Becoming Your Own Bank 101

Posted By: Olivia McGraw ICOR Blog & News,

Infinite banking is a wealth creation concept that has been practiced for hundreds of years by the wealthiest people in our country. So, why don’t we hear about it? Rest assured, there is not a vast conspiracy by the wealthy to keep knowledge from the commoner. I believe it’s because there is too much misinformation—or fake news—coming from misinformed and uninformed sources. 

Infinite banking uses a tried-and-true system to grow wealth while still providing access to liquid cash. How does this work? Start by storing your money inside a properly structured dividend-paying whole life insurance policy. It’s whole life—not universal life, indexed universal life, nor term life. Why do this? Whole life is a long-standing, tried-and-tested product designed to last your whole life. Whole life has existed for two hundred years; it has survived the Great Depression, and it will survive a global pandemic. It’s not tied to the stock market, and it has a contracted minimum interest rate. 

Most people selling life insurance are only doing just that—selling insurance. And life insurance as a product has value to a beneficiary, but it poses little value for most people who are young and looking for opportunities to grow their wealth. 

Unlike insurance salespeople, we teach others how to become banks and how to think like a banker. Bankers know that a loan is repaid with interest. By learning how to become your own banker and paying yourself back with interest (or better yet, having someone else pay back the loan with interest, i.e., through rental property or private money lending), you not only recapture your basis, but also enable your money to grow and compound with interest. The money needs to grow regardless. Insurance companies have to guarantee the death benefit. At the end of the day, this is an insurance product. However, in a whole life policy, you have access to the cash value at any point, and you can use it for any purpose. That’s right—there are no restrictions on what you can do. Want to invest in real estate? Go for it. Want to put it in stocks when the market drops? Go ahead. Pay for your kid’s college? Absolutely. Supplement retirement? Why just supplement? Use whole life as your retirement.

“But why would I pay money back with interest to myself when I can just borrow from my savings?” you might ask. When you borrow from your savings, the balance goes down. Even if you pay it back, or pay it back with interest, a savings account is not a place to grow money. However, inside a whole life policy, if you borrow and pay back with interest, your money will continue to grow and compound as if it had never left the policy. Again, the money must be loaned, so why not let it be to you? 

Storing your wealth in whole life is also extremely secure. Unlike actual banks that do not have to store your money in the vault beneath the building and will loan your one dollar out 11 times (see fractional banking), insurance companies must have a dollar in assets for every dollar they lend. They must guarantee the product they’re selling you, the death benefit, and in order to do that, they invest your money in high-interest loans to the government. The money they make is given back to the owners of the business—policy owners—through dividends. As a policy owner, you own part of the company and have a contract. When you ask for your cash, they must send it to you. 

In addition to being a secure place to store your cash, a whole life policy provides quick access to your money and allows you to be prepared the next time the market turns. Secure your financial future by learning how you can start your infinite bank today.