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Using Life Insurance as Your Personal Bank

If you’re like most Americans, you know that Life Insurance can financially protect your family. When you pass away, your loved ones can use the Death Benefit to cover expenses and outstanding debts. However, Life Insurance is much more than a financial protection tool. In fact, you have the (very cool) ability to treat it as your personal bank. Let me explain.

Some Life Insurance products – called Indexed Universal Life (“IUL”) – allocate a portion of each premium to a savings fund that grows with interest. One of the many ways you can leverage this Cash Value Account is to take a loan against it. While a bank can also help you save and borrow money, an IUL product can do so with several distinct enhancements. For example:

  • The interest rate to grow your Cash Value Account can be tied to a stock market index, like the S&P 500. Thus, IUL products give you the potential to build significant wealth.

  • That being said, your Cash Value Account doesn’t decline when the stock market index drops, since IUL products contain a guaranteed minimum interest rate.

  • No income verification or credit check is required to get a policy loan. Because there’s no approval process, you often receive the loan amount in three to five business days!

  • Furthermore, you don’t have to use assets as collateral to get a policy loan. The Death Benefit is essentially your collateral. If you don’t repay the loan, the Death Benefit will be reduced.

  • The money received from a policy loan is tax-free.

  • Policy loans will not appear on your credit report.

  • The interest rate to repay the policy loan is typically lower than the rate on traditional loans. Additionally, your credit rating has no bearing on the interest rate.

  • Last – but certainly not least – the borrowed money continues to grow in your Cash Value Account as if you never took it out. (Side note: I thought this was a misprint when I first read it, but trusted experts confirmed it for me.)

As long as you repay the loans, you can repeat the cycle of building up your Cash Value Account and borrowing against it. Appropriately, this looping concept is known as “infinite banking”.

The next time I invade this space, I’ll explain how infinite banking can be utilized to achieve your financial goals. (I’ll give you a few hints though: retirement, college, real estate, and expenses.) Until then, please keep in mind that Life Insurance is a powerful – yet underrated – financial tool. Not only can it protect your family when you pass away, you can leverage it to accumulate wealth and borrow from yourself (instead of traditional banks and lenders).

For more information, my email address is The consultation is free with no obligations.

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