Infinite Banking: Expectations vs. Reality

The term Infinite Banking means putting a lot of cash value in a whole life insurance policy and borrowing that money against the cash value instead of borrowing from a bank or anywhere else, whenever you need it. The cash value compounds itself and after certain years, you can develop an infinite bank for yourself. However, it takes a lot of time to reach there and also you have to maintain your cash value till then. Not only that but it is not as easy as it sounds. Let’s learn the reality behind the fancy name.

Expectation VS Reality

●       The only benefit

As the name suggests, Infinite banking means creating a bank for yourself. However, that’s the only benefit of the Infinite banking concept. While it does secure your retirement, it also restricts you from investing in high return schemes such as mutual funds or the stock market. Not only that but with the infinite banking concept in place you are also skipping other retirement investment options that can give you immense returns.

●       Inflation

While your money gets compounded every month, they are still subject to inflation. The initial returns were below the inflation rates. Therefore, in order to get a better return than inflation you need to constantly throw your money into the policy for a long time. Even at that point, when you do the math, you could have earned better returns by investing in other schemes.

●       You need to purchase a whole life insurance policy

To create an infinite banking system, you need to purchase a whole life insurance policy. Overly priced insurance, large commissions, unscrupulous sales techniques, low returns on capital, and barely educated clients and agents afflict the whole life insurance sector. However, if you want to “Bank on Yourself,” you’ll have to enter this market and purchase entire life insurance.


Understanding how the fee structure of Infinite Banking and Full Life policies works will help you make better fee decisions and determine if Infinite Banking is right for you. However, there are many legal aspects, that need to be taken care of and to help you with that, we are putting the link to where you can easily learn more about infinite banking.

Stella Tennant

Stella Tennant has helped several global brands, which get heard across the digital space, through result driven content & social media marketing efforts. Studying blockchains and cryptocurrencies makes her hopeful of a free and decentralized future.