Think about the amount of Life Insurance that you own today. (Ignore the “term” part, because that will go away at some point. You bought that part expecting it to go away; that’s why it’s cheap. It’s worth what you paid for it.)
Now, imagine you could never work again. And you can never buy any more life insurance than you own today. Imagine you have to live on the income from the amount of life insurance you presently own. I want you to imagine that because that is exactly what you’re suggesting your spouse and family do in the event of your death.
This is the kind of mental exercise that honest people do when they think of financial planning. They don’t just pick a number out of the sky and hope it works because “a million dollars is a LOT of life insurance!” That may very well be true, but it’s not a lot of capital when you’re thinking about the fact that it’s all the capital you or your family will ever own.
Infinite Banking Will Work for You
Think of this example: You own one million in life insurance. That life insurance becomes cash on the day you die. Your spouse, your young children or your kids in the middle of college or grad school have just had the safety net snatched out from beneath them. Or, they all have to now live on the fixed amount of income created by the interest earnings from that one fixed amount of money, the one million I imagined you own.
The brightest financial minds and wealth advisors suggest you shouldn’t project more than a 4% rate of return on funds invested safely for long periods of time, so let’s use that. 4% X $1 million = $40,000 interest, which means $40,000 of living income for your spouse and family. We can address inflation’s disastrous impact on your money in another article. (Social Security might provide additional dollars, which I’m ignoring in the present example for simplicity, as well as the fact that if you’re counting on social security as a pillar upon which your family’s financial stability rests, then you either are not reading this anyway, or you are not my client, because my clients don’t plan on living at the poverty level.)
Back to the $40,000. This amount of taxable income puts you in the 15% marginal federal income tax bracket, for a net take-home of $25,000. Divide that by 52 weeks, and you now have a $481 weekly allowance for the rest of your life.
Now I ask you:
- Would you be willing to live on $481 per week for the rest of your life, with no opportunity for a “pay raise”?
- Isn’t that what you’re asking your spouse to do, given the amount of capital you are leaving with your present life insurance program?
Give Infinite Banking a Try
If that’s not what you had in mind, please visit our website or call for an appointment by phone, the web or in person for private wealth management advice. We’ll be pleased to speak with you about infinity life insurance and other options to be your own banker. We believe in providing education so people of integrity can make better-informed decisions.
Alpha Omega Wealth is a full-service financial planning and consulting firm with a special emphasis on private banking solutions. We work with clients across the U.S. who are business owners or who think like them.
Alpha & Omega Financial Services is a full-service financial planning and consulting firm with a special emphasis on private banking solutions. We work with clients across the U.S. who are business owners or who think like them.