A famous 20th century philosopher once said, “Those who cannot remember the past are condemned to repeat it.”

Let’s see what we can pick up from a quick history on the Infinite Banking Concept®.

If you were around during the 1980’s, you’ll remember interest rates soared. They hit an all time high that had never been seen before… or since. It was financially devastating for a lot of people and a lot of businesses.

One of those individuals was Nelson Nash. In our interview with Nelson Nash, Nelson painted a very real picture of what was going on at the time.

Interest rates were so high people were losing their homes and their businesses left and right. There was no alternative. You were subject to what the federal reserve and banks decided interest rates were.  Nelson recounts paying upwards of 23% interest. Can you imagine?

It was at this point he knew he needed a lot more control. What he didn’t realize, however, was he had been preparing for this problem for years, in the form of his whole life insurance policies.

When it finally hit him, he realized he had money available to him at  5% 6% and 8% in the form of policy loans. The interest he saved ultimately saved his businesses and his family. His only regret was not having put more into his whole life insurance policies to start with.

Nelson Nash later wrote a book called “Becoming Your Own Banker,” which teaches what is now known as the Infinite Banking Concept, and how you can put yourself in control of what now is controlled by the Federal Reserve and Banks.

Now back to the quote. “Those who cannot remember the past are condemned to repeat it.”  Let’s take a look at our economy, and why history may be on the verge of repeating itself.

Our State of Affairs

You like recipes? Let’s take a look at one real quick.

  1. Artificially low interest rates (Federal Reserve lends to banks at near 0%)
  2. Inflation
  3. Government Spending at all time highs (USdebtclock.org)
  4. Government in need of revenue.

No one can predict the future, but a couple things have to happen.

  1. Interest rates will go up. How far they go up is unknown, but it could easily look like what it did in the 80’s, or worse.
  2. We are in the lowest tax brackets we’ve been in since the 1940’s (See Below). Taxes have to go up, or government has to decrease spending dramatically. As of 2013, we will already see major tax increases across the board. It’s the start of what could be even more serious tax changes.
Tax History

How Does Infinite Banking Help

The Infinite Banking Concept does 3 things that are key here.

  1. It eliminates the control that the Federal Reserve and banks have over the interest rates you borrow at. You control the lending situation much like Nelson did in the 80’s.
  2. It eliminates the control the government has over the use of your money. It’s no longer locked away inside a government sponsored plan.
  3. The other thing it does is get your money out of the tax loop. Every dollar inside a whole life insurance policy, when handled properly, will no longer be subject to taxes. It grows tax free, and can be used taxed free. It is even passed on tax free.

Why Whole life insurance As The Infinite Banking Vehicle

Whole life insurance is a vehicle that has been around for 200+ years and provides a particular combination of benefits that are not found in any other financial vehicle available. It’s been used by banks, corporations, and wealthy individuals for centuries as a place to store safe money, and even provide employee pensions.

Now back to the combination of benefits, they are laid out nicely in the chart below. PLI stands for Permanent Life Insurance:

Financial Product Comparison Chart
So there you have it.  As you can see when you peel back the layers it’s actually really simple.  If you like being in control of your financial life then infinite banking might make some sense.

Do we see it as the be-all and end-all solution for everybody?  Absolutely not.  There is no such thing as magic bullet in the financial industry, though some will try and convince you otherwise.  Infinite banking is a sound concept that uses a sound vehicle to protect, grow and pass on wealth.

We’ll let you be the judge though, grab our free tool kit below, and decide for yourself.