Infinite Banking 101: Series Part 2 – Building Your Policy
Now that you know the basics of infinite banking, let’s talk about how to set up a policy that works for you. Building an effective infinite banking system isn’t just about purchasing any whole life policy; it requires a policy designed specifically to maximize cash value. Here’s how to get started.
Step 1: Choose the Right Whole Life Insurance Policy
For infinite banking, not all whole life insurance policies are created equal. You’ll need a participating whole life insurance policy from a mutual company, which means you’ll receive dividends that can increase your cash value over time. These dividends are a powerful tool, compounding annually and growing your cash pool.
When working with an insurance specialist, make sure they understand your goals for infinite banking. They should structure your policy with a focus on cash value accumulation rather than just a high death benefit. This is all about the process, not necessarily the product. If you’re ready to explore setting up your infinite banking policy, review the presentation and book a consultation with me here to begin your journey.
Step 2: Understand Paid-Up Additions (PUAs)
Paid-Up Additions riders are optional policy add-ons that help boost your cash value. However, when it comes to banking style policies this is a key ingredient to the recipe. When you make PUA payments, you’re purchasing additional, small amounts of insurance that add to your cash value and increase your dividends. PUAs supercharge your policy, helping you grow your money faster than just relying on the base premiums. This makes it easier to access your funds sooner for loans or other needs.
With PUAs, you have more flexibility. You can contribute additional money beyond your base premium, so even if you have extra cash available one month, you can make that work for you.
Step 3: Be Consistent with Your Premiums
Infinite banking requires a steady approach. Your premium payments are what fuel your policy’s growth. When you’re consistent with these payments, your cash value builds and compounds over time. Ideally, you’re funding this policy with money you would have otherwise been putting into a savings or opportunity fund, but now it’s growing tax-deferred and readily accessible.
Infinite banking is about creating a financial foundation you can depend on, so plan to commit to these premiums long-term. As the policy matures, the cash value will grow faster, giving you greater financial flexibility.
What’s Next?
With your policy in place, you’re ready to move on to the exciting part—using your cash value! In Part 3, we’ll walk you through making your first policy loan, setting up a repayment schedule, and using infinite banking as a cash-flow tool for everyday life.
Building your infinite banking policy right from the start is the key to making the most of this financial strategy. You’re not just buying insurance; you’re creating a powerful financial resource for the future.
If you missed it, be sure to check out Part 1 of the series for a deeper dive into the basics of infinite banking and how it works.
