When funding an Infinite Banking policy or a whole life insurance policy, there are various options to choose from depending on your financial goals and preferences.
The duration of funding a policy can range from a single premium payment to premiums payable over your entire lifetime.
The key is to maintain the policy as a non-MEC (Modified Endowment Contract) to preserve the tax advantages associated with a whole life policy.
Here are some common options for funding a whole life policy:
Single Premium: You can fund the policy with a single, large premium payment. This option fully funds the policy upfront, and no further premium payments are required. However, the single premium will exceed the MEC limit, and it would lose some of its tax benefits.
Limited Pay: With this option, you can fund the policy over a predetermined number of years, such as 5, 10, 15, or 20 years. After completing the premium payments during this limited pay period, the policy will be considered paid-up, and no further premiums will be required.
Level Premiums: This funding option involves paying level premiums for your entire life or up to a specified age, such as 100 or 121. With this approach, the premium payments remain constant throughout the policy’s life.
Customized funding options: Some insurance companies offer customized funding options that allow you to choose a flexible premium payment structure to suit your financial goals and circumstances. You can work with an Infinite Banking Practitioner to design a premium payment plan that fits your needs while maintaining the policy as a non-MEC.
The shortest amount of years to fund a policy while keeping it a non-MEC depends on the specific policy, your age, health, and death benefit amount. A limited pay option of 5 years is often the shortest funding period, but it’s essential to consult with an Infinite Banking Practitioner and confirm that the policy remains a non-MEC within the chosen funding period.
Keep in mind that the funding option you choose will impact the policy’s cash value growth, the amount of premiums paid, and the time it takes to build substantial cash value for Infinite Banking purposes.