Understanding the Infinite Banking Concept® and Its Origins
The Infinite Banking Concept® (IBC) is a financial strategy that allows individuals to take control of their finances by using a specially designed whole life insurance policy as a personal banking system. Rather than relying on traditional banks for loans and financing, IBC is about building a self-sustaining financial system where you recapture the interest that you are paying to banks and finance companies for the major items that we need during our lifetime. The system uses loans from a mutual insurance company using the insurance policy collateral, repaying the policy loan on your terms, while the cash surrender value in your policy compounds uninterrupted, growing your wealth over time.
IBC was developed by R. Nelson Nash, who outlined the strategy in his book "Becoming Your Own Banker." Nash, a financial expert and former forester, realized that by properly structuring dividend-paying whole life insurance policies, individuals could recapture the money typically lost to banks, creditors, and financial institutions.
Today, the Nelson Nash Institute (NNI) is the leading authority on the Infinite Banking Concept®. While many people and companies talk about IBC, it’s essential to learn from the original source—NNI and authorized IBC practitioners—who uphold Nash’s principles and ensure proper implementation.
R. Nelson Nash, Creator of the Infinite Banking Concept
How the Infinite Banking Concept® Works
The Infinite Banking Concept® is built on the idea that you don’t have to rely on banks to finance major expenses. You finance everything you buy–you either pay interest to others, or you give up interest that you could have earned elsewhere. Here’s how it works:
1. Start with a Dividend-Paying Whole Life Insurance Policy
The platform of IBC is a specially designed whole life insurance policy from a mutual insurance company. Unlike term life insurance, which only provides a death benefit, whole life insurance accumulates cash value over time.
2. Build Cash Value
Each time you make a premium payment, the policy cash surrender value increases. This cash surrender value serves as the collateral for "policy loans."
3. Borrow Against Your Cash Value
Once your policy has built up cash surrender value, you can borrow against it instead of taking a loan from a bank. These loans are unique because:
- You are borrowing from "yourself," i.e. using your contract (policy) cash value as collateral. In effect, you are borrowing from a mutual insurance company, not a financial banking institution.
- Your cash value continues to grow uninterrupted, even while you’re using it because of its collateral nature.
- There are no credit checks or repayment schedules imposed on you.
4. Repay the Loan
When you take a loan from the insurance company that issued your policy, you set your own repayment terms. You are paying the interest that is being charged to the insurance company and any additional interest you are charging yourself gets captured as premium.
5. Repeat the Process for Financial Freedom
By consistently using your policy for major expenses—such as cars, education, business investments, or real estate—you eliminate dependence on banks and grow a personal financial system that works for you.
IBC vs. Traditional Banking
| Feature | Traditional Banking | IBC |
|---|---|---|
| Who Controls It? | The Bank | You |
| Loan Approval? | Based on credit score and lender approval | No approval needed – you borrow from "yourself" |
| Interest Payments? | Paid to the bank | You are paying the interest that is being charged to the insurance company and any additional interest you are charging yourself gets captured as premium. |
| Growth? | Money in savings earns low interest | Cash value grows even when borrowed against |
| Liquidity? | Restricted access to funds | Easy access to your money at any time |
Traditional banking benefits financial institutions. IBC benefits you!
Why Becoming Your Own Banker Puts You in Control
“Becoming Your Own Banker” is the title of Nelson Nash’s book, which explains how to rethink everything you know about money. Instead of relying on outside financial banking institutions, you create your own banking system using dividend-paying whole life insurance.
This strategy helps individuals:
The Infinite Banking Concept® is not an investment—it’s a financial system that gives you full control over your money.
Common Myths About the Infinite Banking Concept®
1. “Whole life insurance is a bad investment.”
IBC is not an investment—it’s a cash flow strategy. While the cash value does grow over time, the real benefit is having a private financial system you control.
2. “I can get better returns elsewhere.”
The Infinite Banking Concept® isn’t about chasing high rates of return. It’s about stability, control, and liquidity—controlling how one finances the things needed throughout one's lifetime.
3. “I don’t need life insurance.”
While life insurance provides a death benefit, which is important, IBC focuses on the living benefits—access to capital, financial security, and long-term growth.
Is the Infinite Banking Concept® Right for Me?
IBC is best for people who:
The Infinite Banking Concept® is a process, not a quick fix. Those who use it correctly experience financial independence and freedom from traditional banks.
Ready to Get Started with the Infinite Banking Concept®?
If you’re ready to explore how the Infinite Banking Concept® works, the Nelson Nash Institute provides the most accurate and trusted information on the subject. Many people talk about IBC, but only Authorized IBC Practitioners are trained to teach it correctly.
