Build a pool of cash value you can borrow against.
The Banking Action Plan uses a well-funded participating whole life policy as a source of cash for large purchases, opportunities, or emergencies, with life insurance in place the whole time. We tailor the design to how you plan to use it.
Big expenses usually run through someone else’s approval.
A car, a renovation, tuition, equipment for a business: financing any of them the usual way means an application, a credit check, and a payment schedule set by the lender. The next purchase starts the process over.
The Banking Action Plan builds a pool of cash value inside a life insurance policy that you can borrow against with no credit check. The insurer makes the loan and charges interest, paid to the insurer at the rate the contract sets. You repay on your own schedule, and repaying restores what you can borrow for the next purchase.
What financing usually involves
- An application and a credit check for each loan
- A payment schedule set by the lender
- Starting over with every new purchase
The banking concept, in three parts.
The banking concept, often called infinite banking, rests on three mechanics of a participating whole life policy.
Fund the policy
You pay a fixed premium into a participating whole life policy. Many designs add a paid-up additions rider, which puts more of each early premium into cash value, within limits the insurer and federal tax rules set. Cash value then grows on a guaranteed schedule, plus any dividends.
Borrow against it
When you need cash, you send the insurer a loan request. The insurer lends you its own money and holds your cash value as collateral, with no credit check or approval process. The loan charges interest, paid to the insurer, at the rate the contract sets.
Repay on your schedule
There’s no required repayment schedule. Repaying restores what you can borrow next time, so the same pool of cash value can fund purchase after purchase. Unpaid loans and interest reduce the death benefit.
Cash value you can put to work.
Big purchases
Cars, renovations, tuition, a wedding. Borrow against the policy instead of applying for a new loan each time.
Business and opportunities
Equipment, inventory, a down payment, or a deal that won’t wait for a bank’s timeline.
When something comes up
A reserve you can borrow against for the unexpected, alongside your cash savings.
Guarantees in the contract, plus dividends that aren’t guaranteed.
The premium, the base death benefit, and the guaranteed cash value schedule are written into the contract, as long as premiums are paid when due. Guarantees are backed by the claims-paying ability of the insurer.
Participating policies are also eligible for annual dividends. Dividends aren’t guaranteed, and the insurer sets them each year, but many participating carriers have paid dividends every year for decades. Depending on the policy, dividends can buy paid-up additions, lower the premium, or be taken in cash.
Carriers also differ in how a loan affects your dividend. With non-direct recognition, the dividend is figured the same whether or not you have a loan outstanding; with direct recognition, the dividend on the borrowed portion is adjusted up or down. Either way, loan interest keeps accruing, dividends aren’t guaranteed, and neither method is better in every case. In your session we’ll show which approach a policy uses and how it fits the way you plan to borrow.
One framework, designed around your plans.
In your strategy session we shape the Banking Action Plan around what you want to use the cash value for.
- Premium level: what you can fund comfortably, every year
- Paid-up additions: how much goes to the rider to build cash value sooner
- Premium-paying period: for life, or a set number of years
- Dividend option: more paid-up additions, a lower premium, or cash
- Loan approach: how you borrow and repay for each purchase
Questions we hear about the Banking Action Plan.
Is the Banking Action Plan a bank account?
No. It’s participating whole life insurance; “Banking Action Plan” is the program’s name. Cash value isn’t a deposit and isn’t FDIC-insured. What you get is life insurance with cash value you can borrow against.
Who do I pay the loan interest to?
The insurer. It lends you its own money and holds your cash value as collateral, and the interest is paid to the insurer at the rate the contract sets, which may be fixed or variable.
Do I have to pay the loan back?
There’s no required repayment schedule. Repaying restores what you can borrow next time. Unpaid interest is added to the loan, and any balance still outstanding is subtracted from the death benefit. If the loan grows larger than the cash value, the policy can lapse, and the gain can become taxable. We walk through how a loan and its repayment play out on your policy before you borrow.
How soon can I borrow against it?
Once the policy has cash value. A paid-up additions rider puts more of each early premium into cash value, and your illustration shows how much is available to borrow each year.
Are the dividends guaranteed?
No. Dividends aren’t guaranteed, and the insurer sets them each year, but many participating carriers have paid dividends every year for decades. Your illustration shows guaranteed values next to values that include dividends.
Are policy loans taxable?
Under current tax law, a policy loan is generally not taxable income while the policy stays in force and is not a modified endowment contract (MEC). We design the funding to stay within the federal limits that keep a policy from becoming a MEC.
How is this different from IUL?
Whole life gives you a fixed premium and a guaranteed cash value schedule, plus dividends that aren’t guaranteed. Indexed Universal Life has flexible premiums and index-linked credits with more upside potential and more year-to-year variation. See the full comparison.