How Does Infinite Banking Work?
The Infinite Banking Concept is dependent upon a whole life insurance policy. Whole life insurance, versus the more common term life insurance, is a permanent life insurance policy. This means the policy is guaranteed for a lifetime as long as the premiums are paid on time. In comparison, a term life insurance policy only lasts for a certain time period, like 20 years.
Premiums for a whole life insurance policy are higher than for a term life policy. Here are the three components of where your monthly premium payments go:
The portion that covers the death benefit
Fees and operational costs
The cash value portion held in a savings-type account
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