Though infinite banking can be a useful strategy for building wealth, it’s not necessarily for everyone. Here are some things to consider when weighing if the infinite banking concept is right for you.

Qualifying for the right whole life policy

Not all whole life policies are the same. To make the most use of the infinite banking concept, you should look for a policy that can help contribute to the cash value of the policy or help pay your premiums.

For the strategy to work, you must qualify for an appropriate insurance plan. If not, the strategy may not work for your circumstances, explains the Corporate Finance Institute.

Cost of funding the policy

Whole life insurance policies are often more expensive than term life insurance. It requires the individual to be financially responsible enough to be their own banker. Make sure you can afford these higher premiums because if you fail to pay your premiums your policy can lapse. This strategy may be better for those who are younger and healthier that can meet the financial obligations over a long period of time.

Misinformation and confusion

The infinite banking concept can be confusing at first. Because of this, there’s more misunderstandings about how this financial strategy works and when it’s beneficial for individuals. That’s why it’s important to do your research and double check your findings with an insurance professional, or a qualified tax or legal advisor.