What Is the Infinite Banking Concept?

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The Infinite Banking Concept is a proven wealth strategy where an individual creates their own ‘bank’ instead of relying on traditional bank loans or loans from third-party lenders, essentially making it possible to borrow from yourself. By breaking away from traditional banking, an individual who practices Infinite Banking is better able to control money spent on loan interest, both by reducing the amount of interest paid and by determining loan payback schedules. 

We’ve all heard the old adage, “You have to spend money to make money.” The Infinite Banking Concept helps you spend less money to make money by recouping lost interest. The value of your ‘bank account’ continues to earn a guaranteed rate of return regardless of outstanding loans. In other words, you can borrow a dollar and earn interest on that dollar at the same time. Often, the value of your account accumulates a greater value than the cost of loan interest, netting positive growth even while paying off a loan.


To illustrate the Infinite Banking Concept at work, the example below demonstrates how using Infinite Banking helps grow wealth compared to a traditional bank loan or cash payment for a rental property:

Purchasing a rental property with cash means the buyer doesn’t have to pay any mortgage interest, and will earn nearly $100,000 more than a buyer using traditional bank financing, as a result. However, the buyer using the Infinite Banking Concept who takes out a loan from their personal ‘bank’ with a value of $100,000 earns a guaranteed rate of return (4.5% in this example) that nets $384,700 additional dollars over the 30-year mortgage. The buyer is borrowing their own money ($100,000) and earning interest on it at the same time, making it a more lucrative option than buying the property in cash. In fact, the buyer using the Infinite Banking Concept earns nearly $200,000 more than the cash buyer. 

Read More: Understanding the Basics of Infinite Banking


The Infinite Banking Concept works best when an individual utilizes a dividend-paying whole life insurance policy as their bank. Infinite Banking is NOT whole life insurance, but whole life insurance offers unique benefits that make it ideal for individuals looking to have more control over their wealth. Here’s why it’s the ideal vehicle for Infinite Banking:

  • Funds are available on demand
  • It offers a competitive, guaranteed rate of return
  • It receives favorable tax treatment, so you keep more of your wealth
  • Transfer of ownership is simple
  • It’s private, between you and your insurance company, and may be protected from creditors

When you pay your insurance premium, its value (minus administrative costs/fees) is reflected in the policy’s cash value. It indicates how much your policy is worth, were you to surrender it during your lifetime. This is the amount you can borrow from your policy, and it’s also the amount that earns a guaranteed rate of return, plus non-guaranteed dividends

Your policy is paid for with after-tax dollars, but policy loans are tax free. Because it’s a life insurance policy, it also offers a tax-free death benefit for your heirs. But unlike most life insurance, policies set up for Infinite Banking are uniquely structured to make you money first and provide a death benefit second. 

At Paradigm Life, we specialize in Infinite Banking with whole life insurance and can help you find the best policy that fits with your budget and financial goals. We help people employ the Infinite Banking Concept for goals ranging from real estate investments and generating business capital, to paying for children’s education and funding retirement. 

Schedule a free virtual consultation to see how much you could save on your next loan by switching to Infinite Banking.

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