Infinite banking, have you used it?

Member since 2022 · 77 posts · 47 votes

Just learned about infinite banking at my last meet up. I was by no means an expert when I left, but I did have a grasp. Read the book by nelson Nash "becoming your own banker" and enjoyed it. Has anyone out there borrowed against their life insurance to fund a deal? This is whole concept fascinates me, I wish I had learned ten years ago.

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Thomas RutkowskiPro Member

Financial Advisor · Boynton Beach, FL · Member since 2015 · 833 posts · 798 votes

Quote from @Colin Higgins:

There are a lot of people here on BP using this approach. I use it myself and it absolutely works.

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Thomas RutkowskiPro Member
Financial Advisor · Boynton Beach, FL · Member since 2015 · 833 posts · 798 votes
3y
Quote from @Colin Higgins:

Just learned about infinite banking at my last meet up. I was by no means an expert when I left, but I did have a grasp. Read the book by nelson Nash "becoming your own banker" and enjoyed it. Has anyone out there borrowed against their life insurance to fund a deal? This is whole concept fascinates me, I wish I had learned ten years ago.

There are a lot of people here on BP using this approach. I use it myself and it absolutely works.
4 Reply
Matt Ruttenberg
Specialist · Grand Rapids, MI · Member since 2020 · 116 posts · 80 votes
3y
It's a great concept and if designed properly, can be very beneficial. There two schools of thought with either a Whole Life Policy or an Indexed Universal Life policy... I'm a fan of the IUL personally because of the flexibility and a much easier design. You can use it like a Fix n' Flip then refi out to pay off the loan... rinse, repeat.
4 Reply
Shafi Noss
Lender · Nationwide · Member since 2018 · 571 posts · 310 votes
3y
@Ethan G. Does this and might be able to provide some insight.
1 Reply
Jeffrey Evans
Investor · San Jose Ca · Member since 2020 · 125 posts · 115 votes
3y
@Colin Higgins I have one and have been using it. So far works great. I agree I wish I would have known about it and got a policy a long time ago.
4 Reply
Ethan G.
Attorney · Katy, TX · Member since 2014 · 397 posts · 215 votes
3y
Quote from @Shafi Noss:

@Ethan G. Does this and might be able to provide some insight.

Yes, I do this for myself and my clients. It is great!
4 Reply
Mike S.
Investor · Broward County, FL · Member since 2018 · 1k+ posts · 938 votes
3y
Quote from @Matt Ruttenberg:

It's a great concept and if designed properly, can be very beneficial. There two schools of thought with either a Whole Life Policy or an Indexed Universal Life policy... I'm a fan of the IUL personally because of the flexibility and a much easier design. You can use it like a Fix n' Flip then refi out to pay off the loan... rinse, repeat.
I am also in the IUL proponent camp. But the concept is the same. You just want to use the loans to buy assets and not liabilities. I never liked the example given of using these strategies to buy a car, they did not make sense to me. To buy assets however, you are making your money works at two places at the same time. It's a long term play that has some upfront costs, but when it starts to take off, what a beautiful system...
4 Reply
Colin Higgins
OP
Member since 2022 · 77 posts · 47 votes
3y
Quote from @Mike S.:

Quote from @Matt Ruttenberg:

It's a great concept and if designed properly, can be very beneficial. There two schools of thought with either a Whole Life Policy or an Indexed Universal Life policy... I'm a fan of the IUL personally because of the flexibility and a much easier design. You can use it like a Fix n' Flip then refi out to pay off the loan... rinse, repeat.
I am also in the IUL proponent camp. But the concept is the same. You just want to use the loans to buy assets and not liabilities. I never liked the example given of using these strategies to buy a car, they did not make sense to me. To buy assets however, you are making your money works at two places at the same time. It's a long term play that has some upfront costs, but when it starts to take off, what a beautiful system...

That's my take away, the book goes into buying a vehicle or another expense which is fine, we all need a car but the real estate is fare more growth oriented and exciting. A marathon for sure.
2 Reply
Matt Ruttenberg
Specialist · Grand Rapids, MI · Member since 2020 · 116 posts · 80 votes
3y
Quote from @Colin Higgins:

Quote from @Mike S.:

Quote from @Matt Ruttenberg:

It's a great concept and if designed properly, can be very beneficial. There two schools of thought with either a Whole Life Policy or an Indexed Universal Life policy... I'm a fan of the IUL personally because of the flexibility and a much easier design. You can use it like a Fix n' Flip then refi out to pay off the loan... rinse, repeat.
I am also in the IUL proponent camp. But the concept is the same. You just want to use the loans to buy assets and not liabilities. I never liked the example given of using these strategies to buy a car, they did not make sense to me. To buy assets however, you are making your money works at two places at the same time. It's a long term play that has some upfront costs, but when it starts to take off, what a beautiful system...

That's my take away, the book goes into buying a vehicle or another expense which is fine, we all need a car but the real estate is fare more growth oriented and exciting. A marathon for sure.

Completely agree! These strategies should be only used for investment purposes with buying an appreciating asset. Thats why the dividend or rate you earn within the policy shouldn't be the primary deciding factor... the outside investment is the sole goal.
0 Reply
Kerry Noble JrPro Member
Investor · Indianapolis, IN · Member since 2018 · 2k+ posts · 1k+ votes
3y
ive used it to pay small debt down
1 Reply
Jeffrey Evans
Investor · San Jose Ca · Member since 2020 · 125 posts · 115 votes
3y
@Kerry Noble Jr I have also. I agree the main goal should be to use it for investments. I had the $ to pay off some debt but then the $ is gone. I instead dumped the $ into a policy and then pulled it out to pay the debt off. It has been way easier for me to repay and dump the money back into the policy since I know I have access to it if and when I need it. If just paid the loan off the money is just gone forever.
4 Reply
Dee Dee Huey
Accountant · Mobile Al · Member since 2019 · 33 posts · 20 votes
3y
Can anyone suggest some insurance companies that allow IUL? I'm in Alabama.
2 Reply
Denver McClurePro Member
Financial Advisor · Dallas, TX · Member since 2018 · 659 posts · 479 votes
3y
Hi @Dee Dee Huey, Midland has great IUL products. That's a common provider we use for our clients.
[email protected]
1 Reply
Joe Garretson
Investor · Castle Rock, CO · Member since 2021 · 79 posts · 104 votes
3y
Doesn't this concept take YEARS if not decades though to truly provide any benefit? I've always been in the camp that whole/universal life policies are fantastic - for the selling agent. The purchaser gets shafted with insane fees and overcooked promises. Maybe I'm wrong?
Is this truly better than just budgeting, spending wisely and paying yourself first and saving?
0 Reply
Ethan G.
Attorney · Katy, TX · Member since 2014 · 397 posts · 215 votes
3y
Quote from @Joe Garretson:

Doesn't this concept take YEARS if not decades though to truly provide any benefit? I've always been in the camp that whole/universal life policies are fantastic - for the selling agent. The purchaser gets shafted with insane fees and overcooked promises. Maybe I'm wrong?
Is this truly better than just budgeting, spending wisely and paying yourself first and saving?

Yes, it could take years. However, I recommend high early cash value policies where you have about 95% of your premium available as cash value the next day to borrow. IULs generally pay more commissions to agents faster than whole life policies.
2 Reply
Jeffrey Evans
Investor · San Jose Ca · Member since 2020 · 125 posts · 115 votes
3y
@Joe Garretson it has to be designed correctly for IBC use or it will take many years before it has enough cash value to use. Like @Ethan G. said I was able to borrow and use money they day after it funded.
1 Reply
Thomas Tsitouridis
Investor · Astoria, NY · Member since 2016 · 46 posts · 21 votes
3y
Quote from @Colin Higgins:

Just learned about infinite banking at my last meet up. I was by no means an expert when I left, but I did have a grasp. Read the book by nelson Nash "becoming your own banker" and enjoyed it. Has anyone out there borrowed against their life insurance to fund a deal? This is whole concept fascinates me, I wish I had learned ten years ago.

Great concept! I bought a couple life insurance policies couple years back. Not enough in there as of yet, but both my kids below 5 also have whole policies so they can borrow against their own policy when they get older. Basically creating a family office for them and myself.
3 Reply
Aaron Porter
Insurance Agent · all 50 states · Member since 2022 · 184 posts · 122 votes
3y
@Dee Dee Huey These policies are only available through agents who are "licensed" to sell them.
However just because someone is licensed to sell it doesn't mean that they have the knowledge, education, or training to set these up in a way that they will grow and be usable. according to people in the industry that I trust, less than 5% of agents who are licensed to sell life insurance possess the knowledge and understanding to set up Cash Value policies that are truly a benefit to the owner.
My current favorite IUL is through North American, and I have 2 companies that I am using for whole life Lafayette and Mass Mutual. But remember these change constantly. Right now my agency has access to over 60 carriers all of them "fighting" for top spot.
These policies are definitely long term strategies, they are not fast but they are extremely safe and they offer other protections for the money that you invest in them I use the word invest, but these are not investments.
Yes they offer available cash value on day 1 but it is a percentage of the money that is put into them. If you need to have access to the majority of your cash on day 1 then the policy isn't going to perform as well. These policies should be funded with money that you don't "need" access to. If you need the access maybe a different strategy is better.
Remember if you are putting in $10K/ year it isn't going to grow over $10k in year 1. Then in year 2 another $10K goes in you aren't going to have access to $20K. From the standard 10pay policies that I have seen which are set up for the Infinite Banking Concepts the "breakeven" isn't until year 11 in most cases. Which mean that if you have paid $10,000/year for 10 years, that $100,000. You wont have access to the full $100K you have put in until year 11. This is what these policies are illustrating and what is most likely. If they grow faster than that, that is fantastic, but don't plan on it.
You will have access to a portion of the money that you put in each year but it will not be all of the money.
This illustration is for learning purposes only and not a direct representation of an actual policy. This is only for educational purposes and all that other liability jargon.
Anyone who is showing you illustrations over about 5.5% growth is just trying to get your money, and you should always run from something that sounds too good to be true.
I don't want my whole post to sound too negative, there are a few threads on BP where Be Your Own Bank and Infinite Banking are discussed and there are lots of people who have a very disgusted taste in their mouths. I love my cash value policies, they have helped me with a few different investments that I have and they will continue to perform for me through the rest of my life and set my kids and my grandkids up after I am gone.
1 Reply
Mike S.
Investor · Broward County, FL · Member since 2018 · 1k+ posts · 938 votes
3y
When set up properly with WL or IUL, you should crossover and get more in cash value than premium paid between year 4 and 7 depending on your specifics.
2 Reply
Michael A.
Financial Advisor · Member since 2022 · 67 posts · 67 votes
3y
Quote from @Colin Higgins:

Just learned about infinite banking at my last meet up. I was by no means an expert when I left, but I did have a grasp. Read the book by nelson Nash "becoming your own banker" and enjoyed it. Has anyone out there borrowed against their life insurance to fund a deal? This is whole concept fascinates me, I wish I had learned ten years ago.

The policy has to be structured correctly. This means minimum death benefit (to keep the costs/fees as low as possible) combined with max contribution. Additionally, in most cases it should be blended with term to further lower the costs. If done correctly it can be a tax-free cash cow. Like a bank account on steroids. I personally own an Index Universal Life policy. I also offer my clients infinite banking policies both (IUL and WL). Feel free to message me if you want to set up one of these insurance machines or to ask questions in general.
3 Reply
Bobbi Casalino
Investor · Brooklyn, NY · Member since 2021 · 29 posts · 8 votes
3y
I'm in the process of insuring my family for IBC. To me, it looks like the best policies are:
MassMutual : WL Legacy 10 (12, 15, 20 also) Pay or HECV
NY Life: Custom WL
Northwest Mutual: Participating WL
Guardian Life: WL Ins
I'd like to know if you have any of these and what pros/cons you've found. I appreciate any input you may have!
0 Reply
Ethan G.
Attorney · Katy, TX · Member since 2014 · 397 posts · 215 votes
3y
Quote from @Bobbi Casalino:

I'm in the process of insuring my family for IBC. To me, it looks like the best policies are:
MassMutual : WL Legacy 10 (12, 15, 20 also) Pay or HECV
NY Life: Custom WL
Northwest Mutual: Participating WL
Guardian Life: WL Ins
I'd like to know if you have any of these and what pros/cons you've found. I appreciate any input you may have!

I own Guardian and Mass Mutual. Prefer them over Northwestern Mutual and NY Life. Guardian has the highest early cash value policy which is what I prefer for investors.
2 Reply
Eric Prescott
Investor · Union County, NJ · Member since 2022 · 92 posts · 51 votes
3y
Quote from @Ethan G.:

Quote from @Bobbi Casalino:

I'm in the process of insuring my family for IBC. To me, it looks like the best policies are:
MassMutual : WL Legacy 10 (12, 15, 20 also) Pay or HECV
NY Life: Custom WL
Northwest Mutual: Participating WL
Guardian Life: WL Ins
I'd like to know if you have any of these and what pros/cons you've found. I appreciate any input you may have!

I own Guardian and Mass Mutual. Prefer them over Northwestern Mutual and NY Life. Guardian has the highest early cash value policy which is what I prefer for investors.

Guardian is what I went with. Still pretty new and I'm not over-funding it as much as it allows yet, but glad to be started. As others have mentioned, wish I had known about them many years earlier.
1 Reply
Jeffrey Evans
Investor · San Jose Ca · Member since 2020 · 125 posts · 115 votes
3y
Quote from @Bobbi Casalino:

I'm in the process of insuring my family for IBC. To me, it looks like the best policies are:
MassMutual : WL Legacy 10 (12, 15, 20 also) Pay or HECV
NY Life: Custom WL
Northwest Mutual: Participating WL
Guardian Life: WL Ins
I'd like to know if you have any of these and what pros/cons you've found. I appreciate any input you may have!

my policy is with mass.
1 Reply
Thomas RutkowskiPro Member
Financial Advisor · Boynton Beach, FL · Member since 2015 · 833 posts · 798 votes
3y
Quote from @Bobbi Casalino:

I'm in the process of insuring my family for IBC. To me, it looks like the best policies are:
MassMutual : WL Legacy 10 (12, 15, 20 also) Pay or HECV
NY Life: Custom WL
Northwest Mutual: Participating WL
Guardian Life: WL Ins
I'd like to know if you have any of these and what pros/cons you've found. I appreciate any input you may have!

Have illustrations run for all of them and see which ones give you the best cash value up front and over time. If you aren't seeing about 85% - 90% cash value to premium at the end of year 1, its probably NOT a properly-designed, maximum over-funded policy.
1 Reply
Thomas RutkowskiPro Member
Financial Advisor · Boynton Beach, FL · Member since 2015 · 833 posts · 798 votes
3y
Quote from @Aaron Porter:

@Dee Dee Huey These policies are only available through agents who are "licensed" to sell them.
However just because someone is licensed to sell it doesn't mean that they have the knowledge, education, or training to set these up in a way that they will grow and be usable. according to people in the industry that I trust, less than 5% of agents who are licensed to sell life insurance possess the knowledge and understanding to set up Cash Value policies that are truly a benefit to the owner.
My current favorite IUL is through North American, and I have 2 companies that I am using for whole life Lafayette and Mass Mutual. But remember these change constantly. Right now my agency has access to over 60 carriers all of them "fighting" for top spot.
These policies are definitely long term strategies, they are not fast but they are extremely safe and they offer other protections for the money that you invest in them I use the word invest, but these are not investments.
Yes they offer available cash value on day 1 but it is a percentage of the money that is put into them. If you need to have access to the majority of your cash on day 1 then the policy isn't going to perform as well. These policies should be funded with money that you don't "need" access to. If you need the access maybe a different strategy is better.
Remember if you are putting in $10K/ year it isn't going to grow over $10k in year 1. Then in year 2 another $10K goes in you aren't going to have access to $20K. From the standard 10pay policies that I have seen which are set up for the Infinite Banking Concepts the "breakeven" isn't until year 11 in most cases. Which mean that if you have paid $10,000/year for 10 years, that $100,000. You wont have access to the full $100K you have put in until year 11. This is what these policies are illustrating and what is most likely. If they grow faster than that, that is fantastic, but don't plan on it.
You will have access to a portion of the money that you put in each year but it will not be all of the money.
This illustration is for learning purposes only and not a direct representation of an actual policy. This is only for educational purposes and all that other liability jargon.
Anyone who is showing you illustrations over about 5.5% growth is just trying to get your money, and you should always run from something that sounds too good to be true.
I don't want my whole post to sound too negative, there are a few threads on BP where Be Your Own Bank and Infinite Banking are discussed and there are lots of people who have a very disgusted taste in their mouths. I love my cash value policies, they have helped me with a few different investments that I have and they will continue to perform for me through the rest of my life and set my kids and my grandkids up after I am gone.

THIS IS NOT A PROPERLY-DESIGNED POLICY.
There is no real estate investor anywhere that would accept such low surrender values. The surrender value should be equal to the cash value.
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