Borrowing Against Life Insurance vs Bank Financing

Borrowing Against Life Insurance vs Bank Financing

Why would I borrow against my life insurance instead of getting a regular loan?

You might be thinking, I could get a great rate from the bank because I have a good credit score. You might be right, but do you want to rely on that?

Let me propose this idea to you.

Back in 2008 when cash was tight for many people, banks had to tighten their lending standards.

Existing lines of credit (business and personal) for many people suddenly dried up. They were either rescinded or recalled. The banks took lines of credit back or shrunk available credit limits.

Think about the possibility of being in a position where your income was tight, or maybe you lost your business or lost your job, and you didn’t have that stream of income. In that position, the bank will now see you as being a significant risk and will not extend you those favorable loan terms.

Where the Infinite Banking Concept Fits into Your Cash Flow System

Privatized Banking

Borrowing against life insurance is a part of Privatized Banking, just one step in the greater Cash Flow System.

Wedged between Stage 1 and 3, Privatized Banking fits into Stage 2, the canopy of protection in your financial life.  While protecting your personal economy from the risk of loss, it also helps you keep more of the money you make and amplifies your cash-flowing asset strategy, accelerating time and money freedom. 

Borrowing Against Life Insurance

The cash value of life insurance expands your options because you can borrow against your life insurance policies cash value. We use a specially-design life insurance contract that accelerates high early cash value. It gives you the ability to access that capital through a policy loan whenever you may need it.

It is important to note that because you’re not using your capital, but collateralizing it, you will continue earning uninterrupted compound interest even while you invest. That is what gives you returns in two places at once.

You don’t need a good credit score or have to prove that you have the income to repay the loan. There is no loan repayment schedule, meaning you decide how much you pay and when.

You have guaranteed access with a guaranteed loan option. This ability to borrow against your policy with a life insurance loan gives you access to capital whenever and however you need it.

As valuable as a line of credit is, it can be taken away. However, the guaranteed access to your life insurance cash value gives you peace of mind.

If you’re in a position with no line of credit and no cash, you’re stuck in a cash flow crunch. Needing the capital but having nowhere to get it is a terrifying position to be in.

Instead, we want savings, money that is set aside for emergencies and opportunities. We want a place that earns a competitive return with uninterrupted compound interest, safety, and guaranteed access.

Borrowing against life insurance is ideal because it does not interrupt the compounding, and it’s safe and easily accessible.

Your Decision Point

For more information on Specially Designed Life Insurance Contracts, get our free Quick & Easy Privatized Banking Guide. In the guide we give an example of borrowing against a life insurance policy to finance real estate.

If you would like to implement life insurance and Privatized Banking in your own life, talk to us about how it would work for you.

Book a strategy call to find out how, and also get the one thing you should be doing today to optimize your personal economy and accelerate time and money freedom. 

Success leaves clues.  Model the successful few, not the crowd, and build a life and business you love.

Rachel Marshall

Rachel Marshall is the Co-Founder and Chief Financial Educator of The Money Advantage and President of Marshall's Insurance and Financial Services. She is known for making money simple, fun, and doable. Rachel has built a team of licensed professionals (investment advisors, insurance agents, attorneys, tax strategists) to help her clients create time and money freedom with cash flow strategies, Privatized Banking, and alternative investments. Rachel is the co-host of The Money Advantage podcast, the popular business and personal finance show. She teaches how to keep more of the money you make, protect it, and turn it into cash-flowing assets.
Creditor Protection of Life Insurance

Is Life Insurance Protected from Creditors? Privacy and Creditor Protection of Life Insurance

By Rachel Marshall | January 4, 2021

Want to shelter your assets from the prying eyes of the IRS, claims of creditors, or the public? Cash surrender value and life insurance proceeds are exempt from creditors in most states. In this episode, we’re talking about the privacy and creditor protection of life insurance. So, if you want to know how to protect…

Read More
Direct vs. Non-Direct Recognition

Direct Recognition vs. Non-Direct Recognition: Does it Matter?

By Rachel Marshall | December 21, 2020

Are you considering whole life insurance and want to know which is better: Direct vs. non-direct recognition life insurance companies? What does it mean? Why does it matter? How does it impact you? And should it be a part of your decision-making process? In this episode, we discuss the why, how, and what of direct…

Read More