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The basic idea of the Infinite Banking Concept (IBC) – aka Becoming Your Own Banker – is built around funding whole life insurance and then leveraging the cash value via policy loans to self-finance debt, personal and business expenses, investments, and even to provide passive income for retirement.
Some people are head over heels for this idea, acting like it’s some kind of financial sorcery. On the flip side, you’ve got people claiming the infinite banking concept is as relevant today as a flip phone. Then there are those who despise it, swearing up and down that it’s nothing but smoke and mirrors. So, what’s the real deal with infinite banking – legit strategy or total con job? Well, as usual, the truth isn’t black and white; it’s nestled somewhere in that gray area between the zealots and the naysayers.
The idea behind the Infinite Banking Concept isn’t new. People have been using participating whole life insurance to self-finance purchases for well over 100 years.
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Tools of the Trade - How to Use the Cash Value in Your Life Insurance A quick reference guide on how policy loans work, how to make loan repayments and how to track your loans. |
The term “Infinite Banking,” however, has only been around since the 1980s and the book which popularized the infinite banking concept wasn’t released until about the year 2000. R. Nelson Nash, the author of Becoming Your Own Banker: Unlock the Infinite Banking Concept, states that he didn’t invent the infinite banking concept but simply discovered how to use it for himself.
Here’s how Infinite Banking can work:
Participating whole life insurance (PWLI) is a contract designed to remain in force for the policyholder’s entire life. It includes the buildup of cash values and also grants you the right to borrow against the policy’s cash value. This can be especially advantageous for individuals looking to borrow for a business or an investment and pay the loan back over time or at a specific future time. Enter the infinite banking concept. With the funding of one or more properly designed participating (i.e. dividend-paying) whole life insurance policy(ies), you will have guaranteed access to cash that you can leverage for anything you choose.
The insurance company also contractually guarantees to pay your beneficiaries a certain death benefit when you pass away. If you have a participating policy, the company will share a portion of its profits with you as the policy owner. These profit-sharing payments are called dividends, but they’re actually considered a return of premium under current U.S. tax law.
Life insurance has been around for centuries and thousands (likely millions) of people have taken policy loans and paid them back. We have encountered multiple success stories with individuals who have used the infinite banking concept. Here are a couple:
One of our clients shared how her great-great-grandfather used his life insurance policy in the 1890s to access money so he could start a cigar company—Finck’s Cigar company. This company is still in business today. Read about the details here: How the founder of Finck’s Cigar Company self-financed himself into business with a loan from his life insurance policy.
Current U.S. President Joe Biden has also used whole life insurance. Read this financial statement released by the White House in May of 2012 and see that President Joe Biden (then Vice-President) has taken policy loans against his MassMutual Participating Whole Life Insurance Policies – similar to what the Infinite Banking Concept (aka Becoming Your Own Banker) outlines.
For one reason or another, multiple people and companies have deemed infinite banking a scam. Similar concepts may also be referred to as scams (i.e. the bank on yourself scam).
So are the infinite banking scam connotations accurate? Is it a Ponzi scheme or a fraud? The short answer is no. Yet the infinite banking concept also isn’t necessarily the best and certainly not the only way to take advantage of this established strategy. There are other ways that allow you to collateralize the cash value in participating whole life insurance and use it to self-finance investments, projects, and purchases.
In today’s business landscape, there’s a significant challenge: many only share half the truth or conceal crucial information. This, sadly, includes a few insurance agents.
Yet, this doesn’t imply that every insurance agent is out to deceive. While it’s essential for us to be vigilant about our finances and whom we trust, it’s crucial to remember that not everyone is out to mislead.
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Policy Checklist Make Sure You Get a Good Policy Is your policy good or bad? Use this checklist to help evaluate your existing life insurance or a new policy you are considering. |
At McFie Insurance, our focus is on empowering individuals with knowledge. We delve deep into the specifics of our past choices, allowing you to benefit from both our successes and missteps. Our aim is not only to share our best practices but also to ensure others can benefit from them.
When people ask, “is infinite banking a scam?”, they often aren’t considering all the pros and cons that come with using the strategy. The infinite banking concept isn’t the best strategy for everyone, but that doesn’t mean it’s a scam. Here’s a quick overview of some of the pros and cons.
In summary, the infinite banking concept is not the official or required method for leveraging the cash value build-up in participating whole life insurance, and the infinite banking concept isn’t for everyone.
If you’re disciplined, this is a no-brainer” read more about how Dr. Ethan Childs’ turned their finances around using life insurance.
At McFie Insurance, we focus on helping clients build sustainable wealth using properly designed participating Whole Life Insurance to keep more of the money they make, grow their wealth and have financial peace of mind.
We use many of the principles of the Infinite Banking Concept. Our clients use their policies to self-finance projects and John McFie of McFie Insurance has written a 31-page eBook on understanding the Infinite Banking Concept and how it works in our modern environment.
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Understanding the Infinite Banking Concept and How It Works In Our Modern Environment 31-page eBook from McFie Insurance Order here> |
Owning participating whole life insurance will help most people keep more of the money they make, grow their wealth and have financial peace of mind.
We sell properly designed participating whole life insurance policies that work for the Infinite Banking Concept, help people keep more of the money they make, grow their wealth and have financial peace of mind. Give us a call at 702-660-7000 or schedule a strategy session we can help you with your life insurance.
Dr. Tomas P. McFie
Most Americans depend on Social Security for retirement income. Even when people think they’re saving money, taxes, fees, investment losses and market volatility take most of their money away. Tom McFie is the founder of McFie Insurance which helps people keep more of the money they make, so they can have financial peace of mind. His latest book, A Biblical Guide to Personal Finance, can be purchased here.