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Anyone have a whole life insurance policy they use as a savings account?

I've been told by my financial adviser about investing in a whole life insurance policy with a company instead of an IRS sponsored program and using the money in it as a fund to borrow off of while the account still pays dividends and I simply pay the money back into it. Kind of using it as your own bank so you don't have to borrow money from a bank and pay them back the interest. You pay yourself back what you WOULD pay a bank on principal and interest and you make your money grow. I have yet to see or hear any real life feedback on if this system really works. Anyone have a policy they use as their own bank and if so how effective is it?

Public Comments

1. Bull. I'll bet your financial adviser gets a nice commission if he/she sells you a whole life policy. For 98% of people, whole life insurance is a lousy "investment." And what exactly is an "IRS sponsored program"?
2. I don't think there is any such thing as an IRS sponsored program as your financial adviser suggests. Perhaps your adviser is talking about an IRA account and similar pre-tax savings plans which saves you taxes but is not "IRS sponsored". The problem with using an insurance account for a "private bank" is that the vast majority of people don't pay back the money. Basically, your adviser is telling you to do the same thing with your insurance policy that people did with the equity in their houses. Borrow from it. The results could be the same for you as for all the people who borrowed on their equity. They wound up owing far more than the house was worth. My personal opinion is that your adviser has an interest in what you do, will make money off of you if you do what he wants. You need someone who is more independent and objective.
3. Okay....I'll try to give you the simple answer. Whenever you make a purchase, a major one especially, you typically do one of two things. Either finance the purchase thru a lender and pay them the interest, or save up the cash and pay for the product outright, therefore losing interest that you could have earned. The earning interest comes about because if you pay into a whole life policy and borrow against it to purchase the product, as you pay yourself back, you are still earning interest since you are borrowing against it, and not actually withdrawing the cash. You are the owner of the policy, and at the end of the year dividends are paid. Go to www.infinitebanking.org/ and you will read a wealth of information. It really is a well kept secret because the big banks loose out when your not paying them interest. Read the material and make a decision for yourself. We have policy's for each family member and have used the cash value to purchase our teenagers first cars.
4. I have a whole life policy. I have never borrowed against it because I would be charged their rate (it is earning 6%) plus a couple points. You would think they would only charge me 2% since they are not covering (paying interest on) my borrowed amount; so honestly I don't really know how it works, although I inquired once and decided to go to my bank/credit union. P.S. The idea of life insurance sucks. You can't live with it and you can't live without it. On term policies you are paying out, with no return (unless you die.) With whole life you eventually build up your cash reserves to the point where you could recoup all your payments, but that means giving up the face value which is emotionally impossible because you know you are guaranteed to die some day. And if you mis-guess on when to let the policy cannibalize itself through self-pay and outlive the "annuity" you die as if you had an expired term policy.
5. Your financial adviser is a complete idiot! First, insurance is insurance, not a vehicle for investment. Next, while you are "paying" yourself back, you are also being charged interest by the insurance company.............ON YOUR OWN MONEY!! Yes, paying interest on your own money. How crazy is that? Thus, you will earn a tad interest on this whole life policy, and when you borrow, they will sock it to you. Moral of story: Cancel this policy, and open a level term policy for as far out as possible. There is no interest built on this policy, but so what. Put the savings you will have(as a term policy can be as much as 9 times less than whole life) into a mutual fund, and in years ahead, you will congratulate yourself.