Whole-Life Insurance
The strategy generally starts with a permanent participating whole-life policy designed to provide lifelong insurance coverage.
Infinite Banking
Understand Infinite Banking before deciding if it fits your plan.
Infinite Banking uses the cash value inside a participating whole life insurance policy as part of a long-term financial strategy. It can be useful in the right situation, but it is not a bank account and it is not the right fit for everyone.
How It Works
A long-term insurance strategy with access to cash value.
Participating whole-life policies can build cash value over time. Depending on the insurer and policy, the policyholder may be able to access funds through withdrawals, policy loans or loans secured against the policy.
The concept is often described as creating more personal control over financing, but accessing policy value can involve interest, tax consequences, reduced cash value or reduced death benefits. Policy performance, dividends and costs must be reviewed carefully.
Key Components
What to understand before considering the strategy.
See the key parts of the strategy and what you should understand before deciding whether it fits your situation.
Cash Value
A portion of policy value can accumulate over time according to the policy contract and insurer performance.
Access to Funds
Policy value may be accessed in different ways. Each method can have different costs, tax implications and effects on the policy.
Insurance Protection
The policy remains first and foremost a life-insurance contract, so coverage needs should be considered before financing objectives.
Long-Term Commitment
Whole-life policies can require significant and sustained premium commitments. Early cancellation may produce disappointing results.
Ongoing Review
Policy values, borrowing, premiums and changing financial goals should be reviewed regularly.
Potential reasons people consider it
Some clients value permanent insurance protection, long-term cash value, disciplined funding and the ability to access policy value under the contract.
Important trade-offs
Premium commitments, borrowing costs, policy structure, liquidity, tax treatment and the opportunity cost versus other savings or investment approaches should all be considered.
Suitability First
Start with your financial needs,not the strategy name.
Protection Need
Is permanent life-insurance coverage appropriate for your family, estate or business objectives?
Cash Flow
Can you comfortably maintain the required premium commitment over the long term?
Alternatives
How does the approach compare with available RRSP, TFSA, debt repayment, investment and conventional financing options?
Want to know if Infinite Banking makes sense for you?
We can walk you through how it works, what it costs and how it compares with other options you may already be considering.