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When people first discover the Infinite Banking Concept, they get sidetracked by two questions that miss the point entirely: “How much do the premiums cost?” and “How long do I have to pay them?” These concerns are nothing more than distractions that keep people from understanding the real power of what Nelson Nash discovered.
The truth is, all life insurance guarantees to pay a death benefit that’s larger than the premiums you’ll ever pay into it. This is especially true after you make your very first premium payment. But here’s what most people don’t realize: the longer you pay premiums, the smaller the ratio becomes between what you’ve paid in and what the death benefit will pay out.
Let me show you exactly what I mean with a real example.
Take a 30-year-old who decides to pay $10,000 annually into a participating whole life policy designed for Infinite Banking. After his first premium payment, his death benefit sits at $281,241. That’s a 2,712% difference between what he paid and what his beneficiaries would receive if something happened to him.
Now, fast-forward ten years. This same policyholder has now paid $100,000 in total premiums, and his death benefit has grown to $530,965. While that’s still excellent protection, the ratio has dropped to 431% more than what he’s paid in premiums.
Some people look at this and start worrying. “Why is the ratio getting smaller? Is my policy becoming less valuable over time?”
Here’s the logic behind this phenomenon, and why it’s actually working exactly as it should.
The probability of a 30-year-old dying is low. But as we age, that probability increases. Insurance companies understand this reality better than anyone, and they set their scheduled premiums accordingly to cover their increasing risk exposure.
This is basic actuarial science, and it’s been working this way for over a century. The insurance company is taking on more risk as you age, so the cost structure reflects that reality. Both the amount of premiums and the length of time you pay them are really just distractions from the main event.
Money has to be stored somewhere. That’s a truth of financial life. The question isn’t whether you’ll store money somewhere, the question is where you’ll store it and how well that storage location will treat your money.
Participating whole life insurance takes better-than-average care of money that’s stored within it. More importantly, it allows you to leverage that money and use it to generate wealth while it continues to grow.
When Nelson Nash wrote “Becoming Your Own Banker: The Infinite Banking Concept,” he made a profound observation: “The shorter the premium payment period is, the better the policy is suited for the purposes of the Infinite Banking Concept.“
This wasn’t just theory. Nash had discovered something that the math proves decisively.
Let’s return to our 30-year-old and examine what happens with his cash values under different payment scenarios.
After his first $10,000 premium, his cash values stand at $7,070. Ten years later, after paying $100,000 in premiums, his cash values have reached $113,178.
Here’s where it gets interesting:
The difference becomes even more pronounced over time. In year 20:
This annual cash value growth creates what I call the “tailwind” that makes Infinite Banking so powerful. This tailwind doesn’t stop working when you borrow against your cash values. Whether you’re paying off debt, making investments, or handling ordinary purchases, that tailwind keeps pushing your wealth forward.
Nash understood something that many people miss: “We are not attempting to accomplish all of the banking needs through the device of one policy. We will need a system of many policies in order to do the complete job.”
This is where the 10-pay strategy becomes brilliant.
Money doesn’t stop flowing into your life after you finish paying off one policy. If you can initiate another policy to store additional money, that makes perfect sense. If you can’t start another policy, or if you have existing policy loans that need to be repaid, then continuing to pay premiums on your current participating whole life policy might still be your best option for storing that money.
The key is understanding your options and making informed decisions based on your circumstances.
Building 10-pay policies for Infinite Banking delivers four distinct advantages:
For Infinite Banking to work at peak performance, your participating whole life insurance has to be built with these three characteristics:
Each of these three factors runs contrary to how most life insurance agents design and sell life insurance. Traditional agents want to maximize death benefits, minimize premiums, and stretch payments out as long as possible to maximize their commissions.
This is why the two major criticisms of Infinite Banking – premium costs and payment duration – are nothing more than distractions. They’re not legitimate arguments against the power of this concept.
Infinite Banking maximizes one of the most time-tested financial principles in human history: using other people’s money.
Whenever you can use someone else’s money while keeping the principal you repay and still earning a return on the collateral you used for the loan, you become a winner. This is what Infinite Banking allows participating whole life policyholders to accomplish.
Banks and financial institutions have been profiting from this principle for thousands of years, using their depositors’ money to generate wealth. Nelson Nash was brilliant enough to discover how individual families could harness this same power for themselves.
I’ve been practicing the Infinite Banking Concept for nearly 20 years now. I’ve seen thousands of people transform their financial lives using these principles. Nelson Nash himself said about my family: “I have met thousands of people whose lives have been changed significantly for the better by practicing the principles that are in my book. No one is better at it than the McFie Family. They are awesome!”
That endorsement didn’t come from theory or sales pitches. It came from results – real families building real wealth using properly designed participating whole life insurance policies.
When you understand that money must be stored somewhere, and when you recognize that participating whole life insurance provides superior storage with unique leveraging capabilities, the questions about premium costs and payment duration become irrelevant.
The 10-pay strategy is effective and optimal. It delivers higher growth rates, allows policy system building, avoids tax complications, and creates the maximum possible tailwind for your financial future.
If you’re serious about becoming your own banker, don’t get distracted by the wrong questions. Focus on the right design principles, implement the 10-pay strategy, and start building your system of policies.
The math doesn’t lie. The history doesn’t lie. And the results speak for themselves.
Money has to be stored somewhere. Why not store it where it can work hardest for you while giving you the maximum control and flexibility over your financial future?
That’s the real power of 10-pay whole life insurance built for Infinite Banking.
Tomas P. McFie DC PhD
Tom McFie is the founder of McFie Insurance and co-host of the WealthTalks podcast which helps people keep more of the money they make, so they can have financial peace of mind. He has reviewed 1000s of whole life insurance policies and has practiced the Infinite Banking Concept for nearly 20 years, making him one of the foremost experts on achieving financial peace of mind. His latest book, A Biblical Guide to Personal Finance, can be purchased here.
This free binder has the information to build your own Infinite Banking system.
