of life insurance in Texas, contact us today. We can help you whether you are located in Houston, Dallas, Fort Worth, Austin, San Antonio or El Paso.