Infinite Banking Concept Explained [Comprehensive Guide Updated for 2024] (2024)

Written by Steven Gibbs

| Updated on: March 6, 2024

The Infinite Banking Concept (IBC) redefines personal wealth management by turning high cash value whole life insurance into a powerful personal banking system. Originated by Nelson Nash, the infinite banking concept moves beyond traditional savings approaches, offering a unique blend of benefits like tax-favored status, liquidity, leverage, and stable growth.

In this comprehensive guide of the infinite banking concept, we share our experience and insights into the intricacies of designing an effective Infinite Banking policy, weighing its pros and cons against conventional banking, and exploring real-world applications in areas like real estate investments and debt relief. We also share our 70 plus years of combined experience in selecting the best Infinite Banking companies, as we lay the educational groundwork for you to become your own banker.

Comprehensive Guide to the Infinite Banking Concept

Table of Contents

1. Key Takeaways
2. What is the Infinite Banking Concept?
3. Designing a Proper Infinite Banking Whole Life Policy
4. Comparing Infinite Banking with Traditional Bank Savings
5. Pros of the Infinite Banking Concept
6. Cons of the Infinite Banking Concept
7. References and Examples
8. How to Start Infinite Banking
9. Best Infinite Banking Companies
10. Is the Infinite Banking Concept a Scam?

2. What is the Infinite Banking Concept?

The Infinite Banking Concept, coined by Nelson Nash in his book Becoming Your Own Banker: Unlock the Infinite Banking Concept, involves using a high cash value whole life insurance policy as a personal banking system, rather than a traditional bank savings account. The whole life policy is designed to maximize cash value versus traditional whole life which focuses on death benefit protection.

This book [Becoming Your Own Banker] demonstrates that your need for finance, during your lifetime, is much greater than your need for protection. – N. Nash

The Infinite Banking Concept has taken on a lot of other names, such as cash flow banking, family banking concept, bank on yourself, perpetual wealth strategy, becoming your own bank, circle of wealth, and perpetual wealth system.

According to our experiences and that of countless others, the primary benefit of using life insurance for this purpose is it provides a tax-favored vehicle that offers contractually guaranteed growth for you to pass your finances through, acting as a wealth building conduit, rather than using a typical bank savings account or money market account where your gains are taxed, the interest rate is not guaranteed, and you cannot use your cash as collateral.

Here is our very own Barry Brooksby, an authorized Infinite Banking Practitioner, sharing real life examples based on his personal experiences with the infinite banking concept and how to be your own banker.

One of the main features that makes an infinite banking system possible is that you can use your specially designed whole life policy’s cash value as collateral, taking out a loan, to purchase cash flowing assets, such as investing in your business or real estate, while your cash value in your policy is still earning true compounded interest returns.

You then purchase cash flowing investments with your borrowed dollars, while simultaneously earning compound interest in your policy’s cash value account, making your money work for you in two places at once. You would then use your cash flow from your investment real estate or business to recapitalize your “bank,” recapturing your money, repeating the process again and again.

The whole idea is to recapture the interest that one is paying to banks and finance companies for the major items that we need during a lifetime, such as automobiles, major appliances, education, homes, investment opportunities, business equipment, etc. – N. Nash

3. Designing a Proper Infinite Banking Whole Life Policy

Traditional whole life insurance policies would be designed so that the entire annual or monthly premium payment went towards the base of the policy, which focused exclusively on the death benefit. An infinite banking whole life insurance policy is designed differently,

Paid-Up Additions

A properly designed infinite banking policy uses high cash value whole life from a mutual insurance company. The dividend paying whole life insurance policy lasts your entire life is designed so that the majority of the annual or monthly premium payment goes towards paid-up additions.

The typical structure of an infinite banking life insurance policy is a paid up additions/base premium of 65/35 or 80/20 split. Depending on the client’s need will determine the best split of paid-up additions and base premium, with some people preferring a 90/10 split to get the highest immediate cash value availability but perhaps sacrificing some long term internal rate of return.

For many infinite banking policies, a term insurance rider will also be added. The reason for the term rider is to increase the death benefit in the short term, typically the first 10 years or less, so the policy is able to pass the 7-pay test and avoid becoming a modified endowment contract, or MEC.

Through our years of experience the most effective whole life policy designs for infinite banking are going to be blends of PUAs/Base of 60/40, 70/30, 80/20, and even 90/10.

Lower Agent Commissions

A life insurance agent’s commission is mostly derived from the base premium. As a result, most agents don’t like to design these types of policies because an infinite banking policy designed with a focus on paid-up additions, rather than the base, means the agent’s commission is going to be a lot less.

Direct vs Non-Direct Recognition

In his book, Nelson Nash recommended non-direct recognition companies for practicing the infinite banking concept but we have expertise in this area and many years of experience and we have found that companies offering direct recognition are often favorable. And whether a company is direct or non-direct is not a high priority on the list of importance. The most important thing is cash value growth and the right company.

Direct recognition indicates that the insurer acknowledges the existence of an outstanding loan and applies an alternate dividend rate to it. Whereas, non-direct recognition does not recognize an outstanding policy loan.

Depending on the insurer, this adjusted rate on the borrowed funds could be higher or lower. However, it’s important to note that you continue to receive dividends on the entirety of your cash value, irrespective of whether parts of it are borrowed or not.

Dividend Payments

One of the many benefits of dividend paying whole life insurance is the annual dividend payment. According to Nelson Nash,

If the owner uses the dividend to purchase Additional Paid-Up Insurance (no cost for acquisition, sales commissions, etc.) the result is an ever-increasing tax-deferred accumulation of cash values that support an ever-increasing death benefit.

Using you dividend to purchase paid-up additions further enhances your cash value and death benefit, helping to optimize your infinite banking policy.

4. Comparing Infinite Banking Vs Traditional Bank Savings

Another thing to consider is where do your store your money. You may have your money in 401ks, IRAs, or investment accounts, but you most likely also have your money sitting in a bank. However, consider the following benefits of storing your cash in high cash value whole life insurance policy vs a traditional bank savings account.

*Source: What is the average interest rate for savings accounts? Bankrate, December 2023.

5. Pros of the Infinite Banking Concept

This section delves into the numerous advantages this financial strategy offers that we have experienced first hand by practicing Infinite Banking ourselves.

1. Non Correlated Asset

We cannot stress enough the importance of having your money stored in a safe environment, free from the ups and downs of the stock market or real estate market. Whole life insurance is an asset that is not correlated to the stock or housing market.

Safe Bucket

Whole life insurance offers guaranteed cash value growth year over year, providing policyholders with an excellent “safe bucket” of assets that can help insulate you from risk and volatility and create some stability in an otherwise unstable world, which frees you up to take advantage of opportunities when they arise.

2. Improves cash flow and liquidity

When you engage in the strategic use of a whole life insurance policy applying the infinite banking concept you improve your cash flow and liquidity. Consider this fantastic infinite banking example.

If you have equity in real estate, how liquid is that equity? The answer is, not that much. If you want to gain access to the equity in your home or investment real estate you have to sell the property, qualify for a HELOC or Cash Out RE-Fi.

If your money is in your infinite banking policy, an advantage is that you have unhindered access to your policy’s cash value. To access your cash value, all you need to do is call your insurance company and ask for a check to be issued. You can usually receive a check within just a few days – no qualification – no evaluation – no hassle.

So, a huge benefit of an infinite banking strategy using whole life insurance is that you can store your wealth in a liquid asset. And that asset provides true compound interest growth, in a tax favored environment.

3. Personal Family Financing

Another benefit of infinite banking is that you are in control (i.e. the owner and operator) of your own personal or family financing company. You are using life insurance as your own bank as you become your own banker.

Becoming your own banker means you can:

• loan your money out,
• charge your borrower interest,
• then your borrower pays you for the use of your money,
• you recoup the principal with interest, which
• you use to pay back your policy loan, and
• you then repeat the process ad infinitum.

Each time you loan your money out to either yourself, your family, your business, or whoever, you are charging interest. As you recoup the money with interest, you are adding more money into your bank (policy) than you started with. The result is that over your lifetime you have amassed wealth beyond what you ever believed was possible.

4. Equity storehouse

When you employ an infinite banking strategy you are placing your equity into a tax-advantaged storehouse for later use. The cash in your storehouse is in a true compound interest account because you are never touching your actual principle or paying taxes on gains. Instead, you are borrowing from the carrier’s general fund. That way your money in your cash value life insurance policy is continually compounding, even while you borrow against it to invest in another opportunity.

5. Leverage

And don’t forget about the tax free death benefit for your beneficiary. The life insurance death benefit is not the main focus when an using infinite banking strategy but it does provide a leveraged tax free death benefit payout should you die prematurely.

Having a lump sum tax free death benefit provides peace of mind knowing that your loved ones are taken care of if you die young. And your death benefit will grow over time, so that the older you get the greater the death benefit you leave behind.

Infinite Banking vs 401K or IRA

For those that choose to fund a 401k plan or IRA, there is no death benefit. A beneficiary family gets the proceeds from the 401k or IRA as is, minus any income tax owed, which is taxed as ordinary income (the highest taxed type of income).

6. Tax Deferred Growth

Your whole life insurance policy’s cash value offers taxed deferred growth, and you can completely avoid ever paying taxes on your policy’s tax deferred growth by choosing to take out life insurance loans. Whole life insurance policies offer guaranteed growth, so you know that your cash value will grow year in and year out.

Dividends

In addition to guaranteed returns, tax deferred growth of your policy’s cash value also occurs through life insurance dividends. These dividend paying whole life insurance policies used for infinite banking provide an annual dividend payment to its eligible policyholders. Although non guaranteed, most top mutual insurance companies have paid a dividend every year for over 100 years.

Whole life insurance dividends can be used for many different things but ideally you want to use the dividends to purchase additional paid up life insurance. That way your dividend goes back into your policy and buys even more death benefit. As you do this, your policy’s cash value and death benefit will continue to grow.

7. Tax Free Access to Your Cash Value

Although you may be tempted to withdraw cash from your policy, it is important to understand that you have tax free access to your cash value through life insurance policy loans.

You are using money that has a guaranteed growth rate of 3.5-4% a year, plus dividends that add another potential 2-3% a year. That is a potential 5-6% yield that compounds year after year that you can use tax free via loans. And if you are not being taxed on your gains, it is similar to earning 2-3% more interest, depending on the tax bracket you fall into.

Consider that normal stock market returns are taxed around 20% or more. That means if you earn $10,000, you will pay around $2,000 in taxes that year (maybe higher). If you earn $10,000 in your policy you will pay ZERO taxes, because you have access to that money via tax free policy loans.

8. Guarantees

Whereas other types of permanent life insurance involve some level of risk, whole life insurance provides guarantees.

Whole life insurance guarantees:

• Guaranteed cash value accumulation
• Guaranteed death benefit
• Guaranteed fixed premiums
• Guaranteed compounding interest rate growth

9. Private

For many asset classes, the public can simply do a search and find out what you are up to. For example, running a credit report or title search will tell you a great deal about an individual’s financial holdings.

However, with life insurance your policy’s information is private. Your whole life insurance cash value holdings do not show up on any reports or searches. And when you take out a policy loan for infinite banking, your loan does not show up on a credit report, which comes in handy when you are applying for financing.

10. Creditor Protection

There are many states that provide creditor protection for life insurance. So, if you are faced with some financial strife, your cash value may be sheltered from creditors. Additionally, if you are sued, your money in your policy may be protected from a judgment.

Note: This map is not legal advice and you should consult with an attorney in your state if you have any questions regarding the below information.

Alaska

Exemption Amount (Cash Value): $500,000
Exemption Conditions: Exemption of accrued dividends and loan value exceeding $500,000. Amounts over $500,000 may be attached via court order. AK. Stat. 09.38.025(a). Only certain state exemptions allowed in BK.
Exemption Same for BK and Creditors? Includes cash value exemption.
Exemption of Death Benefits: Beneficiary can exempt proceeds from claims of beneficiary creditors up to $473 per week if debtor is spouse or dependent of insured. AK. Stat. 09.38.30(e)(4).

Arizona

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Cash value exempt if named beneficiary of policy is spouse, close relative, or other dependent family member of insured for uninterrupted period of at least two years. A.R.S. §20-1131(D).
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Creditors of insured / policy owner cannot attach if beneficiary of policy is not owner or insured individual. A.R.S. §20-1131(A). Proceeds exempt from claims of beneficiary creditors up to $20,000 if beneficiary is insured’s spouse or child. A.R.S. §33-1126(A)(1).

Arkansas

Exemption Amount (Cash Value): Unlimited; $500 if attachment based on contractual claim.
Exemption Conditions: Unlimited exemption set forth by statute restricted by Arkansas Constitution provisions limiting exemption available against contractual claims of creditors to $500. AR. Code 16-66-209; Fed. Sav. & Loan Ins. Co. v. Holt, 894 F.2d 1005 (8th Cir. 1990).
Exemption Same for BK and Creditors? Yes. (Bankruptcy debtors may alternatively select federal exemptions).
Exemption of Death Benefits: Creditors of insured / policy owner cannot attach if beneficiary of policy is not owner or insured individual. AR. Code §23-79-131(a)(1). Proceeds exempt from claims of beneficiary creditors, except if creditor claim is based on contractual debt, in which case exemption limited to $500. AR. Code §16-66-209.

California

Exemption Amount (Cash Value):$15,650 (may be doubled if debtor is married)
Exemption Conditions:$15,650 exemption against execution pursued by judgment creditor applies to loan value of unmatured policy. Cal. Civ. Pro. §704.100(b).
Exemption Same for BK and Creditors?Yes.
Exemption of Death Benefits:Beneficiary creditors cannot attach proceeds to extent necessary to provide for care of beneficiary or beneficiary’s spouse and/or children. Cal. Civ. Pro. §704.100(c).

Colorado

Exemption Amount (Cash Value): $250,000
Exemption Conditions: Cash surrender value exempt if policy owned by debtor for at least four years. Does not include increases arising from “extraordinary” contributions during prior four years. Co. Stat. §13-54-102(l)(1)(A).
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Creditors of insured cannot attach if beneficiary of policy is not insured’s estate. Co. Rev. Stat., §13-54-102.

Connecticut

Exemption Amount (Cash Value): $4,000
Exemption Conditions: Cash value exemption if policy owned by debtor and policy insures debtor or individual upon whom debtor is dependent. Ct. Gen. Stat. §52-352b(s).
Exemption Same for BK and Creditors? Yes. (Bankruptcy debtors may alternatively select federal exemptions).
Exemption of Death Benefits: Creditors of insured cannot attach if beneficiary of policy is not insured’s estate. Ct. Gen. Stat. §38a-453(a)

Delaware

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Complete exemption available for any assets or amounts held or payable to the debtor under any life insurance policy. Del. Code §10-4915.
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Proceeds exempt from claims of beneficiary creditors which existed as of time policy proceeds become available to beneficiary. Del. Code §18-2725.

Florida

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Cash value of life insurance policy insuring Florida resident or citizen may not be attached by creditor of insured. Fla. Stat. §222.14
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Creditors of insured Florida resident cannot attach if beneficiary of policy is not insured or insured’s estate. Fla. Stat. §222.13.

Georgia

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Cash value of life insurance policy insuring Georgia resident or citizen may not be attached by creditor of insured. O.C.G.A. §33-25-11(c).
Exemption Same for BK and Creditors? Generally, yes. But cash value exemption in bankruptcy capped at $2,000. O.C.G.A. §44-13-100(a)(9)
Exemption of Death Benefits: Creditors of insured Georgia resident cannot attach if beneficiary of policy is not insured or insured’s estate. O.C.G.A. §33-25-11(a).

Hawaii

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Complete exemption of cash value if beneficiary is insured’s spouse, child, parent, or dependent. Haw. Rev. Stat. §431:10-232.
Exemption Same for BK and Creditors? Yes. (Bankruptcy debtors may alternatively select federal exemptions)
Exemption of Death Benefits: Creditors of insured cannot attach death benefits. Haw. Rev. Stat. §431:10-232.

Idaho

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Complete exemption of cash value of policy owned by debtor, except value attributable to premiums paid in six months prior to bankruptcy filing or attachment. ID Code §11-605.
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Creditors of insured cannot attach if beneficiary of policy is not insured or insured’s estate. Creditors of beneficiary other than insured cannot attach. ID Code §41-1833.

Illinois

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Complete exemption of cash value if beneficiary is insured’s spouse, child, parent, or dependent. 735 ILCS 5/12-1001
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Creditors of beneficiary dependent upon insured cannot attach to extent proceeds necessary for support. 735 ILCS 5/12-1001.

Indiana

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Complete exemption of cash value if payable to insured’s spouse, child, parent or dependent. Ind. Code §27-1-12-14(e). Exemption excludes attachment of premium paid within one year of attachment or bankruptcy filing. Ind. Code §27-1-12-14(f).
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Creditors of insured cannot attach if beneficiary of policy is insured’s spouse, child, parent, or dependent. Ind. Code §27-1-12-14(e). If policy issued by domestic life insurance company prohibits assignment of benefits, creditors of beneficiary cannot attach proceeds unless beneficiary paid for policy. Ind. Code §27-2-5-1.

Iowa

Exemption Amount (Cash Value): Unlimited, except to extent cash value increases from payments made in last two years exceed $10,000.
Exemption Conditions: Complete exemption of cash value if payable to insured’s spouse, child, parent or dependent. Exemption limited to $10,000 in value acquired during prior two years. Exemption excludes premiums paid over necessary premiums during past two years. Iowa Code §627.6(6).
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Creditors of insured cannot attach if beneficiary of policy is insured’s spouse, child, or dependent. Iowa Code §627.6(6). Proceeds exempt up to $15,000 from creditors of beneficiary if spouse, child, or dependent. Iowa Code §627.6(6)(c).

Kansas

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Complete exemption if beneficiary has insurable interest and policy not issued within past year. KS Stat. §40-414(a).
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Creditors of insured and creditors of beneficiaries cannot attach if beneficiary has insurable interest. KS Stat. §40-414(a).

Kentucky

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Money or benefit under insurance policy cannot be attached for payment of any debt or liability of policyholder. Ky. Stat. §427.110(1).
Exemption Same for BK and Creditors? Yes. (Bankruptcy debtors may alternatively select federal exemptions). Creditors of insured or owner cannot attach if beneficiary is not insured or owner.
Exemption of Death Benefits: Creditors of beneficiary as of pay-out date cannot attach. Ky. Stat. §427.110(1).

Louisiana

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Cash value exempt from claims of creditors of insured or owner of policy. La. Rev. Stat. §22:912(A)(1). Limited to $35,000 if policy issued less than nine months prior to judgment execution or bankruptcy filing. La. Rev. Stat. §22:912(A)(2).
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Death benefits exempt against claims of creditors of insured, owner of policy, and beneficiaries as of time proceeds available to beneficiary. La. Rev. Stat. §22:912(A)(1).

Maine

Exemption Amount (Cash Value): $4,000
Exemption Conditions: Cash value exemption limited to $4,000; available if debtor is insured or person on whom insured is dependent. 14 M.R.S. §1422(11).
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Creditors of insured / owner cannot attach if beneficiary is not insured / owner or estate. Creditors of beneficiary cannot attach to the extent claims exist at time proceeds of policy become available to beneficiary. 24-A M.R.S. §2428(2).

Maryland

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Cash Value is exempt against claims of creditors of insured if beneficiary of policy is insured’s spouse, child, or other dependent relative. Md. Ins. Code §16-111(a). Exemption does not include dividends if debtor elects to accept dividends in cash. Md. Ins. Code §16-111(b).
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Death benefits exempt against claims of creditors of insured if beneficiary of policy is insured’s spouse, child, or other dependent relative. Md. Ins. Code §16-111(a). Policy proceeds exempt from claims of beneficiary’s creditors. Md. Courts & Jud. Pro. §11-504(b)(2).

Massachusetts

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Cash value is exempt if beneficiary’s interest in proceeds would be exempt (i.e., beneficiary has “insurable interest”). 175 Mass. Code §125; see also In re Sloss, 279 B.R. 6 (2002).
Exemption Same for BK and Creditors? Yes. (Bankruptcy debtors may alternatively select federal exemptions). Proceeds exempt from claims of insured’s creditors if has insurable interest. 175 Mass. Code §125. Exempt from beneficiary creditors if policy prohibits assignment or attachment, or if beneficiary is spouse. 175 Mass. Code §119A, 126.
Exemption of Death Benefits:

Michigan

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Cash value fully exempt from insured’s creditors if beneficiary has insurable interest. Mich. Comp. Laws §500.2207(2).
Exemption Same for BK and Creditors? Yes. (Bankruptcy debtors may alternatively select federal exemptions).
Exemption of Death Benefits: Policy proceeds exempt from claims of insured’s creditors. Mich. Comp. Laws §500.2207.

Minnesota

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: $9,600 Cash value exemption if insured is debtor or individual upon whom debtor is dependent. Minn. Stat. §550.37(23).
Exemption Same for BK and Creditors? Yes. (Bankruptcy debtors may alternatively select federal exemptions).
Exemption of Death Benefits: Policy proceeds exempt against claims of insured’s creditors if beneficiary is not insured / owner. Minn. Stat. §61A.12(1). Exempt up to $48,000 against claims of beneficiary creditors if beneficiary is spouse or child. Exemption amount increased by $12,000 for each dependent of beneficiary. Minn. Stat. §550.37(10).

Mississippi

Exemption Amount (Cash Value): Unlimited, unless over $50,000 paid into policy within 12 months.
Exemption Conditions: Cash value exempt against claims of insured’s creditors if insured is not beneficiary. Exemption limited to $50,000 for value attributable to policy payments made within 12 months prior to attachment or bankruptcy. MS Code §85-3-11.
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Proceeds exempt against claims of insured’s creditors if beneficiary is not insured. MS Code §85-3-11

Missouri

Exemption Amount (Cash Value): Unlimited. $150,000 in bankruptcy.
Exemption Conditions: Cash value exempt from claims of insured / owner if beneficiary is insured or person upon whom insured is dependent. MO Stat. 513.430(8). Exemption not available in bankruptcy if policy purchased within one year prior to bankruptcy filing.
Exemption Same for BK and Creditors? No. Exemption of cash value limited to $150,000 in bankruptcy proceedings.
Exemption of Death Benefits: Proceeds exempt against claims of creditors of insured and beneficiary. MO. Stat. §377.330.

Montana

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Cash value completely exempt against claims of owner’s creditors. Mt. Code § 25-13-608(k).
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Proceeds exempt against claims of creditors of insured / owner and beneficiaries. Mt. Code §33-15-511.

Nebraska

Exemption Amount (Cash Value): $100,000
Exemption Conditions: Cash value exempt up to $100,000 against claims of insured’s creditors if beneficiary is not insured or insured’s estate. Neb. Stat. §44-371(1)(a) and (b).
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Proceeds exempt against claims of insured’s creditors if beneficiary is not insured or insured’s estate; exempt against beneficiary’s creditor’s if beneficiary is related to the insured by blood or marriage. Neb. Stat. §44-371(1)(a).

Nevada

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Cash value in life insurance policy completely exempt from execution. N.R.S. 21.090(1)(k).
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Proceeds exempt against claims of insured’s creditors if beneficiary is not insured or insured’s estate; exempt against claims of beneficiary’s creditor’s existing at time proceeds become available. N.R.S. §687B.260.

New Hampshire

Exemption Amount (Cash Value): Not provided under state law.
Exemption Conditions: Cash value exemption not provided under New Hampshire law. See N.H. Stat. §511:02.
Exemption Same for BK and Creditors? Yes. (Bankruptcy debtors may alternatively select federal exemptions).
Exemption of Death Benefits: Proceeds exempt against claims of insured’s creditors if beneficiary is not insured / owner and has insurable interest. N.H. Stat. §408:02. Proceeds exempt from claims of beneficiary’s creditors if beneficiary is married woman. N.H. Stat. §408:01.

New Jersey

Exemption Amount (Cash Value): Unclear
Exemption Conditions: Similar Massachusetts statute has been interpreted as allowing complete exemption if beneficiary is third party and beneficiary’s interest in death benefit would be exempt.
Exemption Same for BK and Creditors? Yes. (Bankruptcy debtors may alternatively select federal exemptions).
Exemption of Death Benefits: Proceeds exempt against claims of creditors of insured and/or owner if beneficiary is not insured, owner, or insured / owner’s estate and has insurable interest. N.J. Stat. § 17B:24-6.

New Mexico

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Cash value of policy insuring NM citizen or resident is completely exempt from creditor attachment. NM Stat. §42-10-3.
Exemption Same for BK and Creditors? Yes. (Bankruptcy debtors may alternatively select federal exemptions).
Exemption of Death Benefits: Proceeds exempt from claims of creditors of insured (if NM citizen / resident) or beneficiary – unless contract expressly provides for payment of debts through policy. N.M. Stat. §§ 42-10-3, 42-10-5.

New York

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Complete exemption of accelerated death benefits, cash surrender and/or loan value, and dividends against claims of policyowner’s creditors. N.Y.C.L., Ins. §3212(b)(6). Exemption inapplicable if debtor actually receives cash loan value and has full control over funds. Tanges v. Schonbrun, 196 N.Y.S.2d 381 (Nassau County Supreme 1959)
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Proceeds exempt against claims of creditors of insured and/or owner if beneficiary is not insured, owner. N.Y.C.L., Ins. §3212(b)(1). Proceeds exempt against claims of beneficiary’s creditors if beneficiary is spouse of insured. N.Y.C.L., Ins. §3212(b)(2).

North Carolina

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Complete exemption if beneficiary is insured’s spouse and/or children. N.C. Gen. Stat. §58-58-95.
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Lawful beneficiaries have right to proceeds as against creditors of policyowner / insured unless beneficiary is insured or insured’s estate. N.C. Gen. Stat. §§58-58-95, 58-58-115.

North Dakota

Exemption Amount (Cash Value): $8,000
Exemption Conditions: Exemption if owner is insured and beneficiary is spouse, children, or other dependent relative. N.D. Code §26.1-33-36.
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Exempt from claims of insured’s creditors. If payable to decedent, decedent’s heirs, or estate, proceeds considered as general assets of estate, which may be transferred by insured via will or contract. N.D. Code §26.1-33-40.

Ohio

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Complete exemption if beneficiary is insured’s spouse and/or children, dependent relative, charity, or creditor, or trust for benefit thereof. Ohio Code §3911.10.
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Exempt from claims of insured’s creditors if beneficiary is insured’s spouse and/or children, dependent relative, charity, or creditor, or trust for benefit thereof. Ohio Code §2329.66(A)(6)(b).

Oklahoma

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Complete exemption from claims of insured’s creditors. Okla. Stat. §36-3631.1
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Policy proceeds exempt from claims of creditors of insured or beneficiaries. Okla. Stat. §36-3631.1.

Oregon

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Complete exemption if beneficiary is not insured’s estate. ORS §743.046(3).
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Proceeds exempt from claims of insured’s creditors if beneficiary is not policyowner. ORS §743.046(1).

Pennsylvania

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Complete exemption if beneficiary is insured’s spouse, child, or dependent relative of insured. 42 Pa. Stat. §8124(c)(6).
Exemption Same for BK and Creditors? Yes. (Bankruptcy debtors may alternatively select federal exemptions).
Exemption of Death Benefits: Proceeds exempt from claims of insured’s creditors if beneficiary is spouse, child, or dependent relative of insured. 42 Pa. Stat. §8124(c)(6).

Rhode Island

Exemption Amount (Cash Value): Unclear
Exemption Conditions: Similar Massachusetts statute has been interpreted as allowing complete exemption if beneficiary is third party and beneficiary’s interest in death benefit would be exempt.
Exemption Same for BK and Creditors? Yes. (Bankruptcy debtors may alternatively select federal exemptions).
Exemption of Death Benefits: Proceeds exempt from claims of owner’s and insured’s creditors if beneficiary is not insured or estate. RI Gen. L §27-4-11. Proceeds exempt from beneficiary’s creditors if policy provides for non-assignment. RI Gen. L. §27-4-12.

South Carolina

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Complete exemption if beneficiary is insured’s spouse, children, or dependents, and policy purchased more than two years before bankruptcy. S.C. Code §38-63-40. (However, In re Sims, 421 B.R. 745 (2010), holds that exemption only applies following insured’s death, in what appears to be minority interpretation of similar statutory language). $4,000 exemption if debtor is insured, or if beneficiary is spouse, children, dependent and policy purchased within two years prior. S.C. Code §15-41-30(9).
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Proceeds exempt from insured’s creditors if beneficiary is insured’s spouse, children, or dependents, and policy purchased more than two years before bankruptcy. S.C. Code §38-63-40.Proceeds up to $50,000 exempt from claims of insured’s creditors if beneficiary is spouse, child, or dependent of insured. S.C. Code §38-65-90.

South Dakota

Exemption Amount (Cash Value): $20,000
Exemption Conditions: Exemption from insured’s creditors unless agreement assigns value of policy to creditor(s). S.D.C.L. §58-12-4.
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Proceeds exempt from insured’s creditors up to $20,000 if beneficiary is spouse, or children. S.D.C.L. §58-12-4. Proceeds exempt from insured’s and beneficiary’s creditors up to $10,000 if payable to estate. S.D.C.L. §43-45-6.

Tennessee

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Complete exemption if beneficiary is insured’s spouse, child, or dependent relative of insured. Tenn. Stat. §56-7-203.
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Proceeds exempt from insured’s creditors if beneficiary is insured’s spouse, child, or dependent relative of insured. Tenn. Stat. §56-7-203. Proceeds exempt from insured’s creditors if beneficiary is estate and estate benefits surviving spouse and children. Tenn. Stat. §56-7-201.

Texas

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Cash value of insurance policies completely exempt from attachment by creditors or in bankruptcy. Tex. Ins. Code §1108.51.
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Proceeds completely exempt from creditors of beneficiary or insured except if premiums paid to avoid creditors, policy is contractually assigned, or debt involves child support. Tex. Ins. Code §1108.51.

Utah

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Cash value fully exempt, excluding payments to policy for one year prior to execution or bankruptcy. Utah Code §78B-5-505(1)(a)(xiii).
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Proceeds exempt from insured’s creditors if beneficiary is spouse or child of insured and policy purchased more than one year prior. Proceeds exempt from beneficiary’s creditors if beneficiary is spouse or child of insured. Utah Code §78B-5-505(1)(a)(xi) and (xii).

Vermont

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Complete exemption of cash value except in case of credit life insurance. 12 Vt. Stat. §1740(18).
Exemption Same for BK and Creditors? Yes. (Bankruptcy debtors may alternatively select federal exemptions).
Exemption of Death Benefits: Proceeds exempt against claims of insured’s creditors if beneficiary is not insured or estate. 8 Vt. Stat. §3706. Proceeds exempt from beneficiary’s creditors if beneficiary was dependent on insured as of date of death, to extent necessary for support. 12 Vt. Stat. §1740(19)(H).

Virginia

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Complete exemption of cash value from creditors of insured and policyowner. Va. Code §38.2-3122(1) and (3).
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Proceeds exempt from claims of insured or owner’s creditors. Va. Code §38.2-3122(1). Exempt from claims of beneficiary creditors if beneficiary is insured, owner, insured’s spouse, child, or other dependent. Va. Code §38.2-3122(2).

Washington

Exemption Amount (Cash Value): Not provided under state law for insured or policyowner.
Exemption Conditions: Exemption does not apply to insured’s interests in policy. R.C.W. §48.14.410(3)(a).
Exemption Same for BK and Creditors? Yes. (Bankruptcy debtors may alternatively select federal exemptions)
Exemption of Death Benefits: Proceeds exempt against claims of insured’s creditors if beneficiary is not insured or estate. Exempt from beneficiary’s creditors in existence at time funds become available. R.C.W. §48.14.410(1).

West Virginia

Exemption Amount (Cash Value): $8,000
Exemption Conditions: Bankruptcy exemption of cash value, dividends if insured is debtor or person on whom debtor is dependent. W.Va. Code §38-10-4(h). No specific creditor exemption for life insurance cash value.
Exemption Same for BK and Creditors? No. Bankruptcy W.Va. Code §38-10-4; attachment W.Va. Code §38-8-1.
Exemption of Death Benefits: Proceeds exempt against claims of insured / owner’s creditors if beneficiary is not insured or estate. W.Va. Code §33-6-27(a). Exempt from beneficiary’s creditors if dependent on insured, up to amount necessary for care and support. W.Va. Code §38-10-4(k)(3).

Wisconsin

Exemption Amount (Cash Value): $150,000
Exemption Conditions: Exemption applies if debtor is policyowner and policy insures debtor, debtor’s dependent, or person upon whom debtor is dependent. Wisc. Stat. 815.18(3)(f). Exemption limited to $4,000 if policy issued less than two years prior to attachment or bankruptcy date. Id.
Exemption Same for BK and Creditors? Yes. (Bankruptcy debtors may alternatively select federal exemptions).
Exemption of Death Benefits: Proceeds exempt against claims of beneficiary’s creditors if policy insured individual upon whom debtor was dependent. Wisc. Stat. 815.18(3)(i).

Wyoming

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Complete exemption as long as beneficiary is not policyowner. Wy. Stat. §26-15-129(a). Exemption extended to cash value as long as beneficiary is third party in In re Vigil, 74 Fed.Appx. 19 (10th Cir. 2003).
Exemption Same for BK and Creditors? Yes.
Exemption of Death Benefits: Complete exemption as long as beneficiary is not policyowner. Wy. Stat. §26-15-129(a). Exemption extended to cash value as long as beneficiary is third party in In re Vigil, 74 Fed.Appx. 19 (10th Cir. 2003).

District of Columbia

Exemption Amount (Cash Value): Unlimited
Exemption Conditions: Complete exemption of any unmatured life insurance policy owned by debtor except policy intended to pay debts of debtor. D.C.A. §15-501
Exemption Same for BK and Creditors? Yes. (Bankruptcy debtors may alternatively select federal exemptions).
Exemption of Death Benefits: Creditors of insured / policy owner cannot attach if beneficiary has insurable interest and is not owner or insured individual. D.C.A. §31-4716. Proceeds exempt from claims of beneficiary creditors if dependent of insured and necessary for support. D.C.A. §15-501.

Trustpilot

1. Penn Mutual
2. Lafayette Life
3. Foresters
4. OneAmerica
5. Ameritas
6. Guardian
7. Northwestern Mutual

10. Is the Infinite Banking Concept a Scam?

ANSWER: NO, the infinite banking concept is not a scam. A scam is some sort of fraud, such as a Bernie Madoff Ponzi scheme. Rather, the Infinite banking concept is the strategy of using Dividend Paying whole life insurance from a Mutual Insurance Company as your own personal source of financing, allowing you to leverage your capital and have your dollars working in two places at once.

Unfortunately, most financial entertainers such as Dave Ramsey, and more recently The Money Guy, don’t understand the concept and call it a scam, as they bring wandering sheep back into the Wall Street fold, who do a cursory glance at it and dismiss it outright without ever actually understanding the concept.

The good news is we created many infinite banking resources for you, so that you can learn all about infinite banking and decide for yourself if it is right for you.