The Infinite Banking Concept: A Rocket Launcher for Your Money
by Nate Dean
I remember when my boys were smaller, I would walk by their room and on occasion they would be in an argument about something. The argument was usually after one of them pulled the card "not if you had a rocket launcher!" As my boys get older, I still think back on those times when the solution was simply having rocket launcher....lol. It got me thinking.......is a proverbial rocket launcher a solution for our money? Can we solve problems on a larger scale with the tools and resources we have?
Imagine a financial strategy that propels your money to new heights, igniting a powerful engine of wealth accumulation and financial freedom. Enter "The Infinite Banking Concept" (IBC), a revolutionary approach to personal finance that acts as a proverbial rocket launcher for your money.
In this short article, I want to explore how the Infinite Banking Concept can unleash your financial potential, providing the power and thrust needed to achieve greater certainty, control, efficiency, flexibility, and prosperity in your financial journey.
Understanding the Infinite Banking Concept
The Infinite Banking Concept, popularized by the late R. Nelson Nash in his book "Becoming Your Own Banker," reimagines the traditional financial system. At its core, IBC utilizes specially designed whole life insurance policies, known as "cash value" life insurance, as a strategic tool for wealth-building. Unlike typical insurance policies, IBC policies are structured to accumulate cash value over time, providing a unique blend of protection and wealth generation.
It is rather unfortunate that much of the financial world has taken a little bit of information about whole life insurance, and arrived at an absurd conclusion "Whole life insurance is the worst place in the world to put your money!"
I know you have heard that statement before because that is what the majority of people say and, quite frankly, what I believed for most of my working years up until 2017 when I was introduced to this new way of thinking. Nelson Nash said "Most people's understanding of whole life insurance is based on someone else's misunderstanding."
Whether it be a misunderstanding or an outright agenda, the fact is, whole life insurance is the most misunderstood asset. Yes, I said asset. That statement alone tells you it's misunderstood, because most don't realize it is even an asset. In fact, whole life insurance is a tier 1 asset to a bank, which means it is the most stable asset class they can list on their balance sheet. It would surprise you to know how much banks buy whole life insurance because of the stability, flexibility, growth, and control that one experiences as the owner.
The Rocket-Like Growth Potential
Much like the incredible power and thrust of a rocket launching into space, the Infinite Banking Concept offers remarkable growth potential for your money. As you pay premiums into the IBC policy, a greater portion of those funds accumulate as cash value (or equity). This cash value grows tax-free and can be accessed through collateralized loans, providing an environment to achieve constant pressure on your money to grow without the typical risk of loss or momentum. Think about a line of credit but you own it, control it, and can earn interest on it (even when using it to create value in another area of your life)
Everyone knows how to earn interest on the money they are saving or investing. You typically hand it over to someone else so they can put it to work or you self-educate, become knowledgeable in an area, and take control of your own investment strategy. What is never talked about in personal finance is the power of controlling the banking function. In fact, go ask your advisor right now "What is the power of controlling the banking function?" and watch the color drain from their face because they will not have a clue.
In order to understand this, you must understand the power of properly applying the principle of leverage in your life. Contrary to what you have been told, leverage does not always equal risk. When you create an environment for your money that you control, properly applying the principle of leverage can be one of the most powerful things you ever do with your money.
Earning interest on money you save is easy, but what if your expenses could become rocket fuel for your asset column. Yes, you read that correctly, your expenses. This is where you have to start disconnecting your brain from everything you've been taught up to this point about how money works. Unlearning is more difficult than learning, which is why this message and concept has taken so long to gain traction. Every day I have to battle with the powerful wave of mainstream conventional thought.
Most people base their saving and investment decisions off of average rate of return, but who the heck wants to be average? You've probably never taken a step back to ponder that question until now. One of Nelson's five principles is you must Rethink Your Thinking. If you are ever going to grasp this, you have to be willing to surrender your conventional thoughts and admit that maybe there is something out there that you just haven't found yet. Walk in a library and it will become obvious to you very quickly that you will never be able to learn all the knowledge there is, but you are here now, which means this is your opportunity to learn what changed our lives and many of our clients.
Control and Flexibility: Steering Your Financial Trajectory
One of the most empowering aspects of the Infinite Banking Concept is the control it gives you over your financial future. As the policy owner, you act as the rocket's pilot, steering your financial trajectory in the direction you desire. You can borrow against the cash value (or equity) of your policy for various purposes, such as funding major purchases, investments, or even starting a business. Unlike conventional loans, you are in control. You set the repayment terms, allowing you to tailor your financial strategy to suit your unique needs. This is a dream for anyone who understands cashflow, which is why business owners tend to understand this concept of money has to flow somewhere no matter what. What if the environment you flowed money through made the dollars come out stronger on the other end?
Protecting Against Financial Turbulence
In uncertain economic times, having a solid financial safety net is crucial. The Infinite Banking Concept acts as an unshakable shield, providing protection against unforeseen challenges. Your IBC policy remains intact, unaffected by market fluctuations, offering a secure foundation to weather financial storms. These mutual insurance companies have paid dividends (maintained profitability) for 120+ years in a row. Which means every economic downturn you can think of depression, recession, you name it, they have posted profits and paid dividends to their policy owners. What other industry or institution can claim this?
If you understand how our banking system is set up, then you understand what fractionalized banking is (if not Google it and prepare to be shocked). Our banking system creates money out of thin air in hopes that everyone will not show up on the same day to get their money (people have gone to prison for similar acts, but I digress). Insurance companies do not fractionalize our money. They have very strict cash reserve requirements that must be maintained in order to pay death benefit claims if a catastrophic number of customers die on the same day. Every dollar is a real dollar, not a made-up dollar on a screen.
Leaving a Legacy
Much like a rocket launches a satellite into space, the Infinite Banking Concept can launch a legacy for your loved ones. When you pass away, the death benefit of your IBC policy provides a tax-free inheritance for your beneficiaries, creating a lasting impact for generations to come. If you follow the conventional thought, you should buy term and invest the difference, but what is often missed in this philosophy is, one day, you will not be able to afford term life insurance or you will simply be ineligible for coverage. The argument is made by Dave Ramsey and many others "once you're debt-free, you don't need life insurance". If that is the case, why does Dave Ramsey still carry life insurance? (he's stated this on his show). I can answer this one from personal experience. When you are dealing with the loss of a loved one and a financial burden comes with it, it can compound the grief you experience.
It's important to understand that you can create a system for your money to flow to and flow through that creates a permanent and ever increasing death benefit. You can have your cake and eat it too, but that goes against the narrative of "give your money to Wall Street and one day die without insurance."
- What if you could accumulate millions in assets and have millions in death benefit simultaneously?
- What if your death benefit could replenish everything you spent in your passive income or retirement years?
- What if you never had to worry about running out of money?
- What if your goal was to leave an inheritance to the next generation and you could satisfy that with the money that already flows through your life without giving up the use of that money?
What if everything I just said was absolute garbage?
What if it's the truth about what's possible and people really are living this?
If this makes you uncomfortable, press into it until you can make a definitive stand on how you feel.
You have to decide if you're going the way of everyone else or if it's time to explore the possibility that there is something unbeknownst to you still out there.
We can't make that decision for you, but we can be a resource for you as you set out on this new path of understanding. Education is something we are very passionate about because being informed is what will give you the most confidence in making decisions for you and your family.
Is a rocket launcher a good thing to have? Absolutely.