Infinite Banking And Impaired Risk Life Insurance!

Although I am new to infinite banking, the use of participating whole life insurance as a financial tool, the fact that it is funded by life insurance means that the agent can make all the difference in whether the concept works to its’ maximum.

A huge part of the financial concept is keeping the cost of insurance down so that the maximum amount of premium is going toward cash value and dividends that purchase paid up additions. The more a client has to pay for the cost of life insurance, the less effective the tool becomes. Let’s take a look at an example to help illustrate some important details concerning infinite banking. I have a large number of private pilot clients and they use me because I am able to get them life insurance without a flat extra charge, often getting preferred or preferred plus rates.

So, let’s use an up and coming company executive, a 40 year old guy in perfect health who loves to fly and has been a pilot for several years. He is VFR rated and flies about 40 hours a year in the Cessna 210 he owns. He has about $10,000 a year that he can put into infinite banking and he needs to get the most bang for his buck.

I start with Met Life knowing that they aren’t real wild about pilots, but a lot of people think they are bigger than life and of course would do a great job. A couple of things become immediately problematic. First, even though this client is in perfect health he will pay a $2.50 per thousand flat extra charge for being a pilot. This money plays no part in building anyone’s cash value except Met Life’s. The other problem is that this client would normally use the Met Life Enricher rider to add more cash. Met Life doesn’t allow the Enricher when there is a flat extra on the policy, so this is the best he can do with Met Life.

Let’s stack that up against one of the most pilot friendly companies, Minnesota Life. With Minnesota Life there is no flat extra charge, so all of the money can be optimized. He is also rated at preferred instead of standard. Because there is no annual extra charge for private aviation my client can also shorten the pay period with Minnesota Life.

Do you get the fact that the comparisons are really not apples and apples? The reason for that is that unless an agent uses the right company they can end up making their client pay too long and pay in money that doesn’t have any value added for them.

Bottom line. Whether your goal is life insurance protection for your family or becoming your personal banker, picking the right agent who fits you with the right company can keep more money in your pocket or add more money to your bank account. If you have a sense that you aren’t getting the most bang for your infinite banking dollar because of a health impairment or, like above, maybe you’re a private pilot, call or email me directly and let’s talk.