Becoming Your Own Banker, Part 28: Infinite Banking Definitions

Have you ever felt like you’re on a financial hamster wheel, constantly spinning but never gaining traction? Join us as we unpack the epilogue and glossary of Nelson Nash’s “Becoming Your Own Banker.” It’s a journey through the intricate philosophy of IBC, as we cover Infinite Banking definitions that shows how effective money management can reduce your reliance on financial institutions—empowering you to take charge of your financial destiny.

As we comb through the fine print of Nash’s teachings, we illuminate the idea that banking extends well beyond the brick-and-mortar institutions we’re accustomed to. It’s a profound discussion that traverses the importance of adhering to principles and contract terms, the influence of family values on Nash’s strategies, and the critical role of capital in both your personal finances and the broader economy. Imagine building a financial foundation so robust that you negotiate life’s transactions from a position of strength. We reveal how this can be your reality through the strategic use of whole life insurance as a personal banking system.

Wrapping up with a profound understanding of policy ownership in mutual life insurance companies, we explore how this positions you uniquely to reap dividends and control the banking process. It’s not just about being on the receiving end of profits; it’s about ownership and the control that comes with it. Tune in as we guide you through the mechanics of life insurance policies, the growth of cash value, and how paying interest on policy loans can play into the success of your financial strategy. Our conversation is more than a lesson; it’s a revelation on how to unlock the full potential of Infinite Banking and claim autonomy over your financial future.

Want to be successful with Infinite Banking? Make sure you understand your Infinite Banking policy by knowing these terms and definitions.

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The Truth About Infinite Banking

[7:50] “When you think about Infinite Banking, it is not a product. I think so many times people think this is a product. ‘I can buy this life insurance that does a protective job in my financial life.’” 

Whole life insurance is a product. This much is true. However, Infinite Banking is a concept and a process that you apply to the product. It’s entirely possible to have whole life insurance without ever employing the Infinite Banking concept. And so you have to be careful that you don’t simply buy the product and stop there. You’ve also got to implement good strategies and habits so that you actually execute the banking function in your life. This takes work, education, and guidance.

[13:19] “You put a tool in the hand of somebody that doesn’t know how to use it, they’re going to break the tool. So Infinite Banking is a tool. If you do not follow the basic tenets, it could fail on you. And what does fail mean [in this case]? It means the life insurance doesn’t stay in place. But not because the concept was bad, [but] because you did not follow through with what the contract said it was going to be.”

Infinite Banking Definitions

As we reach the end of our series on Becoming Your Own Banker, we reach the Glossary, in which Nelson defines the major terms and words used throughout the book. This can help you can a deeper understanding and appreciation for what’s happening within the Infinite Banking “Concept,” so that you can apply it with greater understanding.

Definition of Banking

If you’re going to implement Infinite Banking, first you want to identify regular banking. The Webster definition of banking is “the business of a bank; originally restricted to money changing and now devoted to taking money on deposit subject to check or draft, loaning money, and credit, and any other associated form of general dealing in money or credit.”

As you can see, banking isn’t just about storing your cash or using your cash. It’s ALL functions of money dealing. And you cannot control that for yourself when you solely rely on a bank. By adding whole life insurance into the mix, you give yourself another option for loans, money storage, growth, and more. 

Definition of Capital

Webster’s Dictionary defines capital as “accumulated possessions calculated to bring in income.” These accumulated possessions can, according to Webster’s Dictionary, include assets, resources, sources of strength, and advantages that aid in furthering a pursuit. 

[21:50] “The purpose of capital is probably the most important part. The purpose is to accomplish an end or further a pursuit. What could an end or pursuit be? I don’t know—family flourishing. [Or] could it be a particular dollar amount? Could it be a retirement income stream? 

What you’ll note is that the money or assets don’t have value, and don’t become capital, until they’re employed. Capital isn’t money you lock away, never to use. Capital is something you deploy to bring you even greater opportunities. So cash value is capital because it can be deployed for investments, for family loans, and other “pursuits.”

Definition of Capitalization Period

The capitalization period is a term specific to IBC and therefore does not get its own Webster definition. However, Nelson describes this as the length of time that is required to create your own pool of money for your banking system. In other words—funding your whole life insurance policy. 

While you can continue to fund your policy long after the capitalization period, the capitalization period refers to the period when you’re sole focus is injecting your dollars into the whole life insurance policy. The reason it takes time, even if you HAVE the money, is because you want your policy to build and create momentum.

This stage of your policy is incredibly important and is not something to be skipped. By properly capitalizing your policy, you create a firm foundation for yourself and your banking system. If you start leveraging too early, you can cause issues for yourself.

Definition of Cash Value

The cash value is the accessible portion of your death benefit, that you can find “inside” your policy for use during your lifetime. 

Cash value grows to meet your death benefit over time so that by endowment (when the policy pays out if you have not yet passed), the cash value is equal to the death benefit. This is because cash value is a function of the death benefit—it is not an additional sum, nor a separate account. 

If you’re younger, your growth curve will be longer than someone who buys a policy later in life, because you’ve got much more time for your cash value to rise and meet the death benefit. 

Think of cash value as the equity of your death benefit. It’s not separate, it’s just the portion of your death benefit you’ve “unlocked” for personal use by making your premium payments. 

Book A Strategy Call

Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We can help!  Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/, and find out how Privatized Banking, alternative investments, or cash flow strategies can help you accomplish your goals better and faster. That being said, if you want to find out more about how Privatized Banking gives you the most safety, liquidity, and growth… plus boosts your investment returns, and guarantees a legacy, go to https://privatizedbankingsecrets.com/freeguide to learn more.