Since the infinite banking concept is gaining popularity, you have to understand the basics and how does it work in the financial world. Additionally, people have to understand who can actually use IBC regularly and why newcomers are finding the concept difficult to conceptualize.

What is infinite banking?

The Infinite banking concept was created by a popular finance expert and economist named Nelson Nash at the beginning of the 1980s. He advocated that the price of different products is not just the result of their demand and supply. Rather, the people decide the price of goods based on their requirements and own financial status.

Using the same thought process, Nash created the concept that people can become their own bankers and decide when they should borrow and return the money to meet different financial goals. As long as banks will set high-interest rates and different terms for loans, people have limited control to decide how and when they can use their wealth. By becoming your own banker, you can have better control over the way the wealth can be used.

How permanent life insurance policy works in IBC?

There is a cash value that is determined for a whole life insurance policy. This amount will be provided as the death benefit by the insurance company. For those who cancel the policy while they are alive, the company pays them the cash value. As long as the person decides to pay policy premiums, they can use the cash value for different loans for personal or business purposes.

Comparatively, term life insurance will only serve the beneficiaries who are usually family members, after the person passes away. On the other hand, a whole life insurance policy comes with a lot of benefits that can be used by the policyholder. Mainly, there are 2 types of permanent life insurance policies provided by the companies: participating and non-participating. In participating policy, the person can receive dividends from the insurance companies based on their profit.


We hope now you understand the meaning of infinite banking and how people who have a whole life insurance policy can take benefit as a policyholder.