How to Be Your Own Banker blog header image

How to Be Your Own Banker in 5 Steps

So you want to be your own banker? Many families utilize participating cash value life insurance as their own private banking system, allowing them to maximize their income and protect wealth from future market downturns. But how do you get started? 

Read more: Understanding the Basics of Infinite Banking

Be Your Own Banker in 5 Steps

Step 1: Adopt a Growth Mindset

Changing the way you think about money may be easier said than done, but if you’re reading this, chances are you’re already on your way to a new money mindset. It takes a fair amount of courage to go against the status quo and seek out alternative ways to grow and protect your wealth, but if you want different results financially, the way you look at finances must change.

The wealthy have a growth mindset. And they realize the quickest way to make more money is to maximize earned income. This is achievable by reducing taxes, increasing your rate of return, and reducing high-interest debt—all of which a cash value life insurance policy will do. But there’s an even more important way to maximize earned income: Focusing on your human capital assets.

Examples of these assets include:

  • Your talents and strengths
  • Your professional training, experience & credentials
  • Your business contacts & relationships
  • Your business opportunities
  • Your reputation

You’re the source of all the wealth you have created and will create. Your capacity to do so is infinite. In order to be your own banker, you have to have a growth mindset where you are your own greatest asset. 

Step 2: Be Like the Wealthy

One commonality among the wealth is that they diversify their investments. And we’re not talking about mutual funds. Holding non-correlated assets is essential to growing and protecting wealth. Banks and corporations hold billions of dollars in cash value life insurance as Tier 1 Assets on their books. And wealthy families have relied on life insurance for generations. 

It’s not that the wealthy have all their money in insurance. Rather, insurance is used as a foundational wealth vehicle. It fulfills the traditional role of life insurance with a death benefit. But it also offers living benefits inducing liquid assets and a guaranteed loan provision—two features essential to being your own banker.

Cash value life insurance is an extremely liquid asset compared to other assets like real estate, stocks, bonds, or qualified plans like your 401(k) or IRA. In fact, arguably the single most beneficial aspect of infinite banking is that it improves your cash flow. You don’t need to go through the hoops of a traditional bank to get a loan; simply request a tax-free policy loan from your insurer and funds will be made available to you. And you determine the pay-back schedule. What’s more, the cash value of your policy continues to earn a guaranteed rate of return regardless of outstanding policy loans, something no other financial tool or account can offer.

Because whole life insurance is liquid, it can make up a valuable part of your financial foundation, acting as your emergency savings. Whether you run into unforeseen medical bills, job loss or costly home repairs, policy loans offer peace of mind. You can even use your insurance policy to pay yourself an income if you decide to go on sabbatical, return to school or take time off work to care for loved ones.

Step 3: Set Financial Goals

The real benefits of infinite banking become most apparent when you use your insurance policy to accomplish financial goals. Whether you’re trying to put your kids through college, fund a business, invest in real estate, buy a car, or increase cash flow in retirement, you need to outline a clear picture of what you’re trying to accomplish with your insurance policy.

Keep in mind that bankers don’t look for ways to get rich quick. Infinite banking isn’t that kind of strategy. If you want to be your own banker, you need to prioritize long-term goals and understand that this strategy comes with the necessity of commitment. Not only are you committing to annual premium payments, but discipline during the first 7 years of the policy (the initial capitalization period). 

Of course, goals change as your family and career dynamic shift. In order to be your own banker, you need to take a controlling interest in your financial future. This means actively being involved in your finances and meeting with your insurance agent or Wealth Strategist annually to make adjustments if needed. You’re about to be in the driver’s seat—not your accountant, not your tax advisor, not your financial planner (although it’s good to utilize them as part of your wealth management team).

Speaking of team, you should include your family in your goal-making process. Eventually, your policy’s death benefit will pass down to future generations and financial education is key in generating perpetual wealth. You may even decide to increase the spending power of your family’s private bank by purchasing cash value insurance policies for your spouse or children.

Step 4: Get Healthy

At the end of the day, in order to be your own banker and utilize an infinite banking strategy, you need to qualify for an insurance policy.

If you’re young and healthy, this shouldn’t be a problem. But if you’ve recently had a serious illness, are in retirement, or have been denied coverage in the past, a Wealth Strategist at Paradigm Life can help. We work with the nation’s top-rated insurance providers and are experts at finding suitable policies for a variety of ages, health considerations, and budgets. And if you can take steps to improve your insurance rating like losing weight, quitting smoking, or even adopting safer driving habits, now is the time to do so. 

Step 5: Schedule a Free Consultation

If you want your private bank to be successful, it needs to be properly structured. And while any whole life insurance policy will earn cash value, not all policies optimize your wealth equally. The Wealth Strategists at Paradigm Life all utilize the infinite banking strategy and own participating cash value insurance, so we thoroughly understand how to be your own banker, and have first-hand experience seeing how this wealth strategy has benefited thousands of families across the country.

Click to schedule your complimentary virtual consultation here and get started today.