Can You Convert A Universal Life Policy To A Infinite Banking Policy?

The Infinite Banking Concept specifically recommends using dividend-paying whole life insurance policies with mutual life insurance carriers rather than universal life products like indexed universal life or variable universal life.

The reasons for this preference are rooted in the unique features, benefits, and long-term stability of dividend- paying whole life policies issued by mutual carriers:

Guarantees: Whole life insurance policies provide guaranteed cash value accumulation and a guaranteed death benefit, as long as the required premiums are paid. These guarantees offer policyholders a level of financial certainty and stability that is well-suited for the Infinite Banking concept.

Yes, you can convert a universal life insurance policy to a whole life insurance policy through a 1035 exchange, which allows you to transfer the cash value from one policy to another without incurring any tax consequences.

Here are the steps involved in the process:

Consult with an Infinite Banking Authorized Practitioner: Before making any changes to your existing policy, consult with a knowledgeable professional to discuss your financial goals, evaluate the costs and benefits of making the transition, and determine if a whole life policy is suitable for your needs.

Apply for a whole life insurance policy: Work with your insurance agent to apply for a whole life policy. This may involve additional underwriting, medical exams, and potentially higher premiums due to age or changes in health status.

Request a 1035 exchange: Once the whole life policy is approved and in force, request a 1035 exchange from your current insurance company. This tax-free exchange allows you to transfer the cash value from your universal life policy to the new whole life policy.

Complete the exchange: The insurance companies involved will handle the exchange of funds, transferring the cash value from your universal life policy to the whole life policy. The cash value transfer will typically be applied to the new policy as a single premium, reducing or eliminating the need for future premium payments.

Monitor your new policy: Once the exchange is complete, your whole life policy will be in force, and you can begin practicing Infinite Banking or using the policy to achieve your financial goals.

It’s essential to note that while a 1035 exchange allows you to transfer the cash value tax-free, you should carefully consider the potential surrender charges, fees, and other costs associated with the exchange.

Additionally, you should be aware of any potential differences in coverage or features between the two policies.


Information shared by Producers Wealth, Endless Legacy Solutions, or Karl Schnitzer is provided for general information purposes only and does not constitute accounting, legal, tax, or other professional advice. Viewers and subscribers should not act upon the content or information found here without first seeking appropriate advice from an accountant, financial planner, lawyer, or other professional.