Blog 91 – What Does It Take To Implement The Infinite Banking Concept Successfully?

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We get the following question quite often from prospects: What does it take to implement the Infinite Banking Concept (IBC) successfully?

The answer is as follows:

The individual must have read Nelson Nash’s book “Becoming Your Own Banker”, perhaps a couple of times, and have questions on its content. It should also help, reading “The Case For IBC” and “Building Your Warehouse of Wealth”, both also authored or co-authored by Nelson Nash.

Successful implementation of IBC requires patience, discipline, and long-range planning. 

A) Patience: IBC is not a get-rich-quick scheme, and it is not for the person who is always looking for instant gratification. The net internal rate of return on the cash value is between 3% and 5%, depending on the age and health of the insured as well as on the annual contributions to the IBC policy. 

B) Discipline: IBC requires financial discipline to realize that the system starts generating cash values slowly at the beginning but as time passes the cash value continues to compound at an increasing rate. An IBC policy needs a capitalization period of four to seven years to reach cumulative break-even which means that it takes four to seven years for the cash value to be equal to or greater than the premium contributed. In subsequent years, the increase in cash value in a year may be three to four times, or more, the annual premium contribution.

C) Long-range planning: IBC requires long-range planning not to lose sight of what your financial goals are.

Successful IBC owners know very well the difference between cash value and death benefit. Actuarial mathematics defines cash value as the present discounted market value of the expected death benefit and future premium payments. In layman terms, the cash value represents what is called your living benefits or your equity in your death benefit. It is the amount of your death benefit that you have available to obtain a policy loan. Don’t forget that when you obtain a policy loan, the loan amount comes not from your policy but from the general account of the insurance company, and it is collateralized by your cash value. The insurance company charges interest on the loan, but your cash value remains in your policy earning interest and dividends. Although you don’t need to repay your policy loan, you are advised to pay it as soon as you can or at least pay the annual interest every year.

Some IBC owners do not take policy loans often and they plan for the IBC policy to take care of emergencies or to supplement their retirement income when they slow down. Other IBC owners obtain policy loans quite often and generate financial leverage to invest in real estate, buy franchises, or expand their businesses. It is important to remember that to become wealthy, you need to own assets that generate cash flows in a reliable and consistent manner that are several times greater than you annual living expenses.

Although IBC implies that you make contributions or premium payments for a long time (to at least age 70), some IBC clients prefer to make contributions for a limited number of years, like 10 or 15 years. That is fine if they make large enough annual contributions.

Even when dividends are not guaranteed, the top mutual life insurance companies that we use to implement IBC have paid dividends every year for the last 160+ years.

It is also important to be realistic about your IBC expectations. If you are in your fifties or early sixties and can only contribute $100 a month to your IBC policy, it may not be worth it to start your IBC policy. The same goes true for individuals of any age who don’t have financial discipline.

If you would like to learn how you can grow a substantial amount of cash that you have access to at any time without penalties, is unrelated to the stock market, and will generate income that is not included in your tax return, visit our website at  or feel free to email us your questions at or call us toll-free at 1-844-443-8422.

Isis B. Palicio, LUTCF, MBA
Pedro A. Palicio, MBA, Ph.D.
Infinite Banking Concepts® Authorized Practitioners

We are experts in designing high cash value dividend-paying whole life policies.

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