Is Infinite Banking a Scam? Here’s the Honest Answer

What is Infinite Banking?

The basic idea of the Infinite Banking Concept (IBC) – aka Becoming Your Own Banker – is built around funding whole life insurance and then leveraging the 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Some adore/love the concept to the point they seem to believe it is magic, while others believe the concept is outdated and no longer applies in today’s environment. Still, others hate it and truly believe in the infinite banking scam claims. But is infinite banking a scam? The truth, as is often the case, is somewhere between these extremes.

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

The term “Infinite Banking,” however, has only been around since the 1980s and the book which popularized the concept wasn’t released until about the year 2000. R. Nelson Nash, the author of Becoming Your Own Banker: Unlock the Infinite Banking Concept, states that he didn’t invent this concept but simply discovered how to use it for himself. 

An Example of How To Use Infinite Banking

Here’s how it can work:

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. Enter the infinite banking concept. With the funding of one or more properly designed dividend-paying whole life insurance policy(ies), you will have guaranteed access to cash that you can leverage for anything you choose.

The insurance company also 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. These are additional benefits to implementing an IBC strategy for you and your family’s financial legacy. 

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 just a couple:

Fink’s Cigar Company

One of our clients 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.

The 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 see 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 Scam Claim True?

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. the bank on yourself scam).

So are the infinite banking scam connotations accurate? Is it a Ponzi scheme or a fraud? The short answer is no. Yet the IBC also isn’t necessarily the best or the only way (as some claim it to be) to take advantage of this established strategy. There are other ways that allow you to collateralize the cash value in participating whole life insurance and use it to self-finance investments, projects, and purchases.


Infinite Banking Concept Pros And Cons

When people ask, “is infinite banking a scam?”, they often aren’t considering all the pros and cons that come with using the strategy. As we mentioned, the concept isn’t the best strategy for everyone, but that also doesn’t mean that it is a scam. Here’s a quick overview of some of the pros and cons.


  1. Increased cash flow and liquidity over time
  2. Guaranteed available cash value
  3. Tax-free loans and tax-deferred growth
  4. Protection
  5. Increasing equity


  1. Requires a time investment to learn about how to use the strategy effectively
  2. More start up cost because you need a well-designed whole life insurance policy

To summarize, the infinite banking concept is not the official or required method for leveraging the cash value build-up in participating whole life insurance, and the concept isn’t for everyone. 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 and use many of 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 John McFie of Life Benefits 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>

Owning participating whole life insurance will enhance most people’s ability to create sustainable wealth, that is why we design and sell these policies. But we do more than just sell life insurance. We help you develop a personal strategy to create sustainable wealth and keep more of the money you make.

Give us a call at 702-660-7000 or schedule a strategy session to see if using life insurance and the infinite banking strategy can work 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
Infinite Banking Concept

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Infinite Banking eBook

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