I came across the term “infinite banking” or “banking on myself ”. The term comes from Nelson Nash who was an economist that aligned with the Austrian school of economics. Nash’s theoretical leanings certainly influenced the concept of infinite banking, but regardless of my economic ideals, it’s important to ask the question if infinite banking is for me. The whole idea is to recapture the interest that one is paying to banks and finance companies for the major items that I need during my lifetime, such as automobiles, major appliances, education, homes, investment opportunities, and business equipment among others. One of the strong selling points for this product is that policyholders can borrow against the actual cash value of the life insurance policy. If I need to pay for my child’s university bill or a new car, I can borrow against the policy. According to Nash, an individual who has enough money in whole life insurance policies can continually borrow from himself using the policy as collateral. Under this setup, I would theoretically never borrow money from a bank again. Instead, I would borrow from myself, and pay myself back over time. This is the concept of "becoming my own bank". The infinite part of infinite banking refers to the whole life insurance payout when I die. Since my whole life insurance policy always pay out as long as my premiums are paid, I can continue to borrow against my insurance policy throughout my life. Upon my death, the payout from the insurance policy can go to my beneficiaries and allow them to bank on themselves. This could create something like a family bank, where now my beneficiaries, typically my children can setup the same thing for themselves (Farrington, 2020). Practically speaking, infinite banking works best when the people banking on themselves have extremely strong cash flow. Whole life insurance policies can cost several hundred dollars per month and on top of that, building up cash value in the policies can take at least a few years, so a person has to be committed to infinite banking for it to work. One of the big things here is to try to "superfund" the cash value as much as you can without tripping
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