If you spend a lot of time on TikTok or other social media platforms exploring various financial product pitches, you’re likely to come across the “Infinite Banking” concept. Recently, many people have been asking about it, so here’s my perspective.

Full Disclosure

Before I share my thoughts, I want to clarify my background. I am a fee-only fiduciary investment advisor representative. This means I do not sell products for a commission. Instead, my firm is a Registered Investment Adviser (RIA) registered solely with the Securities and Exchange Commission (SEC) to provide fiduciary advice only.

Since I don’t sell products like life insurance for a commission, I tend to be skeptical of many concepts that revolve around large, high-premium insurance policies marketed as investments. Conversely, individuals who sell these products might be biased toward life insurance instead of advocating for a diversified investment portfolio.

It’s worth noting that I haven’t always worked as a fee-only advisor. I entered the industry 30 years ago, selling complex life and disability insurance products to business owners, so I have considerable experience with life insurance.

I also believe in life insurance as an essential financial tool and personally own policies.

Terrible Investment, Great Benefit

Throughout the years, I have sold or reviewed hundreds of life insurance policies. Here’s a surprising realization: I have only encountered one in-force policy that performed in a manner I would consider a good investment. This was a highly specialized policy I helped design for a bank, but I won’t delve into that here. Some banks purchase these policies as permissible assets on their balance sheets for financial reasons.

In all other cases, the policies I sold long ago and those I have reviewed do not stand up as good investments. However, nearly all of them, including some of the more expensive options, have proven to be excellent for providing liquidity upon death.

Bottom Line Advice

Buy life insurance to protect your family and business from the significant financial risk of your death. If you believe you are not adequately covered, consider purchasing life insurance. The type of life insurance you choose is up to you. You can opt for term insurance for affordable, short-term coverage or select a permanent Universal Life or Whole Life policy if that’s what you prefer. The primary concern should be ensuring you are adequately covered.

A secondary consideration is the potential to build cash value in a permanent Whole Life policy, similar to those recommended for “Infinite Banking.” If you need the death benefit, there’s nothing wrong with funding a policy that builds cash value. However, DO NOT expect the cash accumulation in a life insurance policy to come anywhere close to meeting essential long-term financial goals, such as funding your retirement. That simply isn’t feasible. The tax code limits the amount you can pay in premiums, and the costs associated with insurance policies are too high to allow significant growth. While the guaranteed dividend rate of whole life policies may compare favorably to money market rates or bond interest, it cannot compete with the long-term growth potential of an investment portfolio or your 401(k).

The “Infinite Banking” concept encourages individuals to use life insurance primarily to accumulate cash so they can loan money to themselves instead of borrowing from banks. Proponents claim you can “be your own bank” and outsmart the big financial services industry. However, that is not accurate. In reality, you are simply utilizing a large insurance company as a substitute for a traditional bank for your banking needs.

I could elaborate further, but I hope my points are clear. If you’re seeking a comprehensive technical explanation of the ins and outs of Infinite Banking, I recommend reading an insightful post on The White Coat Investor. Additionally, if you currently own or are considering a large, cash-heavy insurance policy based on the Infinite Banking concept, feel free to reach out. My colleague Austin and I are always available to review life insurance policies and proposals.


Those are my thoughts,

Rob Schulz