Compare Your Wealth Plan

Infinite banking, also known as the “Be Your Own Banker” strategy, is a powerful tool for building personal wealth. The concept involves using a properly structured life insurance policy as a financial resource to fund investments, pay off debt, and build savings. By leveraging the cash value of the policy, individuals can maximize the growth and control of their money. Many people are unaware of this strategy and its potential benefits, but those who have implemented it have seen significant financial gains. Through a better understanding of infinite banking, individuals can take control of their financial future and achieve greater financial freedom.


When it comes to finding the perfect vehicle for your private reserve account, you’ll want to keep a few key characteristics in mind. First and foremost, tax deferred growth is crucial – compounding interest in a taxable account simply won’t cut it. The ability to make tax-free distributions is another major benefit to look for, as it means you can access your money without having to worry about paying taxes. Of course, a competitive rate of return during the accumulation phase is also important, as are high contribution limits and the ability to make deductible contributions. Don’t forget to consider collateralization opportunities – they can make a big difference in your overall strategy.

Additional benefits to look for accounts that allow you to collateralize and offer safe harbor options to protect your money. Look for accounts that offer no loss provisions and guaranteed loan options for extra security. Unstructured loan payments are also a desirable feature, allowing you to pay back the money at your own pace without any pressure. Choose wisely to ensure your Money is in the right environment for it to thrive.

You would want liquidity, use and control of the money at all times. And then finally additional benefits such as death protection, disability waivers and maybe even lawsuit protection.

While many accounts will work as a private reserve, there are some that will work better than others.

Savings Accounts

  • Interest rates tend to be relatively low
  • Interest is taxed at ordinary income tax rates
  • Call provisions normally included in loan covenants
  • Loans must still be negotiated with the bank with no guarantee or assurance that the loan will be made.
  • Accounts are subject to creditor attachment.
  • Liquidity from loans not assured unless credit line previously negotiated subject to above mentioned provisions.


  • 401 (k) loans are limited to maximum of $50,000 or one half of the account balance, whichever is LESS.
  • Loan must be repaid in less than 5 years or they are considered a distribution. If this occurs and the account holder is less than 59 1/1  years old, a 10% penalty is imposed on top of their ordinary tax rate. 
  • Interest on the loan is paid on an after-tax basis while later distributions are taxable, resulting in double taxation on the loan interest. 
  • A job change triggers a distribution event and requires a loan repayment or the additional 10% tax penalty. Layoffs are considered a job change. 

Roth IRA

  • Your contribution is limited
  • It’s already a Tax Shelter so I you buy Real Estate with an IRA you loss the tax benefits of the real estate.
  • Some IRA’s you are forced to take distribution at 72
  • Limited in your investment opportunities


  • Amount available typically half the value of the stock portfolio
  • Amount available can change subject to federal regulations
  • Decline in underlying stock could result in a margin call
  • Margin call sales could trigger capital gains tax on stock sales. 
  • Loan rates usually ties to LIBOR and can fluctuate.
  • Hedge fund shorting could trigger decline in the underlying security value and cause a margin call

Real Estate Equity with HELOC

  • HELOCs must be granted by banks and are conditional on credit worthiness and bank liquidity.
  • HELOCs may be revoked at any time at the discretion of the bank in no loans are outstanding.
  • Most HELOCs have call provisions.
  • Given the fluctuations of house valuations, the amount of equity available for some borrowers could be insufficient for their needs. 
  • HELOCs generally have caps on the amount of available credit.


  • Interest rates tend to be relatively low.
  • Interest is taxed at ordinary income tax rates.
  • Loans must still be negotiated with the bank with no guarantee or assurance that the loan will be made.
  • Call provisions normally included in loan covenants.
  • Accounts are subject to creditor attachment.
  • Liquidity from loans not assured unless credit line previously negotiated subject to above mentioned provisions. 
  • Underlying principal tied up for a fixed period and penalties may exist for early withdrawal.

PERMANENT LIFE INSURANCE (Important Considerations)

  • Riders are optional and may be available at additional cost.
  • Once dividends are paid they become guaranteed cash value.
  • Cash value grows tax deferred.
  • Loans are a contract feature. Contract is unilateral and provisions can only be changed by the owner. Loan reduce access to available cash value by the amount of the loan. 
  • Death benefits is paid income tax free and are reduced by outstanding loans or withdrawals.
  • Cash value deficit during initial capitalization funding period. 
  • Disability waiver can pay premiums if insured is unable to work due to sickness or disability.  
  • Loan repayments are made at the discretion of policy owner. Frequency and amount of payment are solely at the discretion of the policy owner.
  • If done properly, funds can be taken from policy tax free. 
  • In most states, cash value cannot be attached by creditors.
  • Insufficient payments, dividends or PUA surrenders to cover base premiums may lead to policy lapse and tax consequences. 
  • Death benefits are tax free.


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Did you know there are actually 3 types of money?

Accumulated Money is money you currently have and are saving.

Lifestyle Money is money you spend to enjoy your quality of living.

Transferred Money is money you may be transferring unknowingly and unnecessarily. Some examples of transferred money are taxes, interest on credit cards, home mortgages and car payments.

Watch the Circle of Wealth video to learn more about the 3 types of money.

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