Infinite Banking and changes to 7702
- Thread starter SamIam
- Start date
Better.
John Guiness
New Member
- 1
By Infinite banking you mean borrowing from the CV from a policy?
- 4,576
Overall worse, but mixed bag. Lower non forfeiture rates will likely force CV to be higher quicker but will also force the required premium to be higher. The same non forfeiture & valuation rate drops will also likely impact the performance of WL PUAR & possibly dividends. 7702 will open room for more money to go into a policy so that will help
Honestly, I don't see how infinite banking can even work well in today's low interest rate market for the shorter term time horizons as it can take so long to have a policy even get to break even compared to 15-30 years ago. Plus, who wants to borrow at 7% and possibly give the dividend rate dropped on the portion of money used as collateral in direct recognition contracts when you can borrow for car or house at 2-5% currently.
Can be great for back up safety net, but not sure it is good math to actually activate to use infinite banking to borrow unless you have no other options. But can never really hurt to build it up just in case
Supplemental retirement design has a longer time horizon & can work if you can get someone started at age 30-45.
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- 2,195
Well said.
- 11,277
Depends on what the money is spent on.
- Thread starter
- #7
For people wo are paying off high debt it can work. Or you have a R.E. investor or business owner and you can use a lender that will give them a loan and have the policy as colladeral.
- 10,330
The second example is not infinite banking.
And how is it better to put money into WL.... wait a few years... and then pay off your high interest debt that has risen to an even higher amount than before?
- 5,497
How long is "so long?" With the proper design and structure and the use of accelerated PUA riders, breakeven can be 10 years or less without MEC'ing.
Participating whole life is without a doubt the greatest financial invention in human history (though for a couple of day that title went to Gamestop common).
It is a banking strategy and done properly there is nothing that can beat it ... certainly nothing with the same guarantees.
- Thread starter
- #10
Wait a few years? Combine a debt snowball with infinite banking. One of my agents had people start paying off some of the debt the first year doing it this way. The reason I like it because some debt if you pay it off early you can't get that money back if you pay it off as you can with a credit card debt should you need it. I used to work with people who had too much debt whether it was because of a lack of discipline or something bad happened in their life and they need structured programs.
As far as the second example it sure is. It depends on what their needs are. They can pay a higher interest rate to the insurance company because they are a real estate investor and they need time on his project before he starts paying the loan back or he has an option to use a regular lender, my point they have options. Especially right now it's when it's harder to get a line of credit.
Look, I'm not one of these agents who are pitching you make money on your policy by taking loans out. But I do believe if the policy if structured correctly it has advantages.
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