Is Infinite Banking a Scam? Here’s the Honest Answer

What is Infinite Banking?

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Some love the concept to the point they seem to believe it’s magic, others believe the infinite banking concept is outdated and no longer applies in today’s environment. Some people hate it and truly believe the problems with the infinite banking concept makes it a scam. But, is infinite banking a scam? The truth, as is often the case, is somewhere between these extremes.

  • Infinite banking is not a scam. There are insurance agents who do not properly educate their clients on how to use it.
  • There are multiple success stories of people leveraging infinite banking to generate substantial gains and wealth.
  • Be sure that you have an insurance agent that you can trust to help you enter the world of infinite banking.

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. 

Tools of the Trade - How to Use the Cash Value 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. 

An Example of How To Use Infinite Banking

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 the beneficiaries of the policy a certain death benefit upon the death of the insured and to share with policy owners (participants, policyholders) a portion of the company profits. This sharing of profits is referred to as dividends but is considered a return of premium according to current tax law in the United States. These are additional benefits to implementing the infinite banking strategy for you and your family’s financial legacy. 

Success Stories with The Infinite Banking Concept

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:

Finck’s Cigar Company

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.

The Current U.S. President

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.

The Problem with Infinite Banking Concepts

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.


Many Agents Don’t Teach the Real Foundational Components 

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.

Policy Checklist - How to Get a Good Policy
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.

Infinite Banking Concept Pros And Cons

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.


  1. Increased cash flow and liquidity
  2. Access to guaranteed cash value
  3. Tax-free loans and tax-deferred growth
  4. Financial protection
  5. Increasing equity


  1. Requires a time investment to learn about how to use the strategy effectively
  2. Start up cost, because you need a well-designed whole life insurance policy

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. 

Learn More About the Infinite Banking Concept

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.

Understanding the Infinite Banking Concept pdf ebook 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 McFieDr. 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. 

Understanding the
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