INFINITE BANKING: Life Insurance Defined

Posted on February 16, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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Infinite banking is not a product or service offered by a specific institution. It’s a concept promoted as a way you can “be your own bank” to have more control over your money. 

Infinite banking is a strategy in which you buy a life insurance policy that accumulates interest-earning cash value and take out loans against it, “borrowing from yourself” as a source of capital. Then eventually pay back the loan and start the cycle all over again. To whit:

  1. Buy a cash value life insurance policy, which you own and control.
  2. Pay policy premiums, a portion of which builds cash value.
  3. Cash value earns compounding interest.
  4. Take a loan out against the policy’s cash value, tax-free.
  5. Repay loans with interest.
  6. Cash value accumulates again, and the cycle repeats.

If you use this concept as intended, you’re taking money out of your life insurance policy to purchase everything you’d need for the rest of your life. Cars. Houses. Airplane tickets. Netflix.

So, when you pay back the policy loan, just as you’d have to pay back any mortgage, auto loan, or credit card, you’re paying yourself back.

Nelson Nash popularized this concept in his book Becoming Your Own Banker.

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DEFINITION: “Infinite” Banking?

Posted on October 19, 2023 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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Infinite banking is a complicated financial insurance concept.  What’s more, borrowing from a whole life insurance policy rather than a bank introduces a unique set of problems. These loans don’t have set repayment schedules but they do accrue interest. Here’s what you should know about borrowing from an insurance policy:

PROs:

  • Easier to secure than a bank loan, especially if you have bad credit.
  • May only take a few days to receive funds.
  • Interest rates may be lower than other loans.

CONs:

  • You may need to pass a physical to qualify for an insurance policy.
  • Policy loans can decrease the death benefit.
  • Premiums can run significantly higher than comparable term policies
  • Payment issues can result in losing your policy and/or paying tax penalties.
  • Interest rates may be variable and fixed rates can be high.
  • Borrowing limits are often capped at a percentage of the cash value.
  • It can take years to accrue enough cash value to take out a significant loan.

CITE: https://www.r2library.com/Resource

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RISK MANAGEMENT AND INSURANCE: https://www.routledge.com/Risk-Management-Liability-Insurance-and-Asset-Protection-Strategies-for/Marcinko-Hetico/p/book/9781498725989

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