saving money

If your goal is to build a lifetime of wealth, paying interest on loans from banks and financial institutes will surely hold you back. It is estimated that the average person pays 25 percent to 35 percent of their income to loan interest over the course of their lifetime.

Think of what you could do with all that money. What would you do with all that money? Start a business?

There are some particular banking concepts that we’d like to share with you. They could change your life and help you achieve your goal for financial wealth. 

Wealth Building Banking Concepts

For the average American, borrowing money from a bank or financial institute is like obtaining a driver’s license—commonplace. Borrowing money has become ubiquitous and a normal part of our culture.

Car loans, student college loans, house loans, business loans, medical loans, credit cards—the list goes on. Paying interest on loans is how lending institutes create wealth.

What if you could become your own bank? With the infinite banking concept, you can. 

The infinite banking concept, or IBC, was invented in the 1980s by R. Nelson Nash, author, and finance expert. Nash was tired of paying high-interest rates to banks and discovered a way to borrow money from the cash value of his whole life insurance policy. 

How Infinite Banking Concept Works

Life insurance policies have two categories—term policies and whole life policies. Term policies only last for a certain duration of time, while whole life policies last until the policyholder’s death (or a specified age cap in which then the policy pays out).

Although premiums for whole life policies are more expensive initially, they even out with term policies over time. One major benefit of taking out a whole life policy is the ability to borrow money against the premiums accumulated over time.

Interest rates on loans taken from whole life policies are typically a lot lower than rates you’d receive from a bank. Taking out a loan from your policy does not require an application or a long waiting period.

Another perk is you create your own payment scheduling. As long as one pays off the entirety of the loan by the end of its term, no penalties are incurred. 

How Does IBC Create Wealth?

At this point, it’s not quite obvious how IBC creates any wealth for the individual. The idea of taking out a loan from your life insurance policy is to optimize how your money works for you. 

Whole life insurance policies pay interest on your premiums over time. Not only that, insurance policies pay dividends to policyholders when the company sees high profits. Even after you take out a loan from your policy, your accumulated cash value still continues to grow and receive dividends. 

Make Your Money Work For You

IBC is an incredible way to make your money work for you. Not only will you optimize your cash with infinite banking, but you also ensure that your loved ones will be taken care of when you pass away. 

If you’ve found this article about infinite banking concepts helpful, read our other wealth building tips in our blog section.