How to Borrow from Yourself with Infinite Banking

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Hear the phrase ‘borrow from yourself’ and most people think of their personal bank savings account and dipping into funds you had set aside for a rainy day. But did you know there’s a better way to borrow your own money? It’s called infinite banking, and it’s better than borrowing money from the bank.

Infinite banking is a wealth strategy that utilizes life insurance to grow and protect wealth instead of (or in addition to) a bank savings account. But not just any life insurance—dividend-paying whole life insurance that earns cash value with a guaranteed rate of return. When structured for growth, this unique type of insurance allows you to borrow from yourself while capturing interest cost and receives tax-advantaged treatment from the IRS.

When used correctly, infinite banking can take the place of bank loans and loans from third-party lenders. It can help fund major purchases, including your retirement. And it can amount to tens, even hundreds, of thousands of dollars in interest savings. 

Curious to learn more? Here’s how to borrow from yourself with infinite banking.

WATCH: Infinite Banking And Accumulation


The concept of infinite banking was created by finance expert Nelson Nash in the 1980s. He believed as long as banks had the power to set interest rates and loan terms, individuals wouldn’t have control over their own wealth. He determined the best way to avoid bank loans was to utilize policy loans from whole life insurance instead.

Although the idea of infinite banking didn’t come about until the 1980s, the idea of using whole life insurance to grow and protect wealth wasn’t new. People had been using whole life insurance for hundreds of years. It’s how families like the Rockefellers passed down their wealth. And before the 401(k), it’s how many people supplemented pensions and retirement savings

Dividend-paying whole life insurance from a mutual insurance company is uniquely qualified to serve as your own personal bank for several reasons:

  1. It earns cash value. This cash value is an accumulation of premium payments you’ve paid into your policy + interest from your insurance company + non-guaranteed dividends from your insurance company.
  2. It’s protected against market volatility; you earn a guaranteed rate of return regardless of what happens on Wall Street.
  3. You can borrow your cash value tax-free or take tax-deferred withdrawals.
  4. You continue to earn a guaranteed rate of return regardless of outstanding policy loans, often resulting in positive net interest. In other words, you can borrow a dollar and earn interest on it at the same time.
  5. It’s liquid. You can access your cash value at any time, for any reason, without credit approval or penalty.
  6. It’s a private contract between you and your insurance company, so your cash value is protected from asset searches and seizures. It’s protected from creditors in most states and can’t be claimed in legal judgments.
  7. It’s guaranteed to pay out a tax-free death benefit to your beneficiary, perpetuating generational wealth like the Rockefellers. 

Read More: Understanding the Basics of Infinite Banking


Once you purchase a life insurance policy, a portion of every premium payment goes toward the death benefit of the policy and is reflected in the policy’s cash value. The cash value is essentially the value of the insurance policy, minus administrative costs and fees. If you were to cash out the policy after the surrender period, this is the amount you would receive from your insurance company. 

But paying your premiums isn’t the only way to grow cash value. You also earn a guaranteed rate of return from your insurance company and non-guaranteed dividends. The rate of return alone far outperforms interest earned in a bank savings account—just one reason to borrow from yourself with infinite banking. But once you factor in dividends, you may experience returns that rival even those of market-based accounts, without the risk. 

Case Study: Guaranteed Returns with Less Risk

Once you’ve accumulated wealth in your cash value account, it’s yours to borrow as you see fit. Submit a request to your insurance company and funds will appear in your bank account within a few days for a quick cash injection. Your insurance company will charge an interest rate on your policy loan, but you determine the payback terms. What’s more, your cash value will continue to earn a guaranteed rate of return in spite of your outstanding loan, so you can earn money and borrow it at the same time. For example, if you have $20,000 in cash value and take out a $10,000 loan, you’ll continue to earn interest on $20,000. No other financial account allows you this advantage.


Let’s take a closer look at what it means to borrow from yourself using an insurance company as your personal bank vs. relying on a traditional bank:

No credit check with credit bureausCredit score qualification required 
Unpaid policy loans won’t affect your credit scoreDefaulting on a loan will affect your credit score
Private loan not on the UCC-1 reportsPublic information on UCC-1 filing
Interest-only with flexible payment provisionsStrict lending terms and payment structure
Loan limit is based on amount of cash value available in your insurance policyLoan limit is based on collateral, credit score and earned income amount
Access to money within daysAccess to money based on the loan purpose (immediate to months)


Schedule a free virtual consultation and learn next steps in setting up your cash value account. Not only can we answer all your infinite banking questions, we use this proven strategy ourselves and can show you first-hand how to borrow from yourself with whole life insurance. Never pay interest to a bank again; take the first step in regaining control of your wealth today with Paradigm Life.

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