Not at all. While we believe this is a phenomenal tool for business owners, we’d argue that this is a great strategy for pretty much anyone who is insurable. We can structure policies for juveniles to help fund their first vehicle or college, for example. Others may use Infinite Banking to finance large purchases like homes or cars. Many real estate investors use Infinite Banking to purchase and remodel properties.

As opposed to term life insurance, your premiums are used to acquire a permanent asset - your death benefit. The question isn't whether it will pay out, but when. Additionally, as opposed to straight whole life insurance, we structure Infinite Banking policies so that a large portion of your premiums goes towards "paid-up" insurance. As a result, your cash values, which represent the current "equity" of your death benefit, grow each year. Therefore, a large and growing percentage of your annual premiums serve as liquid savings.

If you're brand new to Infinite Banking, we recommend a few things before diving in. - Read our Downstream Wealth Infinite Banking Primer here - Read Becoming Your Own Banker by R. Nelson Nash (Amazon) If you're already familiar with IBC and want to discuss implementing it, book a call with us and we can help you explore further. You can book an individual call or a small business call.

A simple definition is not enough to convey the power of Infinite Banking - we have an entire section of our site devoted to IBC education. It takes time and effort to understand. With that said, here is a very basic definition: The Infinite Banking Concept is the process of saving, growing, and leveraging your capital using a specially designed, dividend-paying Whole Life insurance policy, which allows you to maintain permanent control of your capital and provides you with a far superior way to save, finance, and invest. If you really want to understand what it is, you must put in the time to educate yourself, ask questions, and be willing to think outside of conventional financial wisdom. The first question you should ask yourself is, "Is what I'm doing right now working for me, my family, or my business?" If your answer is no, then you would benefit greatly from learning more about Infinite Banking.

There is a fundamental misunderstanding (or flat out misrepresentation) displayed by financial entertainers and others in the financial industry that does a huge disservice to the power of Whole Life insurance and the Infinite Banking Concept. Think about the purchase of a home by financing with a mortgage. You have a down payment that immediately becomes equity in the home. Over the lifetime of the mortgage, with each monthly payment you make, your equity increases (very slowly at first since most of your payments are going toward interest in the early years). When you sell the house, the bank loan balance is repaid first, and the seller receives the balance of the sale net of any other fees. In other words, you don't get the equity and the home. The equity represents your ownership stake in the home minus the balance of the mortgage. This is why when the value of a home decreases beneath the equity the owner is said to have negative equity and the lender can foreclose on it. In the same way, the Cash Surrender Value of a Whole Life insurance policy represents current equity in the future death benefit. One significant difference, however, is that the value of that equity can only go up. Both contractual interest guarantees and non-guaranteed dividends increase cash values in addition to premium payments.

The first impression that IBC is too good to be true is often a result of mixed messaging and marketing used to "sell" the Infinite Banking Concept. What is often presented are the long term results of practicing IBC instead of teaching the Concept itself. IBC requires a change in your thinking, an understanding of how our financial system is rigged against us, and how it solves that problem. If it seems too good to be true, then you owe it to yourself to investigate further and educate yourself. That's what we're here for and we'd love to help.

According to conventional financial wisdom there are only two ways to make a major purchase: Borrow and pay interest or save and pay cash. Under the first option it's pretty clear that you're paying interest. But the second option has a different cost which is giving up future interest. Whenever you spend cash you're permanently giving up control of that money and therefore you give up all future earning and investing power from that money - lost opportunity cost. There's a lot more to comprehend in this regard, so if you'd like to read our Infinite Banking Primer, it's available here for free.

Infinite Banking is a long-term strategy focused on gaining full control over your finances - savings, cash flow, compounding growth, protection and risk reduction, financing, investments, retirement, generational wealth, legacy, and more. The principles of the Infinite Banking Concept are universal - they apply to the individual, the household, entrepreneurs, business owners, and high-income/high-net worth individuals, investors, and all free-thinkers. We have worked with clients across that entire spectrum. The common characteristic in all of these groups is the ability to Think Long Range, think differently, and to be patient, disciplined, teachable, and self-controlled. Infinite Banking is not a get rich quick scheme. It isn't magic, and it doesn't fix things overnight. But it does work and that becomes more clear with each passing year.

To request an in-force illustration on your Indexed Universal Life (IUL) policy, follow these steps: 1. Contact Your Insurance Company or Agent: (we highly recommended getting it directly from the insurance company customer service department over the agent) Reach out to your insurance provider or the agent who sold you the policy. Most companies provide a customer service number or online portal to make such requests. 2. Specify the Request: Clearly state that you are requesting an in-force illustration. This document provides a snapshot of your policy’s current status, including cash value, death benefit, premium payments, and future projections based on current assumptions. 3. Provide Policy Details: Have your policy number and personal information ready to help the agent or representative locate your policy. 4. Clarify Projections: Ask for different scenarios based on various rates of return, premium payment schedules, or changes in policy structure to fully understand how the policy might perform over time. 5. Review the Illustration: Once received, review the illustration carefully, paying attention to the assumptions used in the projections. We are happy to review the in-force illustration with you once you receive it.

Absolutely. Practicing the Infinite Banking Concept is an excellent means of safely building tax-free retirement income. By focusing on increasing savings (which are liquid), instead of chasing "rate of return" on a smaller portion of your income with investment risk, and complemented by uninterrupted compounding interest, Infinite Banking allows you grow your savings while at the same time leveraging it to recapture third-party interest, finance major purchases, and invest as opportunities come your way.

This is not uncommon. Most people are still able to practice IBC by owning a policy on a family member, business parter or key employee. The only requirement is that the owner of the policy has what's called an "insurable interest" in the insured person.

Dividend-paying Whole Life insurance from a mutual company is the only asset suitable for the Infinite Banking Concept. While we can't go into detail in this brief response here, the short answer is that the design and nature of a Whole Life insurance contract allows us to create a place where our savings can flow, allowing it to grow with uninterrupted compound interest and dividends, while at the same time leveraging policy cash values without affecting the growth of the underlying asset. The reason it must be with a mutual company is that as a policy owner you are an owner of the company and entitled to dividends from the company portfolio profits. This is the opposite of a stock company where the shareholders are the owners of the company, and thus, policy owners are not entitled to dividends. We also only work with mutual companies who have a history of paying a dividend every single year for well over 100 years.

We suspect that because Infinite Banking significantly reduces the reliance on traditional Wall Street banks, it’s highly discouraged. However, it’s quite telling that banks themselves own a significant amount of cash value life insurance as a Tier 1 asset. They recognize life insurance as a high-quality asset, but it’s likely much more lucrative to charge customers annually to manage their money and retain cheap deposits used to lever up returns through Fractional Reserve Banking.

Not at all. Infinite Banking is not an either/or proposition, but instead it serves as an enhancement to all other opportunities; IBC then Real Estate, IBC then investments, IBC then charitable giving, IBC then stocks. Remember that IBC is a savings strategy first. It's about capitalization. Once you begin to capitalize you can do all the same things you would do externally, but the key difference is that the underlying cash value continues to grow unimpeded. Think about it this way - no matter what you invest in, you have to have capital to begin with. This goes for 401Ks and IRAs, stocks, cryptocurrency, real estate, or anything else. The difference is with IBC you have a place to compound that savings tax-free, and a place to put it back when you take your profits. For real estate investors who often start with leverage, the long term opportunity to provide your own protected leverage is immense for those who take a little time to capitalize. The Cash Value available in your IBC structured policy is yours to do whatever you see fit. As Nelson Nash said, when you have capital, opportunity will find you.

No. The great appeal of Infinite Banking, which uses dividend-paying Whole Life insurance, is the guaranteed cash value growth, which cannot decline. We’ve seen real estate, stocks, and even “safe” government bonds decline precipitously numerous times. Additionally, since the lender (insurance company) is also the guarantor of the collateral, financing rates are generally much more attractive than HELOCs or brokerage loans, for example. Additionally, you can generally only borrow FROM qualified accounts, rather than AGAINST them, which is one of the many appealing features of Infinite Banking.

We work with clients in all 50 states.

Rule Number One of IBC is Think Long Range. While there is certainly immediate opportunity for those who have already engaged in the discipline of saving, Infinite Banking is not about what you can do in a year or two. Infinite Banking requires discipline, patience, and imagination to see what can happen over many years, even over decades and lifetimes. Capitalization takes time, but those who have the discipline to do so will outperform those who don't.

If you think back to the problem Infinite Banking solves - that you finance everything you buy - you have to recognize the deficit caused by giving up future interest. If you capitalize (save) first into an IBC structured policy and then use that as your financing vehicle, you stop giving up control, and thus, future interest on those dollars. While you pay interest in the short term, the loan interest is offset by the uninterrupted compounding taking place inside the policy as you continue to earn all of the future interest and dividends going forward. Also keep in mind that the repayments on policy loans continue to function as savings. Loan repayments reduce the principal and are once again available the next time you need to use your capital.

There’s no specified amount. We have a thorough process where we help our clients evaluate income, expenses, and liquidity to make recommendations. Each situation is different and we put in a lot of work analyzing financials and making recommendations.

No, you are not creating your own bank. By implementing the Infinite Banking Concept you are capitalizing an asset that allows you to mimic the primary functions of banking - saving, protecting, growing, withdrawing, borrowing, and repaying, all within a privately owned, contract-based financial asset that you have full control over. It allows you to protect, grow, and keep full, permanent control of your capital. It means your money stops flowing away from you and always back into your system.

A Modified Endowment Contract (MEC) is a life insurance policy that fails to meet specific IRS guidelines under the “7-pay test,” which limits the amount of premiums that can be paid into a policy over a set period. When a policy becomes a MEC, it loses some tax advantages associated with traditional life insurance policies. Specifically, withdrawals or loans against the cash value of the policy are subject to ordinary income tax, and if the policyholder is under age 59½, a 10% penalty may apply. While the death benefit remains tax-free for beneficiaries, a MEC is treated more like a taxable investment than life insurance.

No, a policy structured to practice IBC is tailored specifically to the client's particular situation and needs. There are a lot of considerations that go into the design based on the client's income, savings, and goals (both short and long term). While you could technically use a standard Whole Life insurance policy to practice IBC, it takes a much longer time to have a significant pool of cash values available. We structure policies for IBC to have rapid cash value accumulation relative to premiums paid.

Often casually referred to as "the guarantee," the correct term is the "Guaranteed Non-Forfeiture Rate." In a Whole Life insurance contract this refers to the minimum interest rate that the policy’s cash value will earn over the life of the contract, regardless of market conditions. This rate ensures that the cash value and the face amount (initial death benefit amount) will be equal at the policy's maturity date.

There are two types of policy loans - Fixed and Variable. Fixed loan rates are set by the policy contract and do not change. Though not always the case, fixed loans are generally tied to direct recognition dividend payments. Variable loans are usually, but not always, associated with non-direct recognition dividend payments and the interest rates charged by the insurance company are typically tied to something like a total corporate bond yield index.

If a life insurance policy has outstanding loans upon the death of the insured, the policy loan balance (principal plus any accrued interest) is deducted from the death benefit and the remainder is paid out to the beneficiary.

Policy loans in Whole Life insurance allow policyholders to borrow against the cash value of their policy by contractual right. 1. Loan Availability: Once a whole life insurance policy accumulates cash value, the policyholder can borrow a portion of it, typically up to 90-95%. 2. No Credit Check, Application, or Fees: The loan is not dependent on credit approval, as you are borrowing against your own policy. 3. Interest: The loan accrues interest, which is set by the insurance company. The rate can be fixed or variable. 4. Repayment: While repayment is flexible and not required on a set schedule, the loan (plus interest) will be deducted from the death benefit or remaining cash value if unpaid. 5. Continued Growth: The cash value continues to grow and earn dividends One interesting characteristic of policy loans is that they are not amortized like a fix-payment loan. When you make a loan repayment, 100% of the payment is credited toward balance reduction, thereby reducing the interest cost. This is why making regular payments like you would on a car loan or mortgage extinguishes the loan more quickly and therefore reduces the interest cost on the loan while retaining all principle as it is repaid.

Yes. Those who practice the Infinite Banking Concept often end up owning multiple policies on themselves, family members, business partners and key employees. As you practice IBC over a long period of time you will find the need to "expand your system" to have a place to store more of your wealth as it grows. Between the two partners at Downstream Wealth we currently have seven IBC policies and multiple additional convertible term policies planned for future conversion for Infinite Banking.

Paid Up Additions (PUA) are single premium death benefits added to the base policy of a Whole Life contract. You can purchase Paid Up Additions as a rider added to a policy (which is a core part of IBC policy design) and you can receive policy dividend payments from the insurance company in the form of Paid Up Additions, which also increases the policy's death benefit. Dividends taken as PUA are received tax-free.

Most likely yes. The limitation is not the number of policies but your total insurability. Insurance companies consider many factors such as employment income, total number of years left to retirement age, total household income, business income and other sources of income, assets, total net worth, amount of current life insurance in-force, and more depending on the amount being applied for. In addition, you can own policies on spouses, children, business partners, employees and anyone else you might have an "insurable interest" in.

Policy loans from the insurance company are secured by the death benefit that the company must pay the beneficiary upon the death of the insured. When the insured dies, any outstanding loan balance is deducted from the death benefit and the remainder is paid out to the beneficiary.

A Whole Life insurance dividend is a portion of the insurance company’s profits that is paid to policyholders who own participating policies. These dividends are typically issued annually and can result from the company’s favorable financial performance, such as better-than-expected investment returns, lower expenses, or fewer claims. Policyholders can use dividends in several ways: 1. Receive them in cash. 2. Apply them to reduce future premiums. 3. Reinvest them to purchase additional paid-up insurance, increasing both the cash value and the death benefit. (This is what we do in Infinite Banking) 4. Leave them to accumulate interest within the policy. Dividends are not guaranteed, as they depend on the company’s financial health, but they can enhance the value of a Whole Life policy over time.

With Whole Life insurance, Cash Surrender Value, usually referred to just as "cash value," represents the Net Present Value of the death benefit. Whenever you pay a premium, it is going toward death benefit. It's either toward the long-term face amount death benefit, Paid-Up Additions death benefit, or a term death benefit (somewhere between 10 and 30 years). The first two generate cash value. Base policy premiums take a longer time to generate cash value relative to Paid Up Additions because base policy premiums are paid for a much longer period of time, whereas PUAs are single premium additional death benefit. Early on, PUA premiums generate a higher relative cash value because of what they represent. With base premiums, the cash value generation takes a longer period of time to catch up, again, because of their structure and purpose. In the long term base premiums generate far more cash value than PUA premiums dollar for dollar, but it takes longer to get there.

Direct recognition and non-direct recognition refer to how life insurance companies treat policy dividends when a policyholder has an outstanding loan against the cash value of their Whole Life insurance policy. Under direct recognition, the insurance company adjusts the dividend payout based on whether there is a loan against the policy’s cash value. When the policyholder takes out a loan, the company may reduce the dividend paid on the portion of the cash value that is being used as collateral for the loan. In some cases, the company may offer a different (often lower) dividend rate on the collateralized portion compared to the cash value that is not borrowed against. With non-direct recognition policies, the insurance company does not adjust the dividend payout based on loans. The policyholder continues to receive the same dividend rate, regardless of whether there is an outstanding loan. The cash value grows as if no loan had been taken.

The key difference between a mutual insurance company and a stock insurance company in whole life insurance lies in ownership and profit distribution. 1. Mutual Insurance Company: • In a mutual company, the policyholders are the owners. This means they have a share in the company’s profits. • Profits are typically distributed to policyholders as dividends, which can be used to increase the policy’s cash value, reduce premiums, or be taken in cash. • Mutual companies are generally known for offering participating policies, which are eligible to receive dividends. 2. Stock Insurance Company: • A stock insurance company is owned by shareholders, not the policyholders. Shareholders may or may not be policyholders themselves. • Profits go to shareholders as dividends, not to policyholders. However, stock companies may still offer participating policies, but they are less common. • Stock companies are profit-driven and tend to prioritize shareholder returns. In short, mutual companies prioritize policyholders, while stock companies focus on shareholders.

Whole Life insurance and Indexed Universal Life insurance policies are completely different products. Here we're only going to focus on one significant difference. The cost of insurance on a Whole Life policy, which is guaranteed to pay out upon the death of the insured, is amortized over the lifetime of the contract (to age 121). As premiums are paid and invested by the insurance company to meet the future obligation of the death benefit, the insurance company has less and less "net amount at risk" to pay the death benefit when it comes due. The insurance company has a reducing death benefit cost and that's why you see higher and higher dividends paid out each year. By contrast, IUL (and other Universal Life insurance products), are totally different under the hood. IULs have two primary components: The Face Amount (death benefit) and the account value. Beneath the Face Amount is "annually renewable term" insurance where the cost of insurance is based on the current age of the insured and increases each year. Early on it's very cheap, but over time this cost increases dramatically. When you pay IUL premiums, the cost of insurance and other fees are subtracted from the premium and the balance goes into the cash account value which is tied to an index or a series of indexes. The hope is that the growth of the account value will far exceed the increasing cost of insurance in later years. There are far too many differences to answer in this space, but we have a white paper available for those who really want to get into the details of these two products.

There are multiple options with policy ownership and beneficiary structure, which depend on many different factors. We can help you assess what’s best for your business.

This is not uncommon, but there's good news. Many business owners can take out policies on other key persons in the company, which will give the business protection against the loss of key personnel, while still allowing the company to practice Infinite Banking.

While the main principles of Infinite Banking still apply to businesses, we start by use our expertise to help owners closely analyze cash flow and liquidity in order to optimize the policy design. We then consult owners on the best ways to use their Infinite Banking policies to help protect and grow their businesses.

Generally speaking, businesses frequently show cash value on the company’s balance sheet as an asset, and policy loan proceeds may be tracked as a separate balance sheet line item. Policy premiums are tracked on the income statement as an expense, and while there may be exceptions for your situation, these are generally not tax-deductible if we want to maintain the numerous tax benefits of Whole Life insurance. However, we highly recommend speaking with a tax professional.

There are two main ways to use Whole Life insurance tax-free. The first is through withdrawals, though we don't typically recommend doing so. Withdraws from cash value aren't taxable until you've withdrawn past the cost basis, or total premiums paid in over the life of the policy. The other way is through the use of policy loans. When I take a loan against my policy cash value, it is considered a debt against the future death benefit payment, and so it isn't considered a taxable or reportable event. Policy loans are an excellent source of retirement income that don't increase the tax burden of other income.

Policy loans are not required to be paid back because they are secured by the policy death benefit. However, in terms of practicing IBC it's important to always treat policy loans as if they were third party loans. All capital has a cost, whether the interest cost from loans, cash losing purchasing power via inflation and lack of growth from interest, or money locked up in inventory gather dust. When you use IBC as a storehouse for your wealth, you want to be a good banker - making wise loans to yourself, and you want to be your "bank's" best customer. Paying loans back at a high "rate of interest" means that you're reducing your interest cost and filling your capital base back up to use when new opportunities come alone.

First, most who do buy term insurance simply do not invest the rest. This is called Parkinson’s law, as mentioned by Nelson Nash in BYOB, in which people spend excess capital. Second, term insurance expires and becomes much more costly later in life. Third, investment returns aren’t guaranteed. We frequently see people plow money into tax deferred accounts they cannot touch, which forces them to end up relying on costly third-party debt anyway. Infinite Banking allows you to control your banking function.

No, IBC is a financial strategy focused on savings and cash flow management. Investments are the opportunities that come along when one has wisely, patiently, and diligently saved, protected, and grown their capital. By paying premiums into a Whole Life insurance contract you are building a superior financial asset that we use as the instrument to control the banking functions in our lives and reducing risk in many areas.

A traditional savings account has two positive characteristics. You money is safe (relatively speaking) and your money is liquid. You can access it easily for the most part. However, in addition to those first two, Whole Life insurance adds guaranteed uninterrupted compounding interest (and non-guaranteed, but historically reliable annual dividends), tax-free growth, tax-free death benefit protection for your family or business, legacy planning, creditor protection, and the ability to leverage that savings without giving up the interest and dividends being earned on the underlying asset.

Check out our full article here talking about Infinite Banking vs. HELOCs.

There have been many regulatory changes recently to address drawbacks of the various types of Universal Life insurance. It may be wise to request a current in-force policy illustration from your current insurer to see whether outcomes have kept pace with the initial illustration. We are happy to review any existing policies and make recommendations, but Whole Life insurance is the only suitable product for Infinite Banking. We are happy to have a discussion on the inherent flaws in UL policy designs and help you explore options to eliminate the risks associated with various UL policies.

No. 401k loans are extremely restrictive. Many plan sponsors no longer even give the option, and if they do, there are limits on how much you can borrow (i.e., 50% of your vested balance). Additionally, you frequently have a strict repayment schedule (cannot make extra payments), and if you quit or lose your job, your loan may become due immediately. Failure to repay could result in a taxable event, along with a 10% early withdrawal penalty. However, perhaps the most important difference is that with Infinite Banking, you are borrowing AGAINST your cash value capital, while 401k loans are taken FROM your capital. Therefore, you have to stop the compounding growth on your capital to access it - and then pay interest to do so. With a Whole Life policy, none of the restrictions or drawback exist. We believe it is far better to save into a vehicle like an IBC structured policy where you have roughly 95% liquidity on your policy's current cash values.

Infinite Banking is not an investment, and it is not a replacement for investing. Infinite Banking is simply the process of safely growing and leveraging your capital, which provides policyholders with a far superior way to save, finance, and invest. Specifically, for investing, Infinite Banking is a complementary strategy that pays investors to wait when investment opportunities aren't plentiful. Those great returns in the market can still be achieved by safely leveraging cash values. At Downstream Wealth, we do not discourage investing at all. However, we believe that controlling your banking function is the first step towards long-term wealth creation.

IBC and investing fall into two completely different categories. Infinite Banking is a savings strategy - where do you save, protect, consistently grow, reduce risk and have available liquid capital whenever needed? By contrast, the goal of investing is taking risk in order to seek higher potential gains. This comes with it the risk of loss, and that capital is usually far less liquid seeking longer term growth.