Policies for whole life insurance have a cash surrender value, also called cash value. Your policy’s cash value is the amount of your death benefit that the insurance company is transferring to you as cash.
The cash value is what the insurance company usually pays you if you decide to terminate your coverage while you’re still alive. On the other hand, as long as your insurance payments are paid, you can use the cash worth of your policy as collateral for both personal and business loans.
Whole life insurance, in contrast to term life insurance, provides benefits to the policyholder while they are still alive as well as financial support to your beneficiary following your death.
Both participating and non-participating whole life insurance are available. The primary distinction between the two is that participating whole life insurance policies let you share in or receive dividends from the insurance company’s profits. With non-participating policies, the insurance provider does not pay profits or allow you to participate.
Every time the insurance provider pays dividends, your cash worth grows if you utilize a participating whole life insurance policy for Infinite Banking. Additionally, it grows when you pay insurance premiums and earns a fixed interest rate.
Your “bank” essentially consists of a part of premiums paid (your money) plus guaranteed interest received plus prospective dividends (money from your insurance company).
Your dividend-paying whole life insurance policy serves as a safe haven for your funds, allowing them to grow tax-free and at a better rate of return than standard bank accounts that offer meager yield.