Can My Infinite Banking Policy Ever Lose Value?
If you’re considering setting up an infinite banking policy, you’re probably wondering, "Can it lose value?" After all, you’re entrusting your hard-earned money to an insurance policy that’s supposed to be a reliable, long-term wealth-building tool. So, it’s a fair question.
Let’s break this down to make it simple, because your financial peace of mind depends on understanding how your money works. And if you want to listen to more about Infinite Banking, click here to listen to the podcast.
What is Infinite Banking?
Before we get into whether your policy can lose value, let’s quickly remind ourselves what infinite banking is all about. Essentially, it’s a strategy using specific type of insurance, from a specific type of insurance company, that has specific traits and qualifications. Those specifications of this tool is that it is a dividend paying, whole life insurance policy, from a mutual owned insurance company that has atleast 100 years of consistent dividend distribution. These traits give you the best chance of optimizing your ability to build wealth by taking advantage of the cash value that grows inside the policy. The goal is to create an instrument that acts like a privatized banking system where you can borrow from yourself when needed—without the red tape and manipulation from traditional banks.
If you’d like to learn more about how infinite banking works, click here to listen to the podcast.
Will My Policy Lose Value?
Good news: Your infinite banking policy is designed to grow over time, not shrink. Whole life insurance policies have a guaranteed cash value that steadily increases, thanks to the way they’re structured. Unlike riskier investments that can fluctuate with the market, your policy’s cash value is guaranteed to grow at a steady pace, even in times of economic uncertainty.
Now, there are a few important details to keep in mind, so let’s get into them:
1. The Guaranteed Cash Value
The guaranteed cash value of your policy is the amount of money you will receive if you decide to surrender the policy. This amount is set by the insurance company, and it grows each year with a guaranteed minimum rate.
While the growth might not be super fast, you can count on it. This is one of the reasons why whole life insurance is such a reliable tool for long-term wealth-building.
2. Dividends – The Extra Growth
On top of the guaranteed growth, many whole life policies also pay dividends. These aren’t guaranteed, but when your policy pays them, it adds to your cash value, increasing the overall return.
Think of dividends like the “bonus” on your policy. When they’re paid, it boosts your cash value—but even if your policy doesn’t pay dividends one year, your guaranteed cash value will still grow steadily.
3. What Could Cause a Loss in Cash Value?
In rare cases, your policy could experience a temporary loss in cash value if the cost of insurance increases dramatically. This could happen if you have a policy with insufficient funding, or if the insurer’s costs rise due to factors like mortality rates or operational changes.
However, most people setting up infinite banking policies with proper planning will avoid this situation. The key is to ensure that your policy is funded correctly from the start, which is why working with an experienced Infinite Banking Coach (like me!) is essential.
4. Loans and Withdrawals
Another important consideration: if you take out a loan against your policy’s cash value, it will reduce the amount of money available in your policy. But don’t worry—the policy will still continue to grow as long as you manage the loan properly. Just make sure you repay it in a timely manner, so you don’t lose out on potential growth.
In Summary
To sum it up: Your infinite banking policy is built to grow steadily, and the only real way it might lose value is if you don’t manage it well—like taking out loans that you don’t repay. But as long as your policy is set up properly, you can rest easy knowing that your money will grow at a predictable pace, providing you with both security and the potential to borrow from yourself when needed.
Still wondering if infinite banking is right for you? I’d be happy to talk through the details and help you understand how this powerful strategy can work for your unique financial situation.
Ready to Dive Deeper?
If you’re ready to explore infinite banking and set up your own policy, book a consultation with me. Let’s discuss how you can start building wealth and taking control of your financial future—without worrying about market volatility or banking fees. And for even more Infinite Banking insights, click here to listen to the podcast.
