How to Take Whole Life Insurance Policy Loans – Infinite Banking

The beauty of the Infinite Banking Concept is its simplicity: use a dividend-paying whole life insurance policy to create a pool of money so you can access cash when you need it. All of the money you put in your policy grows on a tax-deferred basis. When you loan the money to yourself, you set the repayment terms, giving you freedom and flexibility. When was the last time your banker let you decide how much to pay them each month?

The basic concept and the benefits are easy to understand – but not everything about this is intuitive. Here are some of the most common questions we get asked about policy loans – and our answers, to help put your mind at ease.

Q. How is a policy loan different from a conventional bank loan?

There are many differences, but the most basic one is that with a policy loan, you’re using the cash value in your insurance policy as collateral so you can borrow money from the insurance company. You effectively owe the policy – but you also own the policy. You also set the terms that the insurance company can approve, instead of a bank setting terms for you – which can result in very advantageous conditions to pay back the loan. You set the repayment schedule.

Q. Can I take a loan from my policy at any time?

Yes, you can. You are contractually guaranteed to receive your money from the life insurance company when you ask for it. In some larger cases, for corporate clients, you can potentially borrow against non-guaranteed dividends – this is called an “Immediate Financing Arrangement” and we can help you with this.

Q. How much of my policy value can I access?

You can use up to to 90% of your available cash surrender value in the policy.

One note of caution: if the cash surrender value in your policy ever approaches $0, the policy may lapse. Our financial and insurance advisors are here to help you ensure that this does not happen, so that you retain your benefits and coverage.

Q. I want to take full advantage of the tax-deferral benefit. How can I ensure that I won’t be taxed on the money I borrow against the policy?

That’s where we come in. We work with you over the long term. We help ensure that you continue to access your money in the most tax efficient way. There are some simple steps for you to follow and we are here to guide you all along the way.

Q. If I die while there is a policy loan outstanding, what happens to the insurance benefit?

The value of the death benefit would be reduced by the policy loan balance, including interest. Any remainder will be paid to your beneficiary, tax-free.

These are just some of the most common questions our clients ask about using policy loans. Need more information? We’re happy to provide further information – you can contact us anytime by phone or email if you have any other questions.




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It really is that simple. You fill out 1 form and send it to your insurance company to request a policy loan.

Here are the Loan Request Forms from 3 Canadian insurance companies:

Equitable Life of Canada – Policy Loan Request Form (PDF)

Sun Life Financial – Policy Loan Request Form (PDF)

Canada Life – Policy Loan Request Form (PDF)