The Infinite Banking Concept Episode 4 – Infinite Banking is a scam.
In this installment of our weekly blogs, we will be going over why Infinite Banking is a scam!
Well, I’ll be going over why people call it a scam and some legitimate views that people have towards the Infinite Banking Concept.
You can make more money doing something else
They usually compare it to an equity portfolio or an S&P ETF that has an average return over time of 9%
I’ll tell you right now – yes of course you can make more money investing in an equity ETF than you can if you put it inside a conservative insurance policy.
It Costs Too Much – you can buy term insurance cheaper
One of the main criticisms of infinite banking is the high costs associated with whole-life insurance policies.
And if you haven’t watched the previous episodes in this series, then you don’t know that the Infinite Banking Concept is using an overfunded participating whole life insurance policy and taking a loan against the cash value of the policy to use for investments.
It’s true, it’s not cheap. The baseline in my eyes is you should be able to save $1,000 a month for ten years without having to worry about needing it.
We have clients who invest 100, 200, even 500 thousand dollars a year, so yes it does have a “high” cost, but it’s built for people wanting to keep safely continue to grow their existing wealth and be able to easily pass it on to future generations.
The concept is not for everyone, and if it’s not for you right now, that doesn’t mean it won’t ever be for you.
The Complexity
I’ve read articles online and heard people say that they find it too complex, here’s a direct quote from an article:
“Infinite banking can be a complex financial strategy that requires careful planning and understanding of the policy terms. It may not be suitable for individuals who prefer a more straightforward approach to managing their finances.”
Now this is sort of – it is a little bit complex, but it’s really quite simple
It even gives you an answer here, that if you don’t quite understand it then it might not be for you, but that’s why we make these videos.
These videos are here to be your library of Infinite Banking knowledge; we have many videos about the benefits of Infinite Banking and the most frequently asked questions, which we have linked below.
Pushy Salespeople
An extremely common reason that people view Infinite Banking as a scam is that a lot of people selling it, especially in the U.S., are quite pushy and try to sell you, your mother, and everyone you know that it’s a pot of gold at the end of a rainbow.
While, as we mentioned earlier, the Infinite Banking Concept is not for everyone.
We are not here to sell everyone the Infinite Banking Concept, this concept can be “expensive”, there is some level of opportunity cost while you wait to take your first loans, it is more complex than say saving in your TFSA, which if you are doing this strategy, you probably already have a strong TFSA and a strong RRSP.
The Infinite Banking Concept should not be your first investment, it’s something that anyone can do but not everyone should.
Contact Us
At Safe Pacific Financial, we specialize in helping Canadian business owners, incorporated professionals, and investors structure life insurance for maximum wealth protection, tax savings, and business growth.
If you would like to discuss whole life insurance or investments, we’re happy to chat and see if we can be a good fit to work with you. Fill out our contact form and we will get back to you within 24 hours on business days.
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