LIFE INSURANCE w/ Cash flow? infinite banking?

[fantheflame]

My father,69, is getting ready to retire fully and wants to begin traveling and living a more simple life away from his own business he started over 30 years ago. He never set up any retirement plan, life insurance e.t.c. His saving grace is that he has equity in his home that he is considering taking out to live off that. But as a somewhat experienced financial person myself,I know this is not the way as it will eventually run out and he will be back to square one.

I'm thinking of using that equity he has to invest in a life insurance, but have heard there are ways to create it where it has infinite banking.. anyone know about this?

EDIT: Infinite banking is not the way to go as it's too late for him

Is there a way he can invest 100-200k in his life insurance and have some money come out of it as his cash flow?

Thanks again in advance!

 

[resjudicata]

@fantheflame No. As someone that has a license to sell life insurance… no, just no.

IF, and it’s a big IF, you want to truly utilize “infinite banking” it needs to be setup way before 69, and you definitely don’t want to borrow money from your house to set it up.

Do you know what your dad’s budget is? Do you know what his cash position is? Do you know how much social security he gets monthly? If he has a paid off home he could probably easily add another $1,000 a month to his monthly budget and not use up all of his equity.

 

[rayeli]

@fantheflame No. This is not how Life Insurance or Infinite Banking work.

I think you misunderstand. Infinite Banking does not generate cash flow - cash flow passes THROUGH it. If you have no cash flow to begin with, you don't have Infinite Banking.

There are insurance products (IE annuities) that may be able to help your father's situation as far as mitigating longevity risk, but that's about it.

 

[fantheflame]

@rayeli Thanks! Annuities was another idea as well!

 

[123thatsme]

@fantheflame If you go the annuity route, I suggest you get the minimum annuity he could live off of (and do a ton of shopping around for this annuity)

Then with the rest of the capital, consider following the advice of the person below who recommended dividend stocks (don’t reinvest the dividend, instead have him take it so that every 3 months he gets spending money on top of his annuity).

 

[tabinek]

@fantheflame You can… but why? Does your father need the insurance?

It’s not like the infinite banking concept creates some magical reserve of cash. The idea is that you pay into the policy growing the cash value. When you need access to the cash you take a policy loan and the policy acts like your bank for the loan.

If your father is just going to be spending down his assets then the Infinite Banking concept does not make sense.

 

[fantheflame]

@tabinek Not 100% sure, but I would assume it would be prudent to have the life insurance as he his health slowly declines.

Ok so no Infinite Banking for him, just wondering how to get his money building enough interest for him so he can live off the excess

 

[tabinek]

@fantheflame Good mutual policies pay dividends in the 5% range but the cost of insurance offsets that.

 

[javelinda]

@fantheflame Don't even think about it! First off never borrow money to invest and secondly your father is too old for an IUL his mortality fees will bankrupt your policy and he will lose everything. Stay away from life insurance as an investment. This is a cautionary tale of what happens when you don't plan for your financial future earlier on in life. He's gonna have to eaither sell his home and downsize and live below his means or get a HELOC to start a business that maybe you can help him with or get a part time job to supplement his social security and work until he pases. I know that's probably not what you wanted to hear but it's the truth.

 

[adnerb]

@javelinda IUL isn't whole life insurance or Infinite Banking, despite what the ticky tockers say.

 

[vermillion]

@fantheflame “As a somewhat experienced financial person myself”

We got some serious Dunning-Kruger effect going on here

 

[rayeli]

@vermillion Maybe recently laid off from SVB?

 

[silvina]

@fantheflame You can take any liquidity and move it into a fund that can help in retirement, but it can’t be touched for at least 5-10 years for it to yield any type of substantial growth. It depends on his current situation and when he would need to withdraw the funds. IBC won’t be ideal for him.

 

[vermillion]

@fantheflame No way I would tell a client to do that at 69.

 

[fantheflame]

@vermillion Anything you would tell a client then at 69?

 

[vermillion]

@fantheflame They would be better off looking for lifetime income options to supplement social security. Reverse mortgage (HECM) or an annuity with a lifetime income rider.

But since the equity is tied up in the house, it would be expensive to get the money out. Honestly not great options available

 

[fantheflame]

@vermillion Ok will look into these..

I agree. Now you see why I'm asking for helpful options as he didn't secure his financial future and freedom before this

 

[sharon_m]

@fantheflame Putting 200k into Schd or VOO would yield about 1k monthly in dividends.

 

[traviscig]

@fantheflame Look into an annuity with a guaranteed lifetime income rider.