For Infinite Banking, the ideal policy is a specially designed, high cash value, dividend-paying, whole life insurance policy with a mutual company. But some mutual companies, including Ohio National, have recently demutualized. So what is whole life insurance demutualization, and what does it mean?

https://www.youtube.com/watch?v=TS9lWhrTpGU

Today, we’re going to talk about demutualizing and how it affects Infinite Banking policies.

You’ll learn:

How a mutual company worksWhy you want a mutual company for Infinite BankingWhy life insurance companies demutualizeWhat to do if your life insurance company demutualizes

Hopefully, we’ll cover the question on your mind. So, if you’d love to see what the future holds for Infinite Banking, join us for the conversation!

Table of contentsOhio National DemutualizationWhat is Infinite Banking or Privatized Banking?What is a Mutual Life Insurance Company?How Do You Choose the Best Company?How Does Whole Life Insurance Demutualization Work?What's the Reason for Ohio National Demutualization?Book A Strategy Call

Ohio National Demutualization

On March 23rd, a very prominent insurance company, Ohio National, announced their demutualization and planned merge with a Canadian company. In anticipation of the questions, we want to debunk and provide some clarity about what it means to demutualize, and how it should or shouldn’t affect you.

What is Infinite Banking or Privatized Banking?

Conceptualized by Nelson Nash, Infinite Banking is a strategy of accessing the cash value of an insurance policy for leverage. It wasn’t a new function, however his ideas were new. And so, he wrote a book called Becoming Your Own Banker.

By leveraging the cash value of an insurance policy, and borrowing against it rather than withdrawing from it, you can make your money do two jobs. A specially designed policy, for high cash value, with a mutual company, is the preferred method for privatized banking. 

What is a Mutual Life Insurance Company?

A mutual insurance company is a company in which policy owners are partial owners of the insurance company, rather than stockholders. As a partial owner, you are entitled to a portion of the company’s profits in the form of dividends. This also means that mutual companies are not beholden to investors. This allows them to operate on a much more conservative basis for long-term performance.

A stock company, on the other hand, does not pay dividends to policy owners. Instead, investors pay dividends to stock owners, who may or may not have a policy. As a result, stock companies have to make short-term, risky decisions to appease stockholders and keep stocks up. 

How Do You Choose the Best Company?

In the world of life insurance, it can seem like there is an overwhelming amount of options. Do you choose mutual companies or stock companies, direct recognition companies or non-direct recognition companies, etc. How do you determine which are the best life insurance companies?

First and foremost, we want to be clear that there are two main factors you should consider before anything else—the financial strength of the company, and the customer service. The former is important because you want a company that can meet its financial obligations. 

Life insurance companies commit to paying every policyholder a death benefit. So are they making risky choices with their finances, or being more conservative? Mutual companies tend to think long-term and hold more reserves than stock companies. Even within mutual companies, it’s important to look at financial strength.

Then, you want to look at customer service. How do various companies treat their policyholders? What are people saying? Because of the nature of permanent insurance, you’ll be working with a life insurance company for life. It’s important to know how their service is. 

How Does Whole Life Insurance Demutualization Work?

In the case of demutualization,