Infinite Banking

vs.

Buy Term and Invest the Difference

The majority of the “Gurus” teach you to buy term and invest the difference.  It has been a sales pitch for years.  I think it has been said so many times that everyone just automatically believes it.  Not only do the Gurus teach this but so do your Uncle, your CPA and your Proffesor at school.  It would be interesting to ask someone to actually prove it.  Let’s compare this strategy to banking…

1.  Do you Build equity in the policy?

Infinite Banking

The policies used for this concept have a cash value which is guaranteed to increase every year. Part of your premium goes into a special rider, which super charges the growth in your Cash Value, especially in the early years of the policy.

Buy Term and Invest the Difference

Buying a term life policy is like renting.  The reason why term is so cheap is that the insurance company knows that less than 1% of all term policies actually ever pay a claim.  Is it because they are con-artists?  No, they hire people called actuaries to make sure that they don’t sell policies to people who they statiscally think will die within the term period.  In other words people are outliving the term of the policies.  Can you imagine how profitable this business is for the insurance company?  Even those who recommend term insurance agree. Suze Orman writes “these policies are not very expensive… because the insurance company knows you have relatively little chance of dying while the policy is in force.” (Source: The Road to Wealth, 2001).

2.  Does it give you protection against inflation?

Infinite Banking

The death benefit has the ability to  increase over time, as dividends left in the policy are used to purchase more death benefit.  This helps your death benefit to hedge against inflation.

Buy Term and Invest the Difference

Most term policies have a level death benefit for the term of the policy. If you buy a $1,000,000 20-year term policy, and inflation averages 4% per year, your policy will lose almost ½ of the original value!

3.  Are you protected if your health Changes?

Infinite Banking

You’re covered until the policy matures (typically age 121), as long as you managed the policy correctly and didn’t let the policy lapse.

Buy Term and Invest the Difference

If your health gets worse during the term of the policy and you bought the kind of policy recommended by experts like Dave Ramsey and Suze Orman, you’ll have to pay more to renew it, or you might not qualify for coverage at any price.  Does your health get better or worse as you age?

4.  Can you know for sure how much you will have at retirement?

Infinite Banking

Yes.  One of the benefits of a banking policy is that there is a guarantee minimum amount that the company will contractually guarantee in any given year.  You will know a worst case amount of equity and death benefit now and at retirement time.

Buy Term and Invest the Difference

The Gurus will have you ivnest the difference in Stock and Mutual funds in the stock market.  There is ZERO guarantees when your money is in the market.  A friend of mine always said “You may as well go to Vegas with your money because at least when you play there you get free drinks!”