Infinite Banking Concept Reviews – Legit or Scam?

Infinite is a website run by Nelson Nash, who wants to educate you on “becoming your own banker” by using whole life insurance policies to finance your major purchases (house, car, etc.), rather than the traditional method of borrowing money from a bank which you then have to pay back with interest.

Whole life insurance policies are a combination of life insurance and forced savings policies – the “forced savings” part meaning that part of your premiums are invested and bring you a small return.  The specific attribute of whole life insurance policies that the Infinite Banking system is focusing on, however, is the fact that you can borrow money from this policy.

Infinite Banking claims that investing in a whole life insurance policy and then using it as a source to borrow money from rather than borrowing from a traditional bank will save you the money you pay in interest over the course of your life, which could obviously add up.

To be clear, Infinite Banking is not a system that claims to make you money, rather they say that their system will save you money. Also, they are  not advocating that whole life insurance is a superior policy to term life insurance in the terms of payouts after you pass – their theory is that it is more important to have access to the money you pay into life insurance while you’re alive, rather than to have a large sum paid out after you die.

Understanding the workings of a whole life insurance policy is difficult, and Infinite Banking and Nelson Nash credit this by saying you may have to read through their text Becoming Your Own Banker multiple times before you truly understand how to utilize their system. This seems fair, as a quick skim of financial articles discussing term life insurance policies versus whole life insurance policies has enough numbers, percentages, and sample scenarios to make your head spin.

While the Infinite Banking system doesn’t seem to be for the faint of heart, there are advocates out there who say people without a lot of credit card debt and who have 5-7 years to invest in their policy before borrowing money from it might be able to benefit from this program.

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Customer Responses, Reviews, or Complaints

Average Rating for " Infinite Banking Concept " is 0 out of 5 based on reviews.
  • I just bought the book from amazon, and it's still on the way, but I'm very excited by the concept and am wanting to learn more. I have some hesitance though, can you help?

    Ex. Lets say I'm currently saving 1k/month above and beyond normal IRA and 401k/403b contributions. I'm trying to compare between IBC set up life insurance, and either CDs or WealthFront cash account (earns about 2.5% high yield savings compounded monthly--fully liquid in 2 business days).

    The purpose is to get a down payment for a house over the next 10 years lets say (easy numbers!)

    High yield savings is incredibly straight forward, just grab a compound interest calculator: in 10 years i have 136k and change (honestly on California coast that's still not great for a good house down payment but let's not talk about that right now/housing will crash again within 10 years right?)

    Here's my BEST GUESS at what IBC looks like (after looking at countless examples for a week straight):

    Year 1 looks terrible cuz of base and fees, but eventually by like year 4 or 5 or 6(??) the money in looks about like the money out, like break-even roughly, right? That's most examples I've seen. So I keep paying the 1k/month premium and the cash value increases by the % of premium going to cash value + guarantee growth rate + non-guaranteed dividends, right?

    In either situation, premiums or high yield savings, that's all after tax money--no way around that.

    There's no way after 10 years there's somehow more available to me to borrow in policy loan for down payment than there would be in high yield savings, is there? I understand that's not the point exactly, but still curious.

    I understand the point is that even though it's going to be less, I can borrow against the policy and the rate will be better than a bank because it's a guaranteed loan. However, I'm not comparing it to that, I'm comparing it to high yield savings.

    Next, I understand that somehow borrowing from myself is supposed to be better than just saving it up and spending it. Not sure how, hoping someone can correct faulty thinking here:

    Say I have 100k cash value in the policy, and it's growing by 5% (all in all)--sounds great! So next year I'd be rockin with 105k. BUT lets say I take out a 50k loan for my house at (you guessed it) 5%. So next year my cash value will be 105k and my loan will have 52.5k owed...

    If I just withdrew 50k from the policy, I'd have 50k cash value and next year it would grow to to 52.5k. So isn't it the same thing?
    • I'm new to this concept but as far as I can gather... your 50K loan that you're borrowing from yourself ISN'T a withdrawal from your account. Meaning that even though you borrowed your 50k, your account balance doesn't drop by 50k. You continue to earn that 5% interest on the 105K while using that now liquid 50k.
  • I am not an agent, and make no money from this concept.

    For all those who don't think it's a good idea, please study more.

    Imagine if you deposit 50k into your awesome investment, and earn 10% returns. Now, imagine you need 45k of that 50k tomorrow. What do you do?

    You could do without whatever the 45k was for.

    You could liquidate and lose all the gains of 10% on the 45k (not a good idea).

    You could borrow from the bank, if they let you, and pay the bank whatever rate they deem fair, probably at least 5%, reducing your gains on the other investment.

    What if you could borrow the 45k from the insurance company, and let your 50k continue earning 10%, like above. But since the insurance company knows you have a death benifit which will cover the loan, they don't need you to pay it back. So, your 50k continues as if nothing happened. You get the 45k by simply asking (no underwriting or denial possible). The guaranteed rate and average dividends will pay for any SIMPLE (not compound) interest the insurance company charges, so you never have to pay it back, and your 50k continues to grow. It also grows tax free. The money you pay back, plus any interest you choose to pay back goes right back into the pool of money you can borrow from (the actual cash value of the policy), so you can do it again and again. If structured correctly, you will have access to over 90% of what you paid for the policy in year one. You'll have access to over 100% of what you put into the policy after a few years (3-7 depending on how structured). This means that after a few years, you can 'deposit' 10k into your policy and 'borrow' 11k or 12k and never pay it back. Also, when you die, you leave millions to whoever you like.

    Anyone not putting all their cash thru such a policy is missing out.

    Literally, deposit your paycheck into the policy, request a loan the same day for 90% and the whole amount grows at 5% or more tax free, while you have 90% of that amount to spend.

    Insane not to do it, in my opinion.

    Talk to someone that specializes in this concept, tell them you want a high early cash value policy rider, keep the whole life death benefit as low as possible, add a term life rider to push the death benefit up (to avoid MEC) and start putting all of your money into the plan, then 'borrow' it right back out, but let the full value of your money grow at 5% plus tax free.

    Wish I knew about this 25 years ago!
  • I was introduced to this concept last week by a long term trusted friend who is now a consultant with Infinite Banking. I am 57, annual income of $349,000, debt of 2 mortgages totaling $650,000(3.125% and 4.5%), one commercial farm loan at 149,000(6%), 2 lines of credit at $160,000 (6%), and 2 car loans ($12,500 @ 1.9% & $34,000 @ 2.9%). I have no credit card debt. I have $850,000 in my IRA. From my research, this Infinite Banking is for younger persons, requiring 7-12 years prior to availability and nowhere in my reading can I find the source of the 4.5% guaranteed annual growth. I like the concept of having “my own bank”; however, with my debt picture and age is this wise?
    • I am also 57, born in 1960. Please contact me so i can try to explain you if no one did. It takes time to get it, because it is a paradigm shift. A 180 degrees outlook from what you were used to . But once you get it, you will be upset why didnt do it 25 years ago. But happy that you can live the rest of your life using it.

      Also, can teach you some maneuvers to shorten your mortgage life.
    • Yes it's very wise
  • The half-truths and misstatements from these sellers are enough to elevate the blood pressure of any fee-only financial planner. They use terms like “depositing cash into a life insurance policy” and “having control of your own banking system.”

    Amid all this unbelievable double-talk, they forget to mention one little detail. All that money that you “invest” in your whole life insurance policy is paid in the form of premiums. You aren’t paying it to yourself. You’re paying it to large life insurance companies—which, by the way, are an integral part of the financial system they blast.

    Let’s look at some actual numbers. You pay $12,500 a year in premiums for a $125,000 whole life insurance policy. In four years, after paying in a total of $50,000, you would have $46,110 dollars in your account. Yes, this is less than you put in, as the fees and premiums add up to be more than the growth rate. You can borrow up to 90% of the net value, or $41,500.

    You will pay the company 5% for borrowing your own money.
    • What crack head did you buy your whole life insurance plan from that gave you a 12,500$ a year premium for 125k coverage?!?!?! Jesus mother of askfjsfdfkasdf... You obviously did not do enough research into this subject to be able to talk about it. My premium is 100$ a month or 1,200$ a year for 20 years for a 220k coverage. By the time I pay off the premium in 20 years that's over 400k in coverage owned free and clear.

      I really want to know what company sold you a 12,500$ a year plan and why you were such a sucker to buy it without asking around. There is this thing called Due Diligence, you should do it.
    • The best advice is still to buy term and invest the rest. Any "infinite banking concept" should get better results than investing it yourself.
    • You are not borrowing your own money. Be an exceptional critic and really investigate the concept in detail. Fee only advisors are not as pure as the wind driven snow!

      The least expensive way to purchase a mutual fund is A shares. With break points and staying within a good fund family it can't be beat for costs. If you charge 1% per year for money invested in a bond fund returns 4% over 20 years, you are reducing the return by 25+% and that is if the fund is being managed for free.

      The fee only advisor is only worth 1% if he/she are actually doing real financial planning. Financial Planning is not picking or managing investments. It is much more complicated. Google; financial planner. The term is used much to often and inaccurately.
  • This is another Trump family scam. I don't know why people can't see that.
  • This is a very fair review. I am an authorized practitioner of IBC and searchable on the official website. Everything written in the main review is 100% true.

    I have been using it personally for many years and I've steered a number of my clients into the strategy as well. In 6 years time, I've received 0 calls from unhappy clients about their decision to capitalize an Infinite Banking style policy.

    Not every life insurance policy I write is suitable for IBC, as there are very few policy builds that actually are, but for that specific needs with clear expectations laid out up front, it's a big win for those who capitalize and use it properly.
  • I like the concept of using the cash value of what will eventually be tax free insurance proceeds to finance current financial requirements, but it begs a couple of questions. First of all I am suspicious of the cash value and enhanced value of the insurance. With today's low rates of return, how does it accumulate enough cash value to actually outstrip the paid-in value of the policy while at the same time is able to increase the overall value of the insurance proceeds?

    The concept sounds wonderful,(a little too good to be true) I just find it difficult to believe that it can produce the returns suggested. I would need a thorough education to validate this.

    The other question regards access. I gather than there would be some amount of cash value in the policy after the first year, which would then be available to borrow against. I also gather that it would take several years before there was enough value to be able to significantly borrow against it. Offsetting ones' mortgage would take quite a few years to be able to substitute an insurance loan for a large home owner's loan, unless I missed something.

    • that's why if you had read the book in question you will see that author suggest to start with small purchases like cars and vacation. Because the value of your home is two big to be able to fit in a Insurance. Because life insurance is no more than 10% of your income and nobody buy a home for 10% of your income.
  • I was introduced to this recently and reading through the book by R.Nelson Nash I have some questions such as;

    How much money would I need to "Capitalize with being that I am 51 so that I can still retire at 65 with lets say 80,000 a year income?

    I can buy this against my son, and still be the owner so that my premiums will still be low.

    Is it still worth me running some money though this system?

    Again I think this is a great concept but 1) is it an option at this point for a financial benefit 2)I am in Real Estate and will my investment income be better spent in the Real Estate vehicles?
    • Dino, YES it is worth running money through this system!! When you purchase real estate, you either either finance (paying interest to a bank etc.) or you pay cash (surrendering the potential to earn interest on your cash). Either way this costs you money. Your cash value is earning dividends and is always accessible. It would be most profitable to purchase the real estate with funds loaned from your cash value, leveraging one investment with another. Your cash value will still compound interest/dividends as if the loan never happened. This allows the remaining funds to grow at an always accelerating rate.

      Example: you have $100,000 cash value that earns 5% dividends annually. 5% serves as a benchmark; you have found a real estate opportunity that will provide a 10% return-the cost is $90,000. Let's also say you can take a loan against your cash value at a 3% interest rate to the insurance company.

      It would be most advantageous to finance the purchase with money that earns 5% and can be repaid at 3%. Essentially you earned 2% to finance an investment that will pay you 10%-you just made a 12% return.

      From the proceeds of the real estate you should repay your loan to the insurance company to fully reimburse your cash value. This makes you eligible for round two; or tax free retirement. Now you win on two fronts.

      I hope this makes sense. I am an advisor, My number is (304)851-1888. Feel free to contact me if you wish to discuss this in further detail.

  • I just met an insurance agent with infinite banking concept, as the illustration shows, 20k per year for 10 years, i will have about $200K to borrow with 4-6% interest rate. If i borrow the bank, i can borrow more with lower rate if using my house for colateral. What is good for infinite banking?
    • The money you borrow is from the Life Insurance Company. Your cash value still growths as if no loan was taken out. The 4-6% interest you mentioned grows tax free. All you have to do is call the Insurance Company for a loan no paper work or underwriting won't get turned down. You should pay the loan back but the terms are up to you. The principal goes back to available cash value and any interest over that of what is charged by the Life Insurance Company goes to available cash value as well.

      The equity in your home does not grow unless the price of your home rises in value it can also go the other way. The interest on your mortgage payment is gone for good to the bank. Your paying yourself back on a policy loan. The interest rate earned on the policy can be greater than the interest on the loan. You can always pay a higher interest rate to yourself.
  • I am not sure I totally agree with the statement that it works only for people without credit card debt. If structured correctly, it will help you retire your credit card debt a lot more cheaply and faster than trying to pay it down with the credit card company. This does not mean that you can continue to spend at the rate at which you accumulated the credit card debt, but given sufficient financial discipline, owing money on credit cards should not be a deterrent to at least investigate it as a way of paying it down with less interest in terms that are more favorable to you.

    Where I see a lot of benefit is that small business owners who are on a shoestring budget for growing their business can use their infinite banking policy instead of credit cards (which is what I did) to invest in their business. It is also a good place to put your retirement account funds (warning - PAY your taxes before putting your retirement funds into the policy) because retirement accounts place too many restrictions on how you can use the money.
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