Is the Infinite Banking Concept a Scam?

What is the Infinite Banking Concept?

The basic idea of the Infinite Banking Concept – aka Becoming Your Own Banker – is built around funding whole life insurance and then leveraging cash value via policy loans to self-finance debt, personal and business expenses, investments, and even passive income for retirement.

Some adore/love the concept to the point they seem to believe it is magic, others hate it and truly believe it is a scam. Still other people believe the concept is outdated and no longer applies in today’s environment. The truth, as is often the case, is somewhere between the extremes.

The idea behind the Infinite Banking Concept (IBC) isn’t new. People have been using participating whole life insurance to self-finance purchases for well over 100 years.

Participating whole life insurance (PWLI) is a contract designed to remain in force for the policyholder’s entire life. It includes the buildup of cash values and also grants you the right to borrow against the policy value. This can be especially advantageous for individuals looking to borrow for a business/investment and pay the loan back over time or at a specific future time.

The insurance company contractually guarantees to pay the beneficiaries of the policy a certain death benefit upon the death of the insured; and to share with policy owners (aka participants, policyholders) a portion of the company profits. This sharing of profits is referred to as dividends but is rather considered a return of premium according to current tax law in the United States.

Success Stories with IBC 

Life insurance has been around for centuries and thousands (likely millions) of people have taken policy loans and paid them back. We have encountered multiple success stories with individuals who have used the infinite banking concept. Here are a couple:

Fink’s Cigar Company 

One of our client’s expressed how her great-great-grandfather used his life insurance policy in the 1890s to access money so he could start a cigar company—Finck’s Cigar company. This company is still in business today. Read about the details here: How the founder of Finck’s Cigar Company self-financed himself into business with a loan from his life insurance policy.

Current U.S. President 

Current U.S. President Joe Biden has also used whole insurance. Read this financial statement released by the White House in May of 2012 and understand that President Joe Biden (then Vice-President) has taken policy loans against his MassMutual Participating Whole Life Insurance Policies similar to what the Infinite Banking Concept (aka Becoming Your Own Banker) outlines.

Is the Infinite Banking Concept a Scam

For one reason or another, multiple people and companies have deemed infinite banking a scam. Similar concepts may also be referred to as potential scams i.e. bank on yourself scam.

So is infinite banking a scam, a Ponzi scheme or a fraud? No. Yet is IBC the best way, or the only way as some claim it to be, of taking advantage of this established strategy which allows you to collateralize the cash value in participating whole life insurance and use it to self-finance other investments, projects and purchases? The answer to this question is also a definite No.

Infinite Banking has only been around since the 1980’s and the book which popularized the concept wasn’t released until about the year 2000.

Meanwhile, people have been self-financing investments and personal needs through policy loans against their participating whole life insurance policies for well over 100 years! Even R. Nelson Nash the author of Becoming Your Own Banker: Unlock the Infinite Banking Concept boldly states that he didn’t invent this concept but simply discovered how to use it for himself.


So is IBC the official or required method for leveraging the cash value build up which occurs in participating whole life insurance? No. Is IBC for everybody? Again, the answer is, no. Many people desire more than just a mechanical methodology to follow and it is these people who benefit from Life Benefits’ services.

Learn More About the Infinite Banking Concept 

At Life Benefits, we focus on helping clients build sustainable wealth through the Life Benefits Formula®.

We are also familiar with the principles of the Infinite Banking Concept. Many of our clients use their policies to self-finance projects in ways very similar to infinite banking, and our team has written a 31-page eBook on understanding Infinite Banking in our modern environment.

Understanding the Infinite Banking Concept pdf ebook Understanding the Infinite Banking Concept and How It Works In Our Modern Environment 31 page ebook from Life Benefits Order here>

We are not here just to sell you a life insurance policy. At the same time owning participating whole life insurance will enhance most people’s sustainable wealth, therefore we do design and sell the policies which will help you accomplish this.

Give us a call at 702-660-7000 to see if the infinite banking strategy is right for you.

Dr. Tomas McFieDr. Tomas P. McFie

Most Americans depend on Social Security for retirement income. Even when people think they’re saving money, taxes, fees, investment losses and market volatility take most of their money away. Tom McFie is the founder of Life Benefits which helps people keep more of the money they make, so they can have financial peace of mind. His latest book, How to Build Sustainable Wealth, can be purchased here. 

Understanding the
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