3 Myths Around the Infinite Banking Concept

At www.becomingyourownbank.com, they give three myths which make people think that they should purchase life insurance policies.  I want to clearly point out some of the falacies of the video shown at this site.

This video states that life insurance policies provide tax free growth, allow for great returns from 4.5-6.5% and have no government restrictions.

These 3 statements are basically falacies.  Life insurance does not provide tax free growth, it provides tax deferred growth and to have access to this tax deferred growth, you need to pay for expensive life insurance.  The great returns of 4.5%-6.5% growth is based on the separate account and does not include the amount of money used to pay for life insurance.  Finally, the government does provide restrictions in terms of the account becoming a modified endowment contract if one decides to add too much money into the account, without also increasing the amout being used to pay for life insurance.

Of course, the video explicitly tells you not to do any research, but rather just to purchase a policy!  Here is a good rule of thumb.  Never trust someone who tells you not to get a second opinion!

This post was reposted from http://finlit.biz/life-insurance/3-myths-around-the-infinite-banking-concept/, originally written on February 3rd, 2013.