You’ve probably heard the phrase “be your own bank.” Or maybe you’ve seen TikTok videos saying you can borrow $100K tax-free and your money still keeps growing in the background.
Let’s get one thing straight.
Infinite banking is not a hack. It’s not a shortcut. And it’s definitely not a strategy you try for a year and walk away with a fortune.
But when it’s done right—and when it’s the right fit—it can be one of the most powerful, flexible tools in your financial life.
Let’s walk through exactly how it works, what it takes to do it properly, and who it’s actually for.
What Is Infinite Banking?
Infinite banking is a financial strategy that uses a properly designed cash value life insurance policy as a personal source of financing.
It allows you to:
- Grow money inside the policy—tax-deferred
- Borrow against that cash value—tax-free
- Keep that money growing—even while you’re using it
- Eventually pass on wealth—tax-free to your heirs
The reason it’s called “infinite” is because you can use the same dollars more than once: grow them, borrow them, keep them growing, and transfer them to the next generation.
But it only works if the policy is structured correctly. This isn’t something you want to try on your own or buy from just anyone.
How Does Infinite Banking Work?
Not every life insurance policy builds cash value, and not every policy is built for infinite banking.
You need a permanent life insurance policy—typically whole life or indexed universal life (IUL).
Here’s what’s happening inside the policy:
- You pay premiums – Each premium you pay funds the death benefit and builds up a cash value over time.
- That cash value earns interest – This is called “crediting,” and it works in one of two ways:
- Whole life policies credit a fixed, guaranteed interest rate (plus potential dividends)
- Indexed universal life (IUL) policies credit interest based on a market index like the S&P 500. Your money is not in the market, so there’s no risk of loss—just a cap on how much upside you earn.
- You can borrow against your cash value – Once the cash value builds up, you can take a policy loan. No credit check. No loan approval process. And the money you borrow is not taxable.
- Your money can keep growing – In some policies even while the loan is out, the full cash value continues earning interest as if it never left.
- You repay it—or not – You decide if and when to pay it back. If you don’t, the loan is simply deducted from the death benefit later.
What Are the Tax Benefits of Infinite Banking?
This is one of the biggest advantages of infinite banking—and also one of the most misunderstood.
- The cash value grows tax-deferred (you don’t pay taxes on the gains while they grow)
- Policy loans are tax-free because you’re borrowing against your own money—not withdrawing it
- The death benefit passes to your heirs income tax-free
If the policy is properly managed, it’s possible to access all your compounded growth and never trigger a tax bill.
But if you withdraw money instead of taking a loan, or let the policy lapse with an outstanding loan, you can create a taxable event. That’s why structure and strategy matter.
Who Is a Good Fit for Infinite Banking?
This strategy isn’t for everyone—but for the right person, it can be a game changer.
Infinite banking might be a good fit if:
- You actually need life insurance—for family protection, debt payoff, or estate planning
- You’re thinking long term—this is not a get-rich-quick move
- You want access to tax-advantaged capital while still growing your wealth
- You’re working with a financial professional who understands how to structure this the right way
Here’s a hypothetical example:
A real estate investor wants to buy a new property. Instead of applying for a hard money loan, they borrow $75,000 from their policy—without interrupting growth, without triggering taxes, and without paying 10% interest. Later, they repay the loan after a property sells.
That kind of flexibility can open up options without the stress of banks, paperwork, or selling off investments.
Who Is Not a Good Fit for Infinite Banking?
If you’re just looking for a quick place to stash money—or trying to “hack” the system—this isn’t for you.
It’s probably not the right fit if:
- You don’t need life insurance
- You’re looking for short-term liquidity
- You can’t commit enough money to properly fund the policy
- You’re not interested in learning how it actually works
- You’re expecting overnight results
To be clear: this isn’t something you do with $200/month expecting to pull out $100K in three years.
What You Need to Implement Infinite Banking
Here’s where most people go wrong—don’t leave any of these out.
Infinite banking only works when the policy is custom-built for it.
That requires:
- A licensed and experienced financial professional
- A policy structured for maximum cash value growth, not just a high death benefit
- An insurance company that specializes in these types of plans
- A clear plan for how and when to borrow (and whether to repay)
This is not something to buy online or learn from a TikTok video. A poorly designed policy can lead to surrender fees, tax problems, or worse—it can lapse entirely.
Bottom Line
Infinite banking isn’t a trend—it’s a tool. One that can give you more control, more flexibility, and more protection when it’s done right.
But it’s not a one-size-fits-all solution.
If you’re in the right financial position, need life insurance, and are looking for long-term tax-advantaged growth—you should at least understand how this strategy could work for you.
And if you’re curious whether it’s a fit?
👉 Schedule a Financial Needs Analysis
We’ll walk you through it, step-by-step.
