At no time in Dave Ramsey’s video titled “Why Infinite Banking is a SCAM” does Dave ever touch upon infinite banking. Instead, Dave takes issue with whole life insurance, and more to the point, he takes issue with his “strawman” whole life insurance, which in no way resembles a properly designed dividend paying whole life insurance policy used with infinite banking. See https://www.insuranceandestates.com/infinite-banking-concept/
So, what is the infinite banking concept? In brief, it is when you use a dividend paying whole life insurance policy from a mutual insurance company as a safe bucket to build wealth. You borrow against your cash value to make purchases of big ticket items, such as vehicles, or cash flowing assets, such as real estate. You then pay back your bank (i.e. your policy), with interest, repaying your loan, only to repeat this process over and over again ad infinitum.
Now, while you are practicing infinite banking you are accruing interest in your cash value policy, while the money you borrowed is simultaneously earning interest. So, you are essentially making your money work for you in two places at once. You can read more about infinite banking on our website that has many articles, webinars and ebooks. https://www.insuranceandestates.com/infinite-banking-strategy/
A properly designed infinite banking policy provides:
-Extra cash into the policy using paid up additions
-Exceptional cash value growth vs an initially large death benefit
-Guaranteed Growth & Returns
-Blending Term Life with Whole Life to increase initial death benefit
-Lower Agent Commissions
Point #1: Dividends: Are whole life insurance dividends simply a return of premium?
No, instead, they are comprised of a return of premium, including an investment component, a mortality component, and they are tax-free. And once you earn the dividend, it is locked in – you can never lose it, and it will continue to grow via compound interest over your lifetime.
Point #2: Financial Advisors vs Insurance Advisors
Dave makes it seem that you have to be either one or the other but in truth, most financial advisors recommend insurance products for long term wealth planning and estate planning, whether the insurance products are annuities or cash value life insurance.
Point #3: Stock Market vs Infinite Banking
A whole life policy designed to practice infinite banking is a non-correlated asset that does not have the highs and lows of the stock market. In addition, you get a death benefit paid income tax free to your beneficiary. Here is an example at 16:30, you can also watch our webinar “Infinite Banking vs Stock Market” see https://www.insuranceandestates.com/stock-market-investing-as-a-zero-sum-game/
Point #4: Life Insurance Policy Loans
Dave claims that when you take a policy loan you are borrowing your own money. The truth is, you are borrowing money from the insurance company using your cash value as collateral. The benefit to the policyholder is that there is no lost opportunity cost, because they can borrow money, but the cash value in their policy is still earning interest at a compounded rate, which is why cash value life insurance is such a great compound interest account. See https://www.insuranceandestates.com/compound-interest-growth/
Point #5: Whole Life Insurance Social Proof
Dave states that Infinite Banking “is old school whole life done poorly.” Of course, Dave never even addresses infinite banking, so apparently Dave is clueless as to how ridiculous this statement is.
But more to the point, infinite banking uses a properly designed whole life policy that maximizes cash value growth, which is anything but your typical “old school” version of whole life.
Further, whole life insurance is purchased and used by many top entrepreneurs and business owners, banks, corporations, politicians, etc. These are people and organizations that are financially wise. One has to wonder why Dave is seemingly unaware of this. See our article on Bank Owned Life Insurance here: https://www.insuranceandestates.com/boli-bank-owned-life-insurance/
Point #6: Cash Value
Dave claims that your cash value is just sitting there and when you die, your cash values “all die with you.”
The truth is, your cash value is always growing, it is liquid, you can borrow against it or withdraw it, and as your cash value grows, so does your death benefit.
So, when Dave says that when you die your beneficiary only receives the face value, the truth is your death benefit grows over time, so your beneficiary gets an increasing death benefit. See example at 25:15.
Finally, one way to supercharge your real estate investing is by using it in conjunction with infinite banking. You can watch our webinar and read more about this strategy by going here: https://www.insuranceandestates.com/how-to-triple-your-real-estate-returns-with-infinite-banking/