Infinite Banking In Canada Is Not For Everyone & Do NOT Think Of It As a Get Rich Quick Scheme – Because It’s NOT

There are a lot of laws around Whole Life Insurance, and these laws exist primarily to make sure people don’t confuse Whole Life Insurance with an Investment.

The life insurance industry, in particular, does not want to be confused with banks, and what people need to understand about life insurance in Canada is that it differs GREATLY from Canadian private banks.

Insurance companies CAN NOT lend money the same way a Private Bank in Canada can. Most of the world, including Canada, employ a Fractional Reserve Banking system.

 

Fractional Reserve Banking Definition

Fractional reserve banking is a system in which only a fraction of bank deposits are required to be available for withdrawal. Banks only need to keep a specific amount of cash on hand and can create loans from the money you deposit.

For example, if I deposit $1 into a Private Bank in Canada, that Private Bank can lend out maybe $10 dollars; this fractional reserve banking system depends on BORROWERS REPAYING their loans to the bank. However, this fractional reserve BANKING system, allows banks to do things with money that an Insurance company can never do.

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Insurance companies do not enjoy the fractional reserve banking system, meaning that an insurance company accumulates money from REAL cash deposits. This means that Infinite Banking should NEVER be imagined as a get-rich-quick scheme, nor should it be conceived as a bank or one-size-fits-all solution for your INSURANCE needs.

Infinite Banking Definition?

Infinite banking involves using Permanent Insurance Coverage (Whole Life Or Universal Life Insurance), as a personal line of credit. Whole life policies for example earn cash value at a guaranteed contractual rate over time. Once you’ve accumulated enough CASH VALUE in your insurance policy, you can begin to borrow money from the insurance company, using your life insurance policy as collateral.

The reason it was given the label Infinite Banking is that like-minded people use their whole life INSURANCE contracts the way the average person uses their bank account.

The Infinite Banking concept requires discipline and financial education because without financial education, infinite banking can actually make you worse off and potentially uninsured.

Some insurance won’t issue whole-life contracts, and insurance companies can legally refuse to lend money to their clients, so this is why whole-life insurance should never be confused with an investment or a banking system.

Most insurance companies will allow their clients to borrow against the whole life insurance contracts because, without LIVING benefits, whole life insurance contracts can fairly be viewed as overly priced.

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Term Life Insurance Contracts Offer NO Living Benefits – Whole Life Insurance Offers Living Benefits

You get what you pay for, and Term Life Insurance products are a lot cheaper than Whole life Insurance contracts. Term Life Insurance is like leasing insurance for a period of time; when you buy term insurance, it allows you to have a lot more disposable income to do other things.

People who love term life insurance often say to buy term insurance and invest the difference, and this is a good idea for most. Still, once you turn 65 years old, that’s when most people regret not buying Whole life Insurance earlier because after 65 years old, term life insurance is no longer CHEAP.

If you bought your whole life insurance contract in your twenties, your whole life insurance payments at 65 years old will be a lot cheaper than a term insurance contract at 65 years old.

Furthermore, had you bought whole life insurance, you could have borrowed money from your whole life insurance contract and used it to invest; if buying term and investing the difference is what you wanted to do, Whole Life Insurance, using the infinite banking concept, provides you that ability.

However, again, infinite banking or whole life insurance should NEVER be confused with banking or investing because they’re nothing more than WHOLE LIFE insurance contracts that offer you living benefits for spending your WHOLE life with that insurance company.

Most people do not have the discipline to spend their whole life with a company, but when you decide to this with any insurance company, they should offer you some benefits.

The Failure of Term Insurance

I have no problem selling my clients Term Insurance, but I always make sure that I remind my clients why Whole Life Insurance was created in the first place. Term Insurance predates Whole Life Insurance, which was created because as people got older, Term Life Insurance companies would stop insuring them.

If the expectation is that your chances of death are higher, insurance companies have to factor that into the price of the insurance contract they’re going to offer you. As I mentioned earlier, insurance companies DO NOT enjoy the fractional reserve banking system, so they can’t grant or loan you money they don’t have.

If you send the insurance company $20 per month, that’s all they have from you, so they have to invest that money to multiply it. With INVESTING, the insurance company can also LOSE the $20 you sent them. Hence, the insurance company, when issuing you an insurance contract, has to ensure it can deliver on its contractual obligations to you.

Term Insurance is a very basic type of insurance, meaning that when you need life insurance the most, that’s when Term insurance becomes very expensive, and this is also when you might not qualify for term life insurance, so not only are you gambling on having acceptable health with term insurance, you’re also making a gamble that you’ll have enough money to replace your life insurance needs for yourself and your family when you’re reaching the age of retirement.

Whole Life Insurance is a WHOLE Life Insurance contract; there’s no renewal date, and once you complete your financial contractual obligations, the insurance company HAS to pay you the contractually agreed upon amount.

With Term Life Insurance, most people live out their term insurance contract; in fact, most LIFE insurance clients take excellent care of their health. If you care enough about getting yourself life insurance, chances are you’re the type of person who loves themself and their family.

By the way, with term and whole life insurance, these insurance companies are also insured, so if you’re wondering about your money if the insurance company goes bankrupt, don’t worry. Assuris insures Canadian life insurance companies.

With Whole Life Insurance, you only have to apply ONE time, so although whole life insurance is more expensive than Term Insurance, there are a lot of LIVING benefits to having it that people with Term Insurance can only imagine.

The failure of Term Insurance in a nutshell is that you can live out your term life insurance and the more times you do this, the more expensive your term insurance becomes, not only does your term insurance become more expensive, but your payment also gets smaller as you get older which is the complete OPPOSITE of what happens when you sign up for a dividend paying whole life insurance contract.

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Contact Romone: (416) 705-0892
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Dividend Paying Whole Life Insurance In Simple To Understand Terms

I recommend paid-up additions when getting a Dividend Paying Whole Life insurance contract. Because if you take the dividends in cash, you lose the compounding effect, which is usually more than the amount of money the insurance company would charge you as interest for a loan.

 

Paid-Up Additional Insurance Definition?

Paid-up additional life insurance is purchasing small chunks of whole life insurance purchased using the dividends from your whole life policy. Each paid-up addition (PUA) has its own death benefit and cash value, and also earns dividends.

Whole Life Insurance Contracts offer COMPOUND interest, which equates to the present and future money in whole life insurance contract compounding.

This PUA an effective way to increase the cash value and death benefit over time without medical underwriting or increasing the premium payment. This is also the collateral people in the infinite banking community use as collateral to borrow money from their Insurance Company

I basically just explained the Infinite Banking Concept, that’s how it works, but it takes discipline and it’s clearly not a get rich quick concept because it will usually take at least 7 years before borrowing money from your whole insurance contract makes any financial sense.

So clearly, that’s NOT a get-rich-quick scheme, but you can see why people who have Whole Life Insurance contracts are usually humble and don’t try to shove it down other people’s throats.

It’s also why you want to make sure you have an Insurance agent like Romone Porter helping you with your insurance needs. I’m knowledgeable about life insurance and I don’t believe that one insurance is better than the other, I will meet you here you are in your life.

Call or text Romone for more information

Contact Romone: (416) 705-0892
You can also use the contact form for more information.