At the core of the banking concepts, it is the idea that you become your own banker in infinite banking. Doing this requires a commitment to the idea and discipline in carrying out the practices of the infinite banking concept. The infinite banking system means you are the saver, the borrower and the banker of your own bank. You save money with your bank, you can borrow money from your bank on terms that you set and you pay the bank, means yourself, both the money borrowed and interest on that money. It means you are making money by financing yourself. Your bank is based and financed by your dividend-paying whole life insurance policy.

Benefits of setting infinite banking for yourself:

When used as a banking application, a whole life insurance policy is structured differently than other insurance policies. The policy provides a death benefit to your heirs but places a greater emphasis on your ability to access the cash value liquidity within your account to finance your life. The amount of the Death Benefit is reduced in order to increase the amount of your policy’s cash value. You could set up this same personal banking system with either a checking account or a mutual fund policy. But the financial gains are limited by the tax consequences of each.

A whole life policy or infinite banking offers a bank-like platform but provides some tremendous additional benefits. By using the whole life platform, you benefit from the tax-deferred growth of your money, tax-free distributions through your policy loans, and an income-tax-free death benefit to your heirs. The basis of this system is a whole life insurance policy, and there are initial costs and administrative fees associated with that. Critics of the concept point to these fees as proof of the infinite banking scam.

Understanding the basics of the infinite banking concept:

Any financial policy or tool will have administrative costs associated with it. With infinite banking concepts, this cost is most visible in the first years of the policy when your access to cash values is less than the premiums you deposit. But like all legitimate financial tools, infinite banking is concerned about long-term success and the improvement of people’s lives through financial independence. If policyholders are dedicated and diligent about their commitment to this system of banking, their eventual profits will more than compensate for the upfront cost of the insurance.