Infinite banking refers to a process by which an individual becomes his or her own banker. The infinite banking concept was created by Nelson Nash. In his book, “Becoming Your Own Banker,” Nash talks about the use of whole life insurance policies that distribute dividends and how owning such policies allows individuals to dictate the cash flow in their lives by borrowing against/from themselves instead of depending on banks or lenders for loans.
Digging Deeper into the Infinite Banking Concept
In Nash’s infinite banking concept (IBC), the cash surrender value(s) of whole life insurance policies act as collateral for a loan. The individual simply needs to call the insurance company and ask to take out a policy loan.
A whole life insurance policy is meant to cover the entirety of an individual’s life, not simply to assist family/friends in the event of the individual’s death. As such, the policy is eligible to pay out dividends, meaning it generates a form of income that increases the cash value of the policy over time.
As soon as the policy is active, it possesses value and can be borrowed against so that the individual can take money out of the policy as a loan (using the policy as collateral) to use for handling unexpected or significant expenses that occur during the individual’s life.
Advantages of Infinite Banking
The most outstanding positive of the infinite banking concept or process is the sheer improvement in liquidity or cash flow. The value of a whole life insurance policy acting as collateral is far more liquid than, for example, equity in real estate, because the loan can be taken out more quickly and the individual can secure cash in hand faster and usually at lower interest rates than those available from traditional lenders.
The improvement to an individual’s cash flow can be significant, especially in times of financial hardship or unforeseen expenses, such as medical bills or the need to buy a new car. An insurance policy loan can also come in handy if an individual happens to be without work for a time, whether due to health issues, a death in the family, or simply the loss of a job. Because whole life insurance policies are non-correlated assets – meaning they’re not tied to the whims of the stock market – they are set to retain their worth
R. Nelson Nash author of Becoming Your Own Banker and founder and developer of the Infinite Banking Concept continues to advocate taking control of ones financial situation by the application of Infinite Banking. Nelson is an avid student of economics and it makes for a great discussion in this episode of Infinite Banking Radio with Patrick Donohoe of Paradigm Life.
A native of Georgia, Nash received a B.S. Degree in Forestry from the University of Georgia, 1952. From 1954-1963, Nash worked as a Consulting Forester in eastern North Carolina.
During more than 35 years experience as a Life Insurance Agent, Nash worked with The Equitable Life Assurance Society of the U.S.and with The Guardian. Recognized for his high achievements, Nash was inducted as a Hall of Fame Member by Equitable, a Chartered Life Underwriter.
Nash remains a popular teacher and lecturer on the Infinite Banking Concept™ through dividend-paying whole life insurance and recently completed his latest book Building Your Warehouse of Wealth. You can find this and many more resources pertaining to the Infinite Banking concept at his website – www.InfiniteBanking.org.
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