
E164: Huge Policy Loan Mistakes People Make – A Guide to Infinite Banking Success
In this episode, Nate and Holly discuss the biggest misconceptions about policy loans and how to avoid them in this episode. Unfortunately, these are the misconceptions many people believe when they get started with the Infinite Banking Concept that can lower their wealth-building trajectory.
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E163: How to Know When it’s Best to Use Your Infinite Banking Policy or Pay Cash
In this episode, Nate answers a common question: when does it make sense to use your policy to pay for something, or should you pay for it with cash?
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E148: The Big Differences – Owning a life insurance policy vs being your own banker
In this episode, we discussed the difference between owning a life insurance policy and being your own banker.
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What is Private Family Banking?
A shocking number of Americans live paycheck to paycheck. Surveys show that 74% of all employees live month-to-month, and more than 25% of families earning a six-figure income do the same. Why are so many people so hard up and in poor financial shape? In many cases, the answer to this could lie in the mismanagement of money and escalating debt cycles. The more you earn, the more credit you are entitled to, which combined with interest and fees, erodes family wealth. That’s why it is worth learning about private family banking.
Family banking is easy to fund and provides numerous benefits and can ensure that you never fall into a debt cycle.
Debt is not necessarily a bad thing, as it can facilitate important actions such as buying a home, paying for college, buying a car, or covering health care expenses. However, the interest rates that are tied to traditional lending can cause you to bleed out wealth that could have otherwise been accumulated for your family.
Private family banking can ensure this never happens while allowing you the option of borrowing funds from a whole life insurance policy you set up. This lets you access cash when you need it without borrowing from a traditional bank or other for-profit loan-making organization.
Besides protecting you from debt, family banking also comes with several tax benefits and a number of other financial advantages. Read the rest of this article to find out what these are and to evaluate if the strategy is right for you and your family.
How Private Family Banking Got Started
Before we dive into the mechanics of private family banking, let’s take a look at how the financial strategy got started.
During the 1980s a man named Nelson Nash found himself in a predicament. He had overextended himself on debt and was unable to build wealth thanks to the resulting interest and repayments. At the same time, he recognized that sometimes, to build wealth, you need to be able to borrow money.
As a result, he struck upon what has now become known as the private family banking concept, also referred to as infinite banking. A method where families can effectively become their own bank, build up wealth, pass it to future generations tax-free, and be able to borrow “from themselves” (from life insurance policies) at essentially no interest. We’ll get to how to do that in a bit.
Over time, his ingenious method has become popularized through the publication of a book he wrote called: “Becoming Your Own Banker: Unlock the Infinite Banking Concept”. It is also known among his devotees as the ‘Nelson Nash book’. This book can be found on Amazon.com or from Barnes and Noble or through most other major booksellers.
Other books on the topic have since been written on creating a so-called family bank, and the method has become a widely used, yet little known, wealth hack.
How Family Private Banking Works
So, how does family banking work? How do you set up a family bank and become your own banker?
Private family banking is based on one core offering. Whole life policies purchased through life insurance companies. Let’s take a look at how these work to increase your financial health and to build wealth for you and your family.
Family Bank Funding with Whole Life Insurance Policies
Life insurance can be generally divided into two categories, namely whole life insurance and term life insurance.
Term life insurance is the most common type of life policy nowadays, as it is the cheapest. With a term life insurance policy, you are covered for a certain period, for example, 15 years. Once that period is over, if the policy is unclaimed, it falls away.
In this case, you would need to take out a new policy, and all of the money that you put into the expired policy would be lost. This kind of life insurance policy has no cash value.
Whole life insurance works differently to term life. As the name suggests, whole life policies are for the whole duration of a policy holder’s life. During this time, your monthly payments accrue and give your policy cash value. This makes whole life policies a viable savings vehicle for everyone that can make use of them.
When the insurance policy is claimed (in the event of your death or at a stipulated maximum age), the gain from it is tax-free.
Draw out the cash value of your whole life insurance policy
You can also choose to completely draw out the cash value of your life insurance policy when it has matured. This occurs when your cash value reaches the value of your death benefit.
At the same time, you can choose to borrow cash from your whole life insurance policy before it has matured, and before it reaches the value of the death benefit.
There are quite a few advantages to this, one of them being that you won’t have to go through a loan approval process. If your cash value is high enough, all you have to do is request your ‘loan’. With a family bank, there is no need for credit checks, collateral, or any of the other traditional requirements that typically come with taking out a bank loan.
This effectively gives you a form of cash flow insurance, provides a tax-efficient savings vehicle, and allows you to become your own banker through a family bank.
Now that you know the basics of how to become a private banker, let’s take a closer look at the advantages of this wealth-building system.
The Advantages of Our Family Banking Concept
Private family banking and the family bank concept we use holds a few key advantages. These can be broken down into the following areas. Let’s take a closer look at each of these.
The Ability to Borrow From Yourself Effectively Interest-Free
One of the biggest perks of private family banking is the ability to borrow from yourself, at no interest. It gives you instant cash flow when you need it. Or let’s rephrase that, you will pay interest, but this interest will cancel out.
Here’s how this strategy works.
When you borrow from your whole life insurance policy, you will pay interest on the borrowed amount of money. This interest is set and does not rise over time.
However, the real benefit derives from where this money comes from. When you apply for a loan from your policy, the insurance company does not withdraw the funds from your policy. Instead, they use other funds in their holdings to meet your cash request.
This means that the capital in your policy remains untouched, and continues to grow at a compounded rate of interest. Therefore, while you are paying interest to the life insurance company on the money you borrowed against your policy, your policy itself is canceling out this interest by generating its own positive interest.
This allows you to borrow—against your own money—and effectively not pay interest.
On top of this incredible advantage, as mentioned above, when borrowing against your insurance policy you also won’t have to jump through any of the hoops that you would with regular banks or lenders.
Tax-Free Wealth Growth Through Family Banking
The other sizeable benefits of family banking and the use of whole life policies to build wealth is that they allow for tax-free growth.
The compounded interest you earn on the money within your policy is not subject to tax, unlike most other investment vehicles. Over time this can pose a substantial saving, once which can effectively go back towards the policy and continue to earn more compounded interest over time.
Superior Estate Planning
The third main advantage of private family banking is that it allows for superior estate planning.
Depending on your assets, and where you live, death duties can take a sizeable chunk out of your estate. If you choose to store and accumulate wealth with family banking, you will be able to side pass this.
This reason for this is that life insurance payouts are tax-free. Because these are not taxable, you will be able to transfer the whole value of your fund to your heirs without paying death duties or tax.
Who is this Family Banking Concept for?
Family banking is, essentially, for anyone who wishes to build wealth, improve cash flow when needed, have financial independence from banks and lending institutions, and be smart about estate planning and the passing on of wealth.
However, there is one criterion for embarking on this method. You will need to be able to foot the monthly whole life insurance payments. These payments are substantially higher than term life insurance, which is the reason why term life insurance is now the main type of cover that people take out.
However, with some savvy financial planning and some stringent debt squashing, you may be able to structure your money matters in such a way as to afford a whole term life policy.
Are You Interested in Private Family Banking?
As you can see, private family banking poses a number of key advantages to those that are interested in leveraging this system. From gaining interest-free liquidity backed by your own money—to passing on your wealth tax-free, you have to admit that the perks are substantial and family bank funding is easy to do with our strategy.
If you are interested in learning more about this system of wealth building management, you are in the right place. We have a store of resources on the subject, and also offer consulting services. Additionally, you take advantage of our free infinite banking course that teaches the basics of the infinite banking concept.
At LivingWealth.com, we are a team of experts that are passionate about empowering people like you to realize financial freedom through infinite banking. We are happy to help you in any way that we can realize your goals.
If you have any questions or would like to explore the strategies outlined in this article in more depth, then contact us, or book a live consultation today to get the advice you need to use infinite banking your advantage to design your own private family banking plan.
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What are the different types of whole life insurance policies?
Life insurance is a contract between two parties, the policyholder and the insurer. The policyholder pays a premium to the insurer, and then the insurer offers a benefit when the policyholder dies. The benefit is a sum of money intended to ensure financial security to dependents of the policyholder after their death. In this article, we will look at specific types of life insurance called whole life.
But first, let’s look at life insurance in general and then we will get into types of whole life insurance policies.
Essentially, life insurance provides security. It allows for individuals to have a piece of mind knowing that their family, kin, and other dependents will not face a significant financial burden in the event of their death. Unfortunately, all life insurance policies are not created equal. It is essential to understand which policies allow you to maximize your benefits and suit your individual needs.
Examples of life insurance policies
Examples of life insurance policies include term life, universal life, variable universal life, whole life, and many more. Each policy has advantages and disadvantages. This article’s focus is on whole life insurance.
The insurer for life insurance is often a third-party such as a bank. With whole life insurance, the policyholder has complete ownership. This ownership enables you to have more control of your investment and gives you the flexibility to cater the policy to your personal needs. For example, policyholders can borrow against the premiums you have already paid. You are not limited to waiting until death to have access to your money.
How whole life insurance differs
Whole life insurance also differs from other policies in that it offers a fixed benefit. (This is what Wikipedia says about it.) With some life insurance policies, you pay into it with the hope that there will be a significant amount of money received. However, the exact amount you will receive upon death and/or at the end of the policy may is not guaranteed, nor is it known beforehand. Whole life insurance eliminates the guesswork by providing a guaranteed cash value that remains the same throughout the contract, providing peace of mind. It also allows for accurate planning.
Another perk of a whole life insurance policy is that the money grows tax-free. This means the growth of the policy is not dependent on the IRS and the federal government. There are many advantages to having a whole life policy. However, there are some downsides. To reap these benefits, you are often required to pay higher premiums and extra fees.
Additionally, it is a more complicated option, which may be hard to benefit from without the help of a professional. Nonetheless, this policy has been around for over 100 years and is proven to have worked for many people. It gives you control of your contract and ensures you are reaping the benefits instead of a third-party insurer. Therefore, it can be an excellent investment to get you towards financial freedom and security.
All whole life insurance policies are not created equally. There is a wide variety of options to suit your individual needs. Below is a deeper dive into the different types of whole life policies.
Types of Whole Life Insurance Policies:
Let’s look at the types of whole life insurance policies available in the marketplace:
Non-participating Whole Life
A non-participating whole life policy is one of the more common policies people choose. In this policy, you are not participating in investment activities. You have a fixed death benefit, guaranteed cash value, and level premiums. It is a lower cost and lower risk, but it may not see as much growth as other options.
Participating Whole Life
A participating whole life policy, you are participating in investment activities through dividends. A dividend is a sum of money given to members of the company and/or shareholders. Essentially, when the investments do well, the policyholder receives more money. Premiums are often higher with the policy because of the potential for growth. However, it is a bit of a higher risk because dividends are not guaranteed.
Single-Premium Whole Life
In this policy, you pay a lump sum amount to purchase the policy upfront. This is often lower risk because you are deciding how much you would like to have in your death benefit; it is dependent on how much you invest initially. The option has excellent growth potential. The earlier it is purchased, the longer it can have to build-up. A downside to this option is the high cost, and you are charged more substantial fees for canceling the policy within the first few years.
Level Premium Whole Life
Level Premium Whole Life is also a common policy choice. In this policy, premiums are calculated based on the entire duration of the contract or the policyholder’s life. This option offers stability and consistency. The premiums are the same every pay period until the policyholder dies. Additionally, you have the option to pay for a shorter term (ex. 10 years) to fit your needs. It is also a lower risk because the premium price does not change unless specified by the policyholder.
Indeterminate Premium Whole Life
In this policy, the premium payment varies and is based on the performance and projections of investments. If they are doing well, then the policyholder will pay a lower premium. When they are not doing well, premiums go up. However, the premium cost can not exceed the maximum amount. The amount is set at the time the policy is purchased.
Whole Life Economic
This policy works similarly to participating whole life insurance through the use of dividends. However, dividends are used to buy additional life insurance. A benefit of this option is that benefits can grow if performance and projections are doing well. However, it can also decrease if they are not doing well.
Living Wealth tips for developing a whole life insurance policy
Living Wealth believes that to maximize the benefits of your whole life policy; you should purchase the policy with a mutual company and add a paid-up addition (PUA) rider to the policy. A mutual company is one that is not controlled by the stock market. When you put your policy into the hand of a stock company, you do not have a say in how your money is used. Additionally, the extra money made through the investments goes to the shareholders of the company. In a mutual company, the owner is the one who buys the policy – you. This means you can participate directly in the profits and dividends. Moreover, the profits go to you instead of the stockholders.
A paid-up addition (PUA) rider allows for the policyholder to add benefits to the existing policy. This is achieved by buying additional coverage with dividends. By doing this, you are increasing the potential for growth as PUA riders can also increase in value as time goes on. Essentially this helps you add value and cash to an existing policy.
Overall, whether you take these tips or choose to purchase one of the existing types discussed above, whole life insurance is a good option for many. It is generally higher cost, but this price point allows for greater stability, control, flexibility, and potential for growth. This provides peace of mind knowing that your dependents will be taken care of after your death.
Related:

Infinite Banking Glossary of Terms
Infinite Banking Concept Defined
Before we dive into common infinite banking terms, let’s quickly take a look at the infinite banking concept itself, and how this system of personal money management works.
Infinite banking was conceptualized by a man named Nelson Nash in the early 1980s. Nash was struggling to build wealth at the time, thanks to having to pay high rates of interest on his credit. When he realized that much of his financial frustration was due to a lack of liquidity, and debt that incurred interest, he struck upon an idea, which became what is known as infinite banking. IBC works by individuals investing their savings into a whole life policy. The money put into the whole life policy generates interest and accumulates. From this policy, the holder can take out loans if need be. The family of the holder is also financially protected in the event of the death of the policyholder. When they do pass, the family is paid out.
Advantages of Infinite Banking
The Infinite Banking Concept method of personal banking has a number of key advantages. These include:
- Financial security for the family
- Long term savings and wealth building
- Liquidity of savings, which equates to good cash flow
- Non-taxable interest earned
- Interest paid on money borrowed from the fund is set and does not change for the duration of the policy
One of the benefits that people love about infinite banking is that it essentially helps you become your own banker. If you want to take a loan from yourself, you simply call your insurance company, and the money arrives in a few days.
There are no complicated approval processes, no credit checks or fluctuating rates of interest. Policyholders are also in control of how they pay back loans from the policy.
Common Infinite Banking Terms Defined
Now let’s take a look at some of the common terms associated with infinite banking and their meanings.
1. Be Your Own Bank
Probably one of the most common terms used in infinite banking is to be your own bank. Through the use of whole term policies, you can essentially become your own banker, borrowing from yourself and repaying yourself at will, without common credit restrictions or interest rates that are out of your control.
2. Family Bank
Another similar term is family bank or private family banking. This means that same thing as Be Your Own Bank. It is simply referring to the fact that a family can gain control of their wealth building and cash flow through the infinite banking concept and whole term policies.
There are a number of other names for this, such as: bank on yourself, circle of wealth, and the perpetual wealth system.
3. Borrow From Yourself
As you can see, one of the key benefits of the infinite banking system is that if you need to take out a loan or leverage cashflow—either for emergencies or for an opportunity—you can do so at any point.
This is known as borrowing from yourself. When you choose to borrow from yourself, you are borrowing from your whole term policy. You can borrow up to the cash value of the policy, which is how much you have put into it.
4. Pay Yourself First
Most people pay themselves last. For the most part, in America today people send their money out to everyone else – to their landlord, their mortgage holder, to credit card companies – and they just hope that there’s something left at the end of the month for them. That’s not a good system to guarantee success.
If you paying yourself first, have your money work for you, you’re going to build wealth, reduce your reliance on interest-earning financial businesses such as credit card companies and banks. Instead, you use own money and borrow against it. You also set the terms based on what works for you, as opposed to having to meet terms laid out by a bank or other lender.
Learn more about paying yourself first in this episode of our podcast: Episode 7: Paying Yourself First
5. Whole Life Insurance
If you are interested in how infinite banking works, one of the first things you will need to understand are the terms whole life insurance and term life insurance.
Let’s take a look at whole life insurance first.
Whole life insurance is insurance that covers policyholders for their entire lives. This type of life insurance does not expire.
In some cases, whole life policies may have a cut-off point, generally at 95, 98, or 99 years of age. At that point, the policy will be paid either to the holder or to the beneficiaries in full.
The premiums for whole life insurance are a lot higher than for term insurance. However, over time, these policies increase savings.
Learn more about types of whole life insurance policies here. Also learn more in this episode of our podcast: Episode 20: How to build the perfect insurance policy
6. Term Life Insurance
Term life insurance is more popular nowadays than whole life insurance. This is largely because premiums are much lower.
However, term life insurance policies only run for a set period, such as 15 or 30 years. When this period is up, the policy expires, and—unlike whole life policies—the money that you put into it evaporates.
What’s more, while the premiums are low for younger holders, they increase substantially as you age.
Are You Fascinated by the Infinite Banking Concept?
Are you like us? Fascinated by the infinite banking system?
If you want to figure out how you could use the infinite banking concept to build wealth and financial stability, we are the folk you want to speak to. Passionate about providing people with the tools to thrive financially, we are eager to help you understand more about infinite banking.
To learn how to get started with becoming your own bank, schedule a private consultation with us and let us set you off on the path to financial freedom.

Nelson Nash the Father of Infinite Banking
The United States economy looks great at a macro level. Gross domestic product is increasing and unemployment is near record lows. Once you peel back the onion, a different story emerges. The truth is that 60% of Americans do not have $1000 available in the event of an emergency. The good news is that middle-class Americans do not need to live like this.
Financing pioneer Nelson Nash developed a creative way to generate wealth. Read on to learn all about a process called infinite banking, that Nash invented. Explore the concept behind infinite banking and how it can help you achieve financial independence.
Who is Nelson Nash?
Nelson Nash is the founder of the infinite banking concept. Nash started a movement commonly referred to as: Becoming Your Own Banker, and based on the book of the same name. See a book summary.
He was born in 1931. He died Wednesday, March 27, 2019, at the age of 88. His death was a result of complications from heart disease.
Nash’s white-collar career started as a private consultant in the forestry industry. He received a B.S. Degree in Forestry from the University of Georgia, 1952. From 1954-1963, Nash worked as a Consulting Forester in eastern North Carolina.
In 1964, he transitioned to the life insurance industry. Here, he developed the expertise that led him to start the Become Your Own Banker method.
Later in life, Nash was frustrated that he did not stumble upon this secret sooner. Imagine a scenario in which you could wholly eliminate financing expenses. Think of the positive impact on your personal budget if you did not pay interest on a mortgage or auto loan.
Nash was passionate about shifting financial independence away from lenders and towards consumers. He spent the majority of the last 20 years empowering people to take control of their personal finances.
Nash worked in life insurance for more than 35 years. He worked with The Equitable Life Assurance Society of the U.S. and with The Guardian. Nash was also inducted as a Hall of Fame Member by Equitable, a Chartered Life Underwriter, and Life Member of the Million Dollar Round Table.
Nash flew with the Army National Guard and earned Master Aviator Wings during his 30 years of military service. He was a licensed pilot for 71 years.
What is the Connection Between Nelson Nash and Infinite Banking?
Nash developed the concept behind infinite banking is for consumers to create their own banking system. The primary method for generating capital is using dividend-paying whole life insurance. The end goal of infinite banking is to no longer rely on banks or other financial institutions for capital. Instead, you are financially independent and raise capital on your own. See further info and a glossary of terms here.
What Is Whole Life Insurance?
Since whole life insurance is the vehicle for infinite banking, it is important to define it first. Whole life insurance is permanent and covers a person until their death. This differs from a term life insurance policy, which provides coverage for a fixed period of time. A term life insurance policy most commonly covers a person from 10 to 30 years.
Another benefit of whole life insurance is that the premium is fixed. The premium does not change over time, regardless of how long you have carried the policy. As it pertains to infinite banking, the most important element of a whole life insurance policy is the cash value benefit. There is a savings component for this type of policy. A portion of your monthly premium is directed into a savings account.
What Are Dividends?
Some whole life insurance policies provide dividends. Dividends are a cash payout provided to policyholders on a regular basis. The dividend amount is typically based on the performance of the insurance company’s investment. In some cases, a portion of the company’s profits is returned to policyholders as a dividend. A dividend-paying whole life insurance policy is the foundation of the infinite banking concept. This is the cash flow that can reduce a consumer’s dependence on banks and other lenders for capital.
What Are Dividends Used For?
Dividends on a whole life insurance policy are used for a number of different purposes. Some consumers use dividends to pay down premiums. Others use it to buy additional insurance or prepay a policy. These two uses are not what Nelson Nash had in mind with the IBC. Instead, one way to effectively use dividends is to keep them with the insurance company. The cash is retained in a savings account where it accrues interest over time. Another effective use for IBC followers is accepting cash or check. You can request that the insurance company issue the dividend to you directly.
The good news is that the Internal Revenue Service (IRS) does not tax dividends issued in cash or check. IRS policy is to consider the dividend an overpayment on a premium. By following either one of these methods, you can achieve financial independence. The dividend can now be used to support a business venture or pay for your child’s higher education.
What Training Resources Are Available?
Some consumers are going to want more information than a blog post can offer. While the infinite banking concept (IBC) is easy to execute, there are training resources available for those that want it.
IBC Seminar and Live Training
The Nelson Nash Institute holds an IBC seminar conducted by financial professionals. These seminars routinely occur throughout the country. They are four hours long and are designed to coach IBC users on achieving financial independence
An IBC seminar DVD is available for users that cannot attend in-person. Lastly, there is a training program specifically designed for IBC practitioners. In fact, Nelson Nash was the primary instructor of this program for many years.
YouTube
The Nelson Nash Institute (NNI) has posted many informative YouTube videos. Some people tend to retain more information from a video rather than a book. For this reason, Nash had the foresight to video record his speeches. Many conversations about IBC with Nash were recorded as well. There are also video tutorials of other IBC experts such as Dr. Robert Murphy.
Written Content
Of course, Nelson Nash’s book Becoming Your Own Banker is the best source of information on IBC. There is a lot of written content available for interested consumers. For example, the NNI releases a monthly PDF newsletter with helpful information. There have also been many professional articles written on the subject.
A Recap of Nelson Nash and the Infinite Banking Concept
While many Americans are struggling with debt, you can chart a different path. Nelson Nash laid out an effective strategy for achieving financial independence. You can use a dividend-paying whole life insurance policy to eliminate financing expenses. If you are interested in learning more about Nelson Nash and IBC, sign up for a free course today.
Related Nelson Nash Resources:
Here are some additional resources that people look for when they study Nelson Nash.
- Nelson Nash on Wikipedia – There is no listing for Nash on Wikipedia.
- Nelson Nash on Youtube
- Nash Books: Becoming Your Own Banker Sixth Edition, Building Your Warehouse of Wealth, and The Case for IBC.
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