Infinite Banking Calculator

Infinite Banking Concept Calculator

Use this calculator to illustrate the potential growth of cash value within a properly structured whole life insurance policy, a core component of the Infinite Banking Concept (IBC). You can also simulate the cost of borrowing against your policy's cash value.

Optional: Simulate a Policy Loan

Enter details below to see the estimated cost of borrowing against your policy's cash value.

function calculateInfiniteBanking() { var annualPremium = parseFloat(document.getElementById('annualPremium').value); var policyStartAge = parseInt(document.getElementById('policyStartAge').value); var yearsOfPremiumPayment = parseInt(document.getElementById('yearsOfPremiumPayment').value); var cashValueGrowthRate = parseFloat(document.getElementById('cashValueGrowthRate').value); var policyLoanRate = parseFloat(document.getElementById('policyLoanRate').value); var desiredLoanAmount = parseFloat(document.getElementById('desiredLoanAmount').value); var loanRepaymentYears = parseInt(document.getElementById('loanRepaymentYears').value); var resultsDiv = document.getElementById('results'); resultsDiv.innerHTML = "; // Clear previous results // Input validation if (isNaN(annualPremium) || annualPremium <= 0) { resultsDiv.innerHTML = 'Please enter a valid Annual Premium Contribution.'; return; } if (isNaN(policyStartAge) || policyStartAge 70) { resultsDiv.innerHTML = 'Please enter a valid Policy Start Age (18-70).'; return; } if (isNaN(yearsOfPremiumPayment) || yearsOfPremiumPayment < 5) { resultsDiv.innerHTML = 'Please enter valid Years of Premium Payment (min 5).'; return; } if (isNaN(cashValueGrowthRate) || cashValueGrowthRate 8) { resultsDiv.innerHTML = 'Please enter a valid Cash Value Growth Rate (1-8%).'; return; } if (isNaN(policyLoanRate) || policyLoanRate 10) { resultsDiv.innerHTML = 'Please enter a valid Policy Loan Rate (3-10%).'; return; } if (isNaN(desiredLoanAmount) || desiredLoanAmount < 0) { resultsDiv.innerHTML = 'Please enter a valid Desired Policy Loan Amount (0 or greater).'; return; } if (isNaN(loanRepaymentYears) || loanRepaymentYears < 1) { resultsDiv.innerHTML = 'Please enter valid Policy Loan Repayment Years (min 1).'; return; } var totalPremiumsPaid = 0; var projectedCashValue = 0; var currentAge = policyStartAge; // Project cash value growth during premium payment period for (var i = 1; i <= yearsOfPremiumPayment; i++) { totalPremiumsPaid += annualPremium; projectedCashValue = (projectedCashValue + annualPremium) * (1 + cashValueGrowthRate / 100); currentAge++; } // Project cash value growth for an additional 10 years after payments stop var projectedCashValueAfterPaymentsStop = projectedCashValue; var ageAfterPaymentsStop = currentAge; for (var i = 1; i <= 10; i++) { projectedCashValueAfterPaymentsStop *= (1 + cashValueGrowthRate / 100); ageAfterPaymentsStop++; } var output = '

Illustration Results:

'; output += 'Total Premiums Paid (over ' + yearsOfPremiumPayment + ' years): $' + totalPremiumsPaid.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + "; output += 'Projected Cash Value (after ' + yearsOfPremiumPayment + ' years, at age ' + currentAge + '): $' + projectedCashValue.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + "; output += 'Projected Cash Value (10 years after payments stop, at age ' + ageAfterPaymentsStop + '): $' + projectedCashValueAfterPaymentsStop.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + "; // Loan Simulation if (desiredLoanAmount > 0) { if (desiredLoanAmount > projectedCashValue) { output += 'Note: Your desired loan amount ($' + desiredLoanAmount.toLocaleString() + ') exceeds the projected cash value ($' + projectedCashValue.toLocaleString() + ') at the end of the premium payment period. The actual loan amount available would be limited by your cash value.'; } var loanBalance = desiredLoanAmount; var totalLoanInterestPaid = 0; var annualPrincipalPayment = desiredLoanAmount / loanRepaymentYears; for (var i = 1; i <= loanRepaymentYears; i++) { var interestThisYear = loanBalance * (policyLoanRate / 100); totalLoanInterestPaid += interestThisYear; loanBalance += interestThisYear; // Interest accrues on the loan loanBalance -= annualPrincipalPayment; // Principal repayment if (loanBalance < 0) { loanBalance = 0; // Loan fully repaid } } output += '

Policy Loan Simulation:

'; output += 'Desired Policy Loan Amount: $' + desiredLoanAmount.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + "; output += 'Estimated Total Loan Interest Paid (over ' + loanRepaymentYears + ' years): $' + totalLoanInterestPaid.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + "; output += 'Estimated Net Cash Value (if loan of $' + desiredLoanAmount.toLocaleString() + ' was outstanding at end of premium payments): $' + (projectedCashValue – desiredLoanAmount).toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + "; output += 'Important: In Infinite Banking, your cash value continues to grow uninterrupted even when you take a policy loan. The loan is against the death benefit, collateralized by the cash value. The "net cash value" reflects the amount available to you after accounting for the outstanding loan balance. Once the loan is repaid, your full cash value is restored.'; } output += 'Disclaimer: This calculator provides an illustration based on the inputs provided and simplified growth assumptions. Actual policy performance, cash value growth, and loan terms can vary significantly based on the specific insurance company, policy design, market conditions, and individual circumstances. This is not a guarantee of future results and should not be considered financial advice. Consult with a qualified financial professional specializing in the Infinite Banking Concept for personalized guidance.'; resultsDiv.innerHTML = output; } .infinite-banking-calculator { font-family: Arial, sans-serif; max-width: 700px; margin: 20px auto; padding: 25px; border: 1px solid #ddd; border-radius: 8px; background-color: #f9f9f9; box-shadow: 0 2px 5px rgba(0,0,0,0.1); } .infinite-banking-calculator h2 { text-align: center; color: #2c3e50; margin-bottom: 20px; } .infinite-banking-calculator h3 { color: #34495e; margin-top: 25px; margin-bottom: 15px; border-bottom: 1px solid #eee; padding-bottom: 5px; } .infinite-banking-calculator h4 { color: #2980b9; margin-top: 20px; margin-bottom: 10px; } .calculator-inputs label { display: block; margin-bottom: 8px; font-weight: bold; color: #333; } .calculator-inputs input[type="number"] { width: calc(100% – 22px); padding: 10px; margin-bottom: 15px; border: 1px solid #ccc; border-radius: 4px; box-sizing: border-box; } .calculator-inputs button { display: block; width: 100%; padding: 12px 20px; background-color: #28a745; color: white; border: none; border-radius: 4px; font-size: 18px; cursor: pointer; margin-top: 20px; transition: background-color 0.3s ease; } .calculator-inputs button:hover { background-color: #218838; } .calculator-results { margin-top: 30px; padding: 20px; border: 1px solid #e0e0e0; border-radius: 8px; background-color: #eaf7ed; color: #333; } .calculator-results p { margin-bottom: 10px; line-height: 1.6; } .calculator-results strong { color: #0056b3; } .calculator-results em { font-style: italic; color: #555; }

Understanding the Infinite Banking Concept (IBC)

The Infinite Banking Concept (IBC), popularized by Nelson Nash, is a financial strategy that empowers individuals and businesses to become their own bankers. It revolves around the strategic use of a specially designed whole life insurance policy to create a personal banking system. Instead of relying solely on traditional banks for loans and savings, participants in IBC aim to recapture the interest they would typically pay to third-party lenders and redirect it back into their own financial system.

How Does Infinite Banking Work?

  1. Establish a High Cash Value Whole Life Insurance Policy: The foundation of IBC is a dividend-paying whole life insurance policy structured for maximum cash value growth, often utilizing Paid-Up Additions (PUAs). This design prioritizes early cash value accumulation over a high initial death benefit.
  2. Pay Premiums Consistently: Regular premium payments build the policy's cash value. This cash value grows on a tax-deferred basis and is guaranteed to increase over time, providing a safe and predictable savings component.
  3. Access Your Cash Value Through Policy Loans: Once sufficient cash value has accumulated, you can take loans against your policy. These are not withdrawals; your cash value remains intact and continues to earn dividends and grow, a principle known as "uninterrupted compounding." The policy's cash value acts as collateral for the loan, and the insurance company lends you money from its general fund.
  4. Repay Loans on Your Own Schedule: Unlike traditional bank loans with rigid repayment terms, policy loans offer flexibility. You decide the repayment schedule and amount, or even choose not to repay the principal (though interest will continue to accrue, reducing the net death benefit and cash value). The interest you pay on these loans goes back to the insurance company, which then contributes to its overall profitability and, potentially, higher dividends for policyholders.
  5. Repeat the Process: As you repay your loans, your cash value is replenished, allowing you to take future loans for other needs, effectively creating a continuous cycle of saving, borrowing, and repaying within your own system.

Key Benefits of Infinite Banking

  • Control Over Your Money: You become the "banker," deciding when to borrow, how much to borrow, and your repayment schedule.
  • Uninterrupted Compounding: Your cash value continues to grow even when you have an outstanding policy loan, as the loan is against the death benefit, not a direct withdrawal from your cash value.
  • Tax Advantages: Cash value growth is tax-deferred, and policy loans are generally tax-free. The death benefit is typically paid out tax-free to beneficiaries.
  • Guaranteed Growth: Whole life policies offer guaranteed cash value growth and a guaranteed death benefit, providing a stable financial foundation.
  • Privacy: Policy loans are private transactions between you and the insurance company, not reported to credit bureaus.
  • Liquidity: Access to your cash value is typically quick and easy, without the need for credit checks or lengthy approval processes.

Considerations and Criticisms

  • Initial Costs: Whole life insurance, especially when structured for high cash value, can have higher initial premiums compared to term insurance. It takes time for the cash value to grow significantly.
  • Complexity: Understanding and properly implementing IBC requires education and often the guidance of a financial professional specializing in this strategy.
  • Not a "Get Rich Quick" Scheme: IBC is a long-term financial strategy that requires discipline and patience. It's about building a personal financial system over decades, not generating immediate high returns.
  • Loan Interest: While you control the repayment, policy loans do accrue interest. It's crucial to understand these costs and manage repayments effectively to maximize the benefits.

The Infinite Banking Concept is a powerful tool for those seeking greater financial control and a disciplined approach to wealth building. It's essential to work with an experienced professional to design a policy that aligns with your specific financial goals and to understand all aspects of this sophisticated strategy.

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