The Infinite Banking Concept

The essence of the Infinite Banking Concept is how to recover the interest that you normally pay to a banking institution through the use of dividend-paying life insurance. This way the policy owner makes what a banking institution does. It is a third alternative to making a purchase. Instead of losing opportunity cost on cash or the finance cost of using someone else’s bank, this alternative provides a way to do what you would normally do anyway. It just helps you recapture the cost of those purchases. Earnings grow within the policy tax-deferred. You are both reducing your tax burden and capturing monies for yourself that a banking institution normally would receive. You also have a death benefit thrown in on the side!

Anytime you can cut your payment of interest to others and direct that same market rate of interest to an entity you own and control, you will have improved your wealth-generating potential significantly.

The Infinite Banking Concept is not about investing, it is about financing. Financing is a process, not a product. Financing involves both the creation of and maintenance of a pool of money and its use. However, when a financing system is combined with an investment system, the combination of the two will always outperform an investment system. When the system combines reduced tax liability with a financing engine and allows complete control over your investments, there appears to be no system capable of generating wealth with as much consistency or speed.

A primary concept or principle is that you finance everything. You either finance by paying interest to someone else ie, a bank, lender, etc., or give up the interest you could have earned otherwise. When you pay cash, the interest the money could have earned is forfeited. For these reasons, when we are discussing investment alternatives we must not only weigh the return we will receive but we must also evaluate what we are forfeiting or giving up. This mindset will become more important as we evaluate the “Infinite Banking Concept.” For all of the reasons mentioned above, every person should be fully engaged in two businesses – Your occupation and Banking.