A mechanical breakdown of the infinite banking concept -- how policies accumulate cash value, how policy loans function, and how the private banking cycle repeats.
I’ve read Becoming Your Own Banker and The Power of Zero. What often gets overlooked in this conversation are the fees/commissions associated with this insurance product and the interest charged on the policy loans. I see how it can be a meaningful slice of a person’s portfolio, but those are real considerations if someone is curious about this.
On commissions: policy design is the tell. A properly structured contract front-loads paid-up additions over base premium, which dramatically reduces the advisor's payout. Anyone building it the right way is essentially opting into less commission. That's a meaningful filter.
On loan interest: you're not actually borrowing your own cash value - you're borrowing from the carrier's general fund with your account as collateral. Your balance keeps compounding in full. The real cost is the spread between what you're paying and what your capital is simultaneously earning, which is often much narrower than it appears on paper.
Legitimate considerations. Just ones that look different once the structure is understood.
I’ve read Becoming Your Own Banker and The Power of Zero. What often gets overlooked in this conversation are the fees/commissions associated with this insurance product and the interest charged on the policy loans. I see how it can be a meaningful slice of a person’s portfolio, but those are real considerations if someone is curious about this.
On commissions: policy design is the tell. A properly structured contract front-loads paid-up additions over base premium, which dramatically reduces the advisor's payout. Anyone building it the right way is essentially opting into less commission. That's a meaningful filter.
On loan interest: you're not actually borrowing your own cash value - you're borrowing from the carrier's general fund with your account as collateral. Your balance keeps compounding in full. The real cost is the spread between what you're paying and what your capital is simultaneously earning, which is often much narrower than it appears on paper.
Legitimate considerations. Just ones that look different once the structure is understood.