There are various types of life insurance policies available to protect your loved ones when you pass away. One of the best types of life insurance is the whole life insurance policy. It is the form of permanent insurance which means you will be covered for life if your payments stay current. On the other hand, the term life insurance expires when your selected term is over. With whole life insurance, you don’t have to renew your life insurance policy in the later stage of life and pay higher premiums. The whole life insurance, which is backed by the infinite banking concept, would last for the rest of your life as long as you keep paying premiums. Whole life insurance also plays a key role in financial and retirement planning.
Here are a few powerful benefits of having whole life insurance that also explain what is infinite banking.
1. Benefit for Your Beneficiaries:
Whole life insurance provides you protection for a secure future. It helps you protect your family financially when you are no longer here to fulfil their needs. You can rest assured that a guaranteed amount of money will be transferred to your heirs or other specified causes from your death benefit. This financial life protection remains in place for your whole life as long as the premiums are paid. That means you don’t have to worry about how your loved one would survive when you are gone.
2. Potential Dividends:
You may also receive annual dividend payments on your whole life insurance policy if you buy it from a mutual insurance company. Dividend-paying whole life insurance policy explains the infinite banking concept. Dividend payments are the way a mutual insurance company share its annual profits with the policyholders. Moreover, you can also reinvest those dividends in your policy to build the cash value quickly. Another tactic of financial planning is to buy additional insurance by using the dividend. This way you can increase your total death benefit. Also, you can use dividends to pay some of your premiums when you have infinite banking life insurance.
3. Tax Advantages:
You will also enjoy many tax benefits when you have a whole life insurance policy. That means your cash value grows on a tax-deferred basis, and your loved ones will also receive a tax-free sum from your whole life insurance policy. This enables you to provide tax-free financial protection to your heirs after your death. The tax-free assets allow your loved ones to access them quickly than other assets. While your property and other assets might take time before your heirs can actually access them, this is not the case with whole life insurance. Moreover, you take out a tax-free policy loan using the cash value of your policy as collateral.
4. Supplemental Retirement Funding:
You can also use your whole life insurance as your supplemental retirement funding. You can use the cash value of your policy as part of your retirement funding when you have had the policy for enough time. The cash value of your policy won’t be affected by the fluctuations in the financial market. Moreover, you can probably withdraw tax-free money when you actually need it. Thus, your whole life insurance policy can be used to build supplemental income for your retirement. It is a guaranteed asset you can rely upon.