Be Your Own Bank? Here’s the Side of Infinite Banking Nobody Talks About

[William Thompson]

If you’ve spent any time around wealth-building or real estate groups, you’ve probably come across the idea of infinite banking.

The pitch usually sounds like this: “You can be your own bank. Borrow from yourself, grow money tax-free, and never rely on a lender again.”

Sounds amazing, right? But here’s the deal—there are a few things they don’t mention up front that you really need to know before diving in.

What It Actually Is

Infinite banking isn’t magic. It’s basically a whole life insurance policy that you overfund. That extra money builds up “cash value” inside the policy, which grows at a slow but steady rate. Later, you can borrow against it while the policy keeps earning interest/dividends.

So yes, in theory, you’re “banking” with yourself.

The Catch They Don’t Lead With

• High costs up front – Most of your first payments go toward fees and commissions, not savings. It takes a while to build up.
• Patience required – Realistically, it’s 7–10 years before you see much usable cash value. That’s a long wait if you’re trying to scale in real estate.
• Loans aren’t free – When you borrow from your policy, you’re still paying interest—usually to the insurance company. If you don’t pay it back, your death benefit shrinks.
• Low returns – We’re talking maybe 3–5% long-term. Many investors can find better returns putting that same money into deals.
• It’s not a tax loophole – It’s tax-deferred growth, not a magic “tax-free hack.” If structured wrong, you could even create a taxable event.

When It Might Actually Make Sense

• You’ve already maxed out other retirement/tax-advantaged accounts.
• You want a permanent death benefit plus a conservative side bucket for long-term planning.
• You’re thinking in decades, not just the next deal or two.

My Honest Take

Infinite banking isn’t a scam, but it’s not the silver bullet people make it out to be either. For most real estate investors still in growth mode, tying up cash in something slow and expensive doesn’t really help you scale.

But… if you’re already sitting on strong cash flow and looking for diversification or a legacy planning tool, it can play a role. Just know what you’re really signing up for.

Curious how others here see it:

• Have you been pitched on infinite banking?
• Do you think it has a place in a real estate investor’s wealth strategy, or is it better to keep that cash in deals?

[Chris Seveney]

For me, it boils down to what type of life insurance policy do I want. Do I want a term policy that is more affordable a whole life policy, or a mix of both. I will state that I do have one of these policies and I think they are a good fit for specific types of people. I do believe that the higher your net worth the more advantages these policies have.
to me, this is a type of tool you can use in your tool belt that has its pros and cons.