What is the Infinite banking concept? How does it work?

Infinite banking allows individuals to become their own banks and leverage the amount of a dividend-paying life insurance policy on a permanent basis. Back in the 1980s, Nelson Nash, a well-known economist, developed the infinite banking concept that provides freedom to you to access the cash value of the policy simply by taking it from yourself and paying it back at any time. Infinite banking can remove the tension about credit checks, loans, as well as high-interest payments.

On the path to financial freedom, becoming one’s own banker is a major step. Let’s take a closer look at how the concept works.

How does infinite banking work?

This concept mostly revolves around the permanent life insurance policy. Hence, this policy will work for a lifetime or at least till the time the premiums are paid by you on time. Comparatively, a life insurance policy that is not permanent will last for a few years or decades.

Premiums for a short-term life policy are less than a permanent life insurance policy. There are 3 components of where a person’s premium payments go on a monthly basis that is mentioned below:

  1. The portion of the amount held in a savings account
  2. The value that covers the death benefit
  3. Fees and operational cost

A portion of every premium payment is funneled into the savings amount part. This feature is considered a unique benefit of the permanent life insurance policy. The person can borrow money from part of their growing cash value to pay for major life expenses like purchasing a home or joining school/college.

Mostly, the amount in the life insurance policy determines how good a banker a person can become for themselves while following the rules of infinite banking.

The concept of infinite banking in a nutshell

Infinite banking can surely be considered a powerful personal finance tool for those people who have a good net worth. They can take advantage of tax savings and use the concept to quickly borrow money for personal needs.


We hope now you understand the concept of infinite banking and how you can quickly borrow and return the money by using the IBC.

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.