"Infinite banking Concept" anyone?

[Doc8404]

short version: not a fan of whole life. Situation with son is he is newly diagnosed with Type 1 diabetes. So we are looking at options since later in life, when he may have a family, term life won't be an option.

Buddy just got whole life for his two children to lock in premiums. As much as whole life doesn't work for me and my spouse, we are exploring this option for him.

anyone?

 

[Dean]

20-year term?

 

[JHZR2]

The infinite banking thing is life insurance, but as I recall, the point is that you can take loans against the premium, and if set up properly, will still pay and compound interest.

We looked into it a few years ago. The Key is to get a good salesman who is into the product. The key to making an efficient product is to minimize the outright commision paying premiums, and instead use the paid up additions to increase the policy value and what you can borrow.

When we looked at it sometime back, and rates were lower, it was paying 5.5%. It may pay higher now.

Its not as bad, IMO, as most annuities and insurance products. But it’s contingent upon the seller to build an actual efficient plan…

And if it’s the kind of thing that you can get him into now, given the known issues with being insurable later, that’s not a bad way to do wealth transfer and locking him into a policy that will grow, especially when the interest becomes self sustaining. IIRC, If you borrow against the cash value, the terms are good… and when it gets paid out it is tax free….

 

[supton]

Link. I had to look it up.

The infinite banking concept (IBC) is a system whereby one becomes their own banker by growing their liquid cash value inside a properly-designed whole life insurance policy while borrowing against it to fund major expenditures, emergencies, and outside investment opportunities.

I don't feel like reading any of the articles, so I'm going off the quick blurb, as it matches my attention span.

So... save money now, inside of a diversified portfolio, that can grow until it is needed? Start now, keep adding, when he is of age, he takes over the portfolio, continuing to add, and can then thus self-insure? Edit: I see JHZR2's response, it sounds like a package different than that.

How old is the son?

 

[tbm5690]

Are you sure he won't be eligible for term or will he be eligible with higher premiums?

 

[Doc8404]

Are you sure he won't be eligible for term or will he be eligible with higher premiums?

very very high premiums from what I am seeing

 

[Doc8404]

sorry: link https://bankingtruths.com/infinite-...gencies, and outside investment opportunities

12 year old son

 

[supton]

12 years old? So (hopefully!) more than 10 years from family life.

I tend to be distrustful of, well, everything. I have to wonder, if you just start off with $100 per month into an index fund, fund that until he can then fund it himself, if he won't have six figures by the time he has kids. If he's like part of the current trend, he might not have his own until his 30's. If he and his partner "know" they cannot get life insurance, but plan appropriately, perhaps they can build an appropriate amount of wealth before kids, and have a plan on how to use that wealth in case of need.

What are those premiums you are seeing?

At age 12 it's pretty hard to know what he'll do for life. But I do know I've had for all of my career one year's of income of life insurance through the company I work for. Not sure how many companies do that. I don't think it's contingent on my health either. That's not a lot but it's more than zero, and could count as part of his plan, once into a career, as one of the benefits that he will want to keep an eye out for.

 

[Doc8404]

12 years old? So (hopefully!) more than 10 years from family life.

I tend to be distrustful of, well, everything. I have to wonder, if you just start off with $100 per month into an index fund, fund that until he can then fund it himself, if he won't have six figures by the time he has kids. If he's like part of the current trend, he might not have his own until his 30's. If he and his partner "know" they cannot get life insurance, but plan appropriately, perhaps they can build an appropriate amount of wealth before kids, and have a plan on how to use that wealth in case of need.

What are those premiums you are seeing?

At age 12 it's pretty hard to know what he'll do for life. But I do know I've had for all of my career one year's of income of life insurance through the company I work for. Not sure how many companies do that. I don't think it's contingent on my health either. That's not a lot but it's more than zero, and could count as part of his plan, once into a career, as one of the benefits that he will want to keep an eye out for.

goodpoint. we have that at our work also.