Infinite Banking Concept - The Golden Key that Unlocks Your Financial Life

Infinite Banking Concept (IBC): The Golden Key that Unlocks Your Financial Life

You play a big game, and you want your money to keep pace. Being in control is essential to you, and your money is no exception.  You don’t have time to be strung along every year, hoping for better returns. Instead, you want a system that works as long as you live, improving over time like a fine wine. Using your savings to mimic “the bank” with Infinite Banking fits your criteria.

Privatized Banking is a golden key that unlocks and improves every other area of your financial life. With it, you reduce taxes, increase safety and liquidity, while earning competitive growth with built-in contractual guarantees. This elevates your ability to perform at the highest level in your life and business.

Today’s article will walk you through the building blocks and what it does for you.  Then, we’ll show you this system is a strategy that you do, not just a financial product you buy.

What Is Infinite Banking?

What Is The Infinite Banking Concept?

Infinite Banking is a process of reclaiming the banking function in your life. You become your own banker by creating your own banking system with dividend-paying whole life insurance.

The first thing that makes this concept stand head and shoulders above the sea of financial products is that it is more than a product.  It’s a strategy for using a particular product—a whole life insurance policy, to be exact.

Rather than comparing it to a particular make and model of a racecar, it’s more like a particular style of racing in that car.

Before we dive into the nuts and bolts of how it works it is important to see how it fits into the bigger picture and why it’s relevant to your life.

Where The Infinite Banking Concept (IBC) Fits into Your Cash Flow System

Privatized Banking

The Infinite Banking Concept is just one step in the greater Cash Flow System.

It’s the peanut butter to your cash flow sandwich.

Infinite banking is sandwiched between Stage 1, where you’re being more efficient and keeping more money you already make, and Stage 3, where you’re making more from your investments.  It’s what makes the sandwich a sandwich, not just two slices of bread.

While it’s nestled into Stage 2, Protection, it also improves everything else around it.  Infinite Banking helps you keep more of the money you make in Stage 1, amplify your cash-flowing asset strategy in Stage 3, and accelerate your Time and Money Freedom.

Why The Infinite Banking Concept Is a Better Place to Store Cash

1) Provide Safety, Control, and Certainty

Infinite Banking will solve your risk and volatility problems as a place to store your cash where it’s safe and won’t lose value.  This gives you control.  You don’t have to wonder if your personal bank will be there tomorrow, or what it will be worth.

2) Accessibility

Infinite Banking Concept - The Golden Key that Unlocks Your Financial Life

Your money is liquid.  That means you can access money when you need it, without barriers or penalties.  You won’t have to apply for or beg to use your own money.  Instead, it’s as simple as, “It’s mine.  I want to use it.  Please send me a check.” and the check shows up in your mail.

3) Emergency/Opportunity Fund

Whether you want to buy an investment property, do a business expansion, buy-out another business, or even cover a medical emergency or home remodel, you have access to capital. Your money isn’t segregated, imprisoned, or quarantined.  You can use it for whatever you want, whenever you want to use it.

4) Uninterrupted Compound Growth

It provides an alternative financing source outside of banks, credit unions, credit cards, or paying cash for major purchases.  Instead of your only payment options being limited to loans and interest payments (Spender) or paying cash and giving up the ability to earn interest (Saver), you gain a third option.  You get to earn interest, even while you’re using your cash (Steward).  Life insurance policy loans allow you to become your own banker, earning compound interest without interruption, even while you put your money to work in another investment.

5) Competitive Rate of Return

Instead of the dismal .08% growth on bank savings that makes it seem worthless to keep cash, your cash grows faster.  With Infinite Banking, you earn a rate much higher than other safe, liquid assets provide.

6) Reduce the Interest You Pay

Instead of paying a higher interest rate on uncollateralized loans, you get access to lower rates.  How? This concept serves as the collateral that’s your ticket to lower rates and financing costs.  Because you pay lower rates, you keep more of your dollars.

7) A Debt-Free Weapon

Whenever you have enough assets to pay off your loans, even if you haven’t done so, you’re not in debt.  When you build an Infinite Banking system, you’re gaining a valuable asset that you could use to pay off loans.  This doubles as a secret debt-free weapon.

8) Tax Benefits

Usually, the growth of your money incurs a growth of your tax bill. Instead, the growth inside is tax-advantaged.  This shrinks your future tax liability and cuts unnecessary money leaks, so you keep more of your money.

9) Shrinks Opportunity Cost

When you stop losing so many dollars to interest and taxes, you don’t forfeit what those dollars could have done for you.  Instead, you keep the dollar, put it to work, and maximize its potential.

10) Increases Protection

At the heart of Infinite Banking is a dividend-paying whole life insurance policy, which protects your income and ability to create wealth, whether you are here to see it through or not.  It protects your human life value and your livelihood, ensuring that not even death can prevent you from building wealth.

As a private contract, it has built-in privacy because there is no public database where individuals can look up how much life insurance an insured has.

Also, because Infinite Banking can be used in business as well, it can fulfill the role of key man insurance, buy-sell agreement funding, or serve as an executive bonus.

11) Each Dollar Does More Than One Job

One of the features of The Infinite Banking Strategy is the ability to harness the power of the same dollars over and over again. This keeps your money in your personal economy. In all other tools, once you use the dollars, they are gone forever, and you’re never able to use them again.  You get to recycle the same money and use it an infinite number of times.

12) Peace of Mind

Having money you can access when you need it fences out worry and stress.  This gives you an abundance mindset that helps you focus on providing value and making more money.

13) Legacy Transfer

The Infinite Banking Strategy allows for one of the most efficient methods of transferring your legacy to the next generation.  It keeps your estate intact, bypassing probate and arriving to your beneficiaries income-tax free so they won’t lose huge chunks of your estate in the process.

If Those Aren’t Your Goals, the Infinite Banking Concept Is Not For You

So, what’s the secret? Those sound like some pretty tall claims.  How does Infinite Banking do all this?

Now, if these 12 benefits energize you, and make every fiber of your being say, “Yes, that’s exactly what I want to create!” then dig into the next section.

But if those are not your goals, I give you the permission to put down this article right now and free up the time you were planning to spend reading.  How it works is only vital if you want what it does.

At the risk of being a silly example, you don’t care much about how a rotating paddle with holes works, unless you know that we’re talking about a KitchenAid, and you just so happen to have a goal of making mouth-watering, fresh, chocolate chip cookies.  Given that context, now the instructions on how to use the KitchenAid are going to be meaningful and relevant to you.

So, let’s walk through the basic building blocks of Infinite Banking. You’ll see how creating a personal bank with Infinite Banking fulfills the promise of being a golden key that unlocks and improves every other area of your financial life.

Infinite Banking: A Process That You Do

IBC is not just a concept it is a whole cash flow system, or process, of money management. It has two critical components:

  1. The product design itself: a Specially Designed Whole Life Insurance Contract (SDLIC), AND
  2. The way it’s used: the strategies to utilize the contract to do the most with your money

Unfortunately, the way most people think about using whole life insurance policies has caused them to see far less than its potential.  They look only at the features of the product, without considering how to use it. Instead of using it to its fullest capacity, they do the equivalent of buying a U-Haul that could provide transportation and income, and then leave it parked in the garage.  Just like an income-producing truck, SDLIC is meant to be used.

Please understand, buying a product, no matter how good it is, will get you nowhere without the right strategies to use it.  And the right strategy, no matter how ideal, will get you nowhere without the right principles.

The reason I emphasize this point is that everything in your financial life must start with a principle.  You need to be crystal clear on what you want to accomplish and why.  Then you can design the strategy and system to do that. Finally, you can select the right products that work best to get the job done.  But if you start with products before you have a north star in your financial endeavors, you’ll forever be chasing your tail, not really knowing whether you’re getting closer to your goals.

So, The Infinite Banking Strategy isn’t something you buy, it’s something you do.  And it just so happens to help you do a lot of things really well. If you have the right mindset.

What Makes Whole Life Insurance the Perfect Vehicle for the Infinite Banking Concept (IBC)?

Let’s break down the four non-negotiable elements of whole life insurance policies, the significance of each, and find out what it does for you.

The main ingredients are:

  1. High cash value
  2. Dividend-paying
  3. Whole life insurance contract
  4. With a mutual company

High Cash Value

R Nelson Nash, the father of Infinite Banking and author of Becoming Your Own Banker, famously says that whole life policies have been misclassified.

The reason? Classification should happen along the lines of the primary characteristics of the thing.  And when you think about life insurance, you’re usually thinking about the death benefit that your loved ones get when you die.

But when we look at a whole life insurance policies for Infinite Banking, the cash surrender value takes center stage.

So, what exactly is cash surrender value?  It is the portion of your death benefit that is available to access and use while you’re alive.

Cash surrender value is very similar to the equity in a house.  The home value itself is like the death benefit.  The cash surrender value is like the equity.  As you pay down the principal of your mortgage, you build equity.  The more money you put in, the more equity you build.  Cash value, like equity, is an asset that you can use (except it is much more accessible than home equity).

This cash storage and savings function is the defining purpose of SDLIC when you’re planning to use it for Infinite Banking.  You can access and tap this asset for any type of emergency or wealth-creation opportunity that arises in your life.

A Place to Store Cash

Infinite Banking Concept - The Golden Key that Unlocks Your Financial Life

The crucial questions become, what is the best place to store my cash during pauses in use, like when you’re building up capital for an investment, waiting for the ideal investment, or holding it in reserves?  Compared to how much I put in, how much can I use, and how quickly?  How does it grow over time?  How confident can I be of its value in the future?  And how easily can I get to it and use it?

And you may be surprised to learn that an SDLIC’s cash value outperforms every other savings tool we’ve assessed – from savings, checking, money market accounts, and CDs – with competitive growth rates, more safety, and more access to your capital.

Circling back to the established fact that this is a participating whole life insurance policy, its special design is what allows it to build high cash early in your policy.  We aren’t talking about a typical whole life policy that can take decades to slowly build cash like the undetectably incremental process of metamorphosis.  Instead, we are using a whole life policy that front-loads the cash value, so your growth is more like the launch track on a roller coaster that accelerates the train to its full speed quickly.

With Infinite Banking, the insurance component that we are maximizing is the cash value, a place to store liquid capital that is better than a traditional bank.


Additionally, the ideal whole life policy for an Infinite Banking Strategy also has maximum long-term growth.  Part of this growth is accomplished through receiving dividends, the distribution of excess profits. When dividends are added to your policy, this input adds to the cash value pool.

Whole Life Insurance Policies

As you probably are aware, there are several types of life insurance.

Term life insurance covers you for a specific period of time, usually between 5 and 30 years.  It provides a death benefit only.  Because term life insurance doesn’t give you access to capital you can use, it cannot be used for Infinite Banking as a place to store cash.

For most of the other types of insurance, in addition to the death benefit, you gain a savings component inside these policies, where a portion of your death benefit is available to you in the form of cash value.

There are multiple types of permanent policies, namely, whole life, universal life, and variable life, with additional variations like equity-indexed universal life, and variable universal life.

Here’s what you need to know:

  1. Whole life covers you for as long as you live.  It offers guarantees in mortality charges and interest, with additional dividends on top of the guarantees. The guarantees make it an ideal, dependable tool to use for Infinite Banking.
  2. Universal and variable life do not have sufficient guarantees to be used for Infinite Banking.  Universal life is more flexible, with interest earned by short-term money rates, but the mortality charges increase with age.  Variable life includes mortality charges that can be either fixed or increasing, with a return that is determined by the stock market performance.  Some of the malfunctions that have caused these plans to go awry are an increase in mortality cost that exceeds the growth of the policy, requiring more premiums to be due than originally illustrated, or a stock market crash dragging down the value of an asset that was supposed to have certainty and stability.


One of the reasons whole life is so attractive is that it offers the guarantees of being a contract.  And these guarantees are extremely valuable to you because they lay out the minimum future values you can expect, giving you a lot of certainty for the future.

You have guaranteed premium payments, which are the dollars that you pay into the policy to keep it in force.  The premium payments in whole life policies never go up or increase.  You’ll never have a surprising moment where you wake up and have a higher premium due just to maintain the performance.

A whole life policy gives you a guaranteed death benefit. When you begin a policy, you’ll see every year from your current age out to age 121 with a guaranteed benefit amount that will be paid out when you die.  The age of 121 is a place marker called the age of endowment.  It’s significant, because although no one alive today expects to live that long, if you were to do so, you would receive the full death benefit at that time.

Additionally, the whole life policy has a guaranteed cash value.  This is the minimum amount of your death benefit that you will be able to access and use. And the guarantees are a rock-bottom value.  As long as you pay into the policy as planned, you’ll have at least the illustrated minimums available to you in any given year.  The guaranteed value is based only on the internal growth of the policy from interest.  It does not add the highly anticipated dividends, which are subject to the current year’s profitability.

With a Mutual Company

We’ve talked about dividends, but let’s look at what makes them possible: it’s the ownership structure of the life insurance company itself.

With a mutual life insurance company, the policy owners are owners of the company.  By contract, the insurance company must pay out profits to its owners.  This return of profits is added to your policy as a dividend.

Dividends are shown in a separate section of an illustration because they are not guaranteed.  You’ll see an expected dividend payout, which may be more or less, depending on the actual profitability in real time.  Although dividends are not guaranteed, they are highly anticipated. In fact, the mutual companies that we work with have paid out dividends every single year, for over 100 years, even throughout the Great Depression.

When you’re a policy owner with a mutual company, these dividends are an extra boost that accelerates your long-term growth.

In contrast, a stock company has stockholders who are the primary stakeholders of the company.  In a stock company, profits are distributed to shareholders, not to policyowners.

The reason you want to ensure your policy is with a mutual life insurance company is that they will have a sole allegiance to the policy owners. Everything the company does benefits policyholders directly.

What Makes Whole Life Insurance Cash Value Such a Great Vehicle for the Infinite Banking Concept?

Now that we’ve outlined the 4 key features of a whole life insurance contract, let’s look a little deeper into the growth, safety, and liquidity of this cash value that makes it valuable to you.


One of the most fascinating mechanisms inside of a whole life insurance contract is how your money grows.

Within the policy, you earn a competitive, tax-free return.  Current policies are earning between 3 – 5%, net of all taxes and fees, over a 30+ year period, historically performing 2 – 3 basis points above savings account rates in the same period.

What makes this possible?  While it may seem too good to be true, it’s far from magic or wizardry.  Life insurance companies value stability, certainty, and conservative guarantees over risk.  Their calculating stewardship works more like the tortoise in the legendary Aesop’s fable of the tortoise and the hare.

When you place your premium dollars into the policy, the life insurance company invests those dollars conservatively, with a long-range view, so that they can guarantee a return to policyowners.  To accomplish this, the insurance company selects a portfolio primarily consisting of investment-grade corporate bonds and real estate.

Then, the company covers its costs: administrative overhead, agent commissions, and most significantly, the cost of paying out death claims.

After accounting for growth, costs, and maintaining appropriate reserves, excess profits are then distributed to policyowners as dividends.  From a profitability standpoint, it’s to your benefit for the insurance company to be profitable.  Higher profits mean you, as a part-owner of the mutual company, get a higher dividend.

The dividend is then added to your guaranteed interest growth, to make up the total cash value in your policy.


It’s important to note that whole life policies grow tax-deferred.  It can be accessed and used without paying tax, and the death benefit is paid to your beneficiaries, income-tax free.  With whole life insurance policies, you are truly paying tax on the seed, and not the harvest.  (Aside from some improper uses, including withdrawals over the cost basis, or MECing a policy, which would change the tax status.)

In taxed assets like CDs and stocks, you owe annual taxes on the gains.  That means that in taxable accounts, your returns are not the actual return, since you still have to subtract out the taxes owed before you arrive at a true return.  For example, a 6% taxable return in a 30% tax bracket is a real return of 4.2%.

However, once you place your already-taxed dollars into the policy, you don’t pay tax again, as long as you use the policy correctly*.  The growth rate you see is the final rate.

This gives whole life insurance growth a leg up over taxable accounts, because a lower, non-taxable return, will outperform a higher, taxable return.

Net Returns

Cash values are always listed net of all costs, so it’s an actual bottom line, or net-net-net return. Taxes don’t apply, and costs have already been accounted for.

Long-Term Actual Growth

A Whole life insurance policy is a long-term tool, and its performance and growth should always be viewed with a long-range perspective.

When you look at the expected performance over the next 30 years, or the actual, historical performance of a specially designed policy that’s been in force over the last 30 years, you can compare the total cash value against the total capital outlay to derive a rate of return.

This is where we are finding the 3 – 5% returns.  In the long-range performance.  Actual returns in the early years will be negative, followed by increasing growth rates over time.

In the first few years, many of the costs are front-loaded, causing a lack of liquidity.  Typically, somewhere between years 5 – 9, the policy will cross the break-even point, where the total cash value begins to exceed the total premiums paid in.  Beyond that point, growth continues.

Generally, insurance company growth rates tend to follow the bond market.  Today’s low interest-rate environment has also repressed the growth rate of policies, and we’re seeing much lower growth than policies from 30 years ago.  However, as interest rates rise, a subsequent increase in growth could be expected.


Money that you store in a Specially Designed Life Insurance Contract can be thought of as a savings tool, where money is safe and liquid.

It is not an investment.  As such, it is not subjected to market risk.

Every time interest or dividends are added to your policy, the current, real-time cash value becomes the new floor, and it will never drop below that value, but only rise over time.

Adding an additional layer of safety, in most states, your cash value is safe from scrutiny or seizure by creditors, predators, lawsuits, and the government.


Another of the intriguing inner workings of a life insurance policy is the liquidity – your ability to access your money.

When you have cash value, you are able to access it with a guaranteed loan option and unstructured repayments, stacking up to a truly hassle-free borrowing experience.

This is possible because as a part-owner of a mutual company, you have first priority to your capital.

You Don’t Use up Your Cash Value, You Borrow Against It

Of several options, the most advantageous way to access capital is to utilize a life insurance loan.  Only, instead of borrowing from your cash value, you borrow against it.  You use your cash value as collateral, borrowing against your policy, and using the insurance company’s money instead.

Yes, you pay interest to utilize capital in this way, because all capital has a cost.  Being the banker and the borrower means, you don’t only pay interest, you also get to earn interest, because all of your collateral remains intact, continuing to earn interest and dividends, without interruption.

That means that your money can reap the rewards of long-term growth, even WHILE you use that money in another place.  You really get a multiplier effect when you use a policy loan to invest in a cash-flowing asset because you earn a return in two places at the same time.

And getting a whole life policy loan is a piece of cake.  There are no applications, questions asked, credit checks, or even scrutiny as to what you can use the money for.  Simply having whole life policies entitles you to utilize their value for whatever you want, for emergencies or opportunities to work in another asset for you, at any time.  You just ask for the check, and it shows up in your mailbox about a week later.

The icing on the cake is that you set your own payback schedule.  While we recommend always creating a plan to pay back the policy loan, you pay as you choose.  The company will not hold you accountable to the plans you set in motion, you do.  You can pay interest-only, set a principal and interest repayment plan, or wait and pay it all back at once.  This flexibility allows you to stay in control.

The Infinite Banking Concept: The Bottom Line

Maybe you never thought about buying life insurance, until today.

Tragically, so many people get hung up on the word life insurance they never open their mind enough to explore the multifunctional and transformative use of this premium savings tool.

So, why is it a better place to store cash?  You get a competitive, tax-free growth rate, compared to other liquid cash assets.

How does it put you in control?  As a policyholder you have contractual guarantees, safety, and access to your money, you are in control.

How does it improve your financial efficiency?  It is one of the best tools that the wealthy have used over the last 150 years to store their cash, collateralize their capital, using other people’s money (OPM) and keeping their own.

How does it speed up my path to time and money freedom?  Infinite Banking shrinks the cost of capital and opportunity cost. It allows you to reclaim the banking function to minimize financing costs and improve your access to capital for opportunities.

The Infinite Banking Concept is a golden key that improves every other area of your financial life: you get tax advantages and gain liquidity, use, and control of your money.

And this all translates to more peace of mind so that you can perform at the highest level in your life and business.

The Infinite Banking Concept Puts the Power of Choice In Your Hands

Equipped with a new perspective and possibilities, you now have a choice.

You can wait for a better time in your life to take control.  The problem is that this type of thinking usually winds up in perpetual stall mode, and it’s hard to break free and get into motion.  You can continue hoping that the status quo financial strategies will produce a better result next time and keep gambling with your future.

Or instead, you can take the reins and direct your financial destiny.  With Infinite Banking, how much you have available to you in the future depends only on how much you put in and how soon you get started.

Learn More About R Nelson Nash

To find out more about the author of Becoming Your Own Banker, listen to our interview with him here:

  • Our interview with the author of Becoming Your Own Banker book:
  • Nelson Nash Institute:

Learn More About the Infinite Banking Concept

For more information on being your own banker with Infinite Banking get our free Quick & Easy Privatized Banking Guide:

Every person’s story, path, journey, and outcomes are different, and how you start, fund, and use Infinite Banking will look different from individual to individual.

If you have great income but are financially stuck, you may need to find and fix your money leaks before you’re ready.  You can lock in your ability to start this strategy later with the right convertible term life insurance policy today.

If you’re already saving each month, but you want to use a better tool, get tax-advantaged growth, and greater accessibility, let us help you determine how to implement this strategy in your own life and improve every area of your financial life in one simple move.  We’ll help you determine if you’re a fit for this strategy.

Contact us to find out the one thing you should be doing to gain control of your personal finances today so you can begin building capital, putting it to work, and accelerating Time and Money Freedom.

* If the policy is utilized correctly, you’ll never pay tax on the growth and distributions.  The policy is tax-free via loans and withdrawals as long as the policy stays in force and does not become a Modified Endowment Contract.

Rachel Marshall

Rachel Marshall is a devoted wife and nurturing mother to three wonderful children. Rachel is a speaker, coach, and the author of Seven Generations Legacy™, passionate about helping enterprising families unlock their true potential and live into the multi-generational legacy they are destined for. After a near-death experience, she developed a deep understanding of the significance of recognizing and embracing one's unique legacy As Co-Founder and Chief Financial Educator of The Money Advantage, Rachel Marshall is renowned for her ability to make money simple, fun, and doable. She empowers her clients to build sustainable multi-generational wealth and create a legacy that extends far beyond mere financial success. Rachel's expertise lies in helping wealth creators remove the fear of money ruining their children, give instructions for stewarding family money, teach financial stewardship and create perpetual wealth through family banking, and save time coordinating family finances. Rachel co-hosts The Money Advantage podcast, a highly popular show that delves into business and personal finance, including how to effectively manage finances, protect wealth, and generate sustainable cash flow. Rachel's engaging teaching style and practical advice have made her a trusted source of financial wisdom for her listeners.
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  1. Gina Thomas on October 21, 2019 at 4:17 am

    I have a whole life policy that is paid and I am getting dividend additions to my policy. Can this policy be changed into a Specially Designed Life Insurance Contract?

  2. Gina Thomas on October 22, 2019 at 1:51 am

    How can a whole life policy become a Specially Designed Life Insurance Contract (not starting from scratch)? Thank you for your previous advice and podcast.