Interesting breakdown-really highlights how little most people think about what happens after they deposit money. The scale and leverage behind basic banking is always eye-opening.
The bank profits from the spread between deposit rates and lending rates. In the infinite banking model, you pay the spread to the insurance company instead. The intermediary changed. The spread didn't disappear.
Action: Find the current policy loan interest rate on any whole life product — compare it against a HELOC or margin account rate. Find out whether you're eliminating the intermediary or just switching to a more expensive one.
Policy loans are between 4-5% and you can pay them back on your own schedule. In addition, the money you put in continues to grow. Borrow from a HELOC and your immediately put on a payment plan from month to month. The prime rate today is 6.75%
Interesting breakdown-really highlights how little most people think about what happens after they deposit money. The scale and leverage behind basic banking is always eye-opening.
Most people think banks grow rich by “holding” money, when in reality they grow rich by making your idle money move constantly behind the scenes.
100%
The bank profits from the spread between deposit rates and lending rates. In the infinite banking model, you pay the spread to the insurance company instead. The intermediary changed. The spread didn't disappear.
Action: Find the current policy loan interest rate on any whole life product — compare it against a HELOC or margin account rate. Find out whether you're eliminating the intermediary or just switching to a more expensive one.
Policy loans are between 4-5% and you can pay them back on your own schedule. In addition, the money you put in continues to grow. Borrow from a HELOC and your immediately put on a payment plan from month to month. The prime rate today is 6.75%