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Infinite banking is a new approach to finance that lets you become your own bank. This method has been developed by economist Nelson Nash and gives you the flexibility to access your money anytime by borrowing from yourself and paying back into the account.

“Banking without borders” is a real possibility with infinite banking. With infinite banking, you never need to worry about credit checks, high-interest payments, or even having to apply for a car or student loan. You will simply be your own bank!


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Finding financial freedom is one of the most powerful goals for many of us, but the path can be long, winding, and full of potholes. With a little guidance, though, you can stay on the right track and make your way to the top. The Infinite Banking Concept may be the key.

How does the Infinite Banking Concept Work?

The Infinite Banking Concept is rooted in whole life insurance which for purposes of this concept is considered infinite banking life insurance. Unlike term insurance, whole life insurance is permanent, as long as the policyholder pays the premium. Moreover, unlike term insurance that doesn’t contain a cash-value component, Whole life insurance provides a lifetime death benefit and cash accumulation resulting from compound interest and dividends.

When the premium is paid, a portion of it is diverted to the cash value account where interest and dividends are earned on a tax-deferred basis. This accumulated cash value account is then available for you to be your own banker rather than paying interest to a lender. This allows you to recapture the interest you would pay if you purchased with cash (loss of interest) or a third-party lender.

How to Become Your Own Bank

If the infinite banking concept is something you’d like to take advantage of, certain guidelines are recommended for you to follow:

  • Start the infinite banking plan as soon as possible. Since premiums will be based primarily on your age and health, it certainly makes sense to purchase your whole life insurance while you are young and healthy. Remember, once your policy is issued, your premiums are locked in going forward.
  • Choose a mutual insurance company that has a stellar reputation of paying dividends on its participating whole life insurance.
  • Only purchase a policy that is “Non-Direct Recognition.”This type of policy provides you with dividend payments on the full cash value of your policy, not on the value net of outstanding loans.
  • Select the “paid-up additions” for dividend payments so your policy’s cash value account will grow faster and your bank will accumulate the funds you need sooner.
  • Make certain you choose a policy that provides a cash value rider so your beneficiaries will receive the death benefit plus the cash value of the policy.
  • Borrow the money from Your bank! When your cash-value account has the funds available to allow you to borrow, call the company and request the funds you require. Unlike traditional third-party loans, there will never be a credit check and you can borrow from YOUR bank for any reason.
  • Set up a schedule to repay YOUR bank. Even though you are not required to pay back your loan, you should repay it because the insurance company will charge interest (typically lower than banks and credit cards) on the balance of the loan. Moreover, the death benefit will be reduced by the amount of your outstanding loan(s).

The Pros and Cons of Infinite Banking

Yes, there are advantages and disadvantages to deploying your infinite banking concept. However, the advantages outweigh the disadvantages for most individuals who choose to be their own banker.

Pros of Being Your Own Bank


Borrow money for any reason
No credit checks
Cash value continues to grow while you are borrowing
You can contribute more than your established premium
Loans, dividends, and withdrawals are tax-exempt
Make purchases or lend money to friends or family
Loan interest is generally less than a traditional loan
You are providing a guaranteed death benefit for your beneficiaries

The Cons of Being Your Own Bank


Whole life insurance premiums are higher than Term or Universal Life
Unless you select the appropriate cash value rider, the company will keep the cash when you die.
Outstanding loans will be deducted from the death benefit
Individuals who have severe or multiple health conditions may not qualify for a whole life policy
The amount you pay in premiums could earn more interest if invested in traditional investments
Your cash account will take time to earn interest and dividends


Generally speaking, the infinite banking concept makes better financial sense for individuals with a very strong cash flow and have an extremely strong net worth.

Since whole life insurance premiums are very high compared to other life insurance products so if your budget doesn’t have room for rather high insurance premiums or you don’t qualify for a standard or better risk classification, you won’t be a candidate for being your own banker.

Moreover, building adequate cash value will likely take at least a few years which means you’ll need to be committed to being your own bank for it to be a successful strategy.

Which Type of Whole Life Insurance Works Best for the Infinite Banking Concept?

There are many types of whole life insurance products in the marketplace but only a select type will work for infinite banking. We recommend that you employ the following guidelines when selecting an insurer to do business with:

  • Make certain the insurer has a very high rating with all of the insurance company rating services.
  • Only use a “participating” whole life insurance policy that will earn dividends.
  • Only select an insurer that has a positive history of dividend payments.
  • Make certain the whole life product you select is a “non-recognition” product so you will receive dividends according to the full value of your cash value.
  • If possible, purchase a 10-pay whole life policy so that the policy’s cash value will accumulate rapidly and you’ll be able to “open your bank” sooner rather than five or more years down the road.


Frequently Asked Questions

How soon can I borrow money?

This will depend on how you fund your whole life policy. If you purchase a single premium whole life policy you can borrow as soon as your policy has been issued. If you make periodic premiums into your policy, it can take 3 years or longer.

Why should I choose a mutual insurance company?

Since mutual insurance companies answer to their policyholders rather than stockholders, profits are returned to the policyholders. This allows your policy to build cash value with dividend payments as well as interest.

Is the death benefit in my policy guaranteed?

As long as the premiums are paid to the life insurance company, your policy will remain in force. Your death benefit is guaranteed but can be reduced by the amount of any outstanding loans against the policy.

Are the premiums for my whole life insurance flexible?

To an extent, yes. You must pay the minimum premium due on your policy but you can always pay more than the minimum. The more you contribute to your policy, the quicker your cash-value account will accumulate funds that you can borrow.

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