How to Use Infinite Banking Concept Calculator

For anyone who chooses or considers an infinite banking strategy is crucial to understand how to calculate the rate of return (ROR) using an infinite banking concept calculator.

It is necessary to calculate your rate of return because you would see what the savings are by doing simple math. By calculating, you are progressing and understand what those savings genuinely mean in terms of return rate.

In this article, we will cover:

  •  What is the infinite banking concept;
  •  Why do you need an infinite banking calculator;
  •  An example of how you can calculate your ROR;
  •  How to be your own bank.

Whether you are just considering over-funded life insurance or already using it, keep reading this article to see step by step how easy it is to calculate your ROR.

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What Is Infinite Banking?

Infinite Banking, or over-funded life insurance is a strategic method for managing your whole life insurance. By engaging your life insurance, you can start an endless banking system. You become your own banker, just without a financial institution and its high fees and interests.

To use infinite banking, you need to buy a whole life insurance policy and use the cash surrender value as collateral for a loan. One of the most significant advantages is the severe improvement in liquidity or cash flow. The net worth of an insurance policy standing in as security has more liquidity than other assets, equity in real estate, for instance. Even if you experience financial hardship or suddenly run short of cash, a life insurance policy loan helps you remarkably.

Another great advantage that infinite banking provides you is you have the freedom to determine how long it will take to repay your loan and what your payment schedule will be.

Whole life insurance policies are not concerned by the fluctuations in the stock market, and they retain their value at all times being non-correlated assets.

Explanation of How Over-funded Life Insurance Works

The list of names for infinite banking concept is pretty long:

  •  Perpetual wealth code
  •  Cashflow banking
  •  Money multiplier
  •  Overfunded life insurance
  •  Cash-value life insurance.

But they all refer to the same – infinite banking work on borrowing against yourself using a participating whole life insurance policy. A dividend-paying whole life policy is not the only vehicle but comes as the best one.

When you own a participating whole life insurance policy, your cash value grows each time the life insurance company pays dividends.

Even if it doesn’t seem like much, these dividends make sense over time. You hold a wealth-building vehicle when you combine this with the guaranteed interest rate. The fact that your cash value grows over time creates a compounding effect.

Infinite banking is based on insurance companies’ permission to use your policy as collateral and borrow money from your cash-value account. Instead of borrowing from a bank (or other financial companies), you borrow from yourself. The best part is your money continues to compound, and your cash value does not take a hit.

Your bank inheres of:

  •  Your premium payments,
  •  The dividends paid by the life insurance company,
  •  The guaranteed interest rate.

Having policy means having a vehicle that allows you to grow your money tax-free while earning a higher ROR than you would with a traditional bank.

The whole life insurance policy is much more than a refund for the family when the policyholder dies. The main idea was to design it for the policy owner to use during a lifetime, in numerous different ways – from an emergency fund to car purchases. Otherwise, when you pay cash for stuff, you permanently give up the opportunity to earn interest on your savings.

What Is The Role of Whole Life Insurance?

The infinite banking concept is not the whole life insurance itself.

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The whole life insurance is like a weapon for infinite banking to mirror the banking concept using own money. Whole life insurance policies have to arrange a cash profit for policyholders. Although there are other types of permanent life insurance, whole life insurance policies guarantee the same premium for the entire period of the policy.

Let’s see step by step when infinite banking starts:

  1. With every premium payment you make, one chunk goes directly to savings.
  2. After every payment, your cash value compiles a taxed-free rate.
  3. You can use the collection of cash values for whatever your needs are – from paying off your policy loans to investing in other vehicles.
    This step is the starting point for the infinite banking system.

Policy loans and withdrawing money are the ways you can access your cash.

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Make the Right Decision

We choose financial strategies based on our financial goals, preferences, and lifestyle. The best way is to scale the ins and outs and see whether cash-value life insurance suits you or not.

Pros of Infinite Banking Concept

We highlighted the main pros:

  •  Liquidity
  •  Control
  •  Non-Correlated Asset
  •  Tax-Free Growth
  •  The Death Benefit


Overfunded cash value insurance policy increases liquidity much more than other assets (stocks, bonds, 401(k) plan, real estate, etc.). The extra increase accumulates in a cash-value bank account when you overfund permanent life insurance.

You need to request a policy loan from your insurance company, and the funds will be yours – it is that simple. Thanks to overfunded life insurance, you don’t need to go through the whole process of the traditional banks to get credit.

Unlike velocity banking (and many others banking strategies), with overfunded life insurance, you can use your cash values at any age for anything you need – from emergency to investment opportunities or early retirement.

If you ever imagine having a pool of financial value that’s growing every day no matter what, then this might be a dream come true.


Since you are your own banker, you control your financial assets through your whole life insurance policy.

When you borrow money (no matter what you borrow it for), it charges interest every time. Due to taxes, your policy’s cash value growth has been delayed. After each loan in your policy, the cash value continues to grow.

Let’s see a specific example. If you take a $ 40,000 loan from an insurance company, the company uses your cash value accounts as collateral.

Yet, the cash value remains in your policy and earns even more interest rates. Additionally, you also get payment from dividends.

So, compound interest rates rise in your policy even when you use your cash value elsewhere (it can be a car loan or a mortgage).

You are allowed to have money in two places at the same time. The result of using infinite banking is an increase in financial assets.

Non-Correlated Asset

The whole life insurance is called a non-correlated asset because it is not directly connected to the stock market. Thanks to not being associated with the stock market, whole life insurance is a much safer asset – it cannot fluctuate like the stock market. And even if the market crashes, your own personal economy will not be affected.

Tax-Free Growth

There are many ways in which the infinite banking system provides tax benefits. Infinite banking reduces taxes because the cash values grow without having to pay taxes on it as you would with managed money in taxable accounts or money kept at the traditional institution.

For instance, tax-free death benefits and the possibility of taking out a policy loan against the total cash value and the whole life insurance loan are not taxed. Earned dividends from the insurance company are also not taxable.

The Death Benefit

Over-funded life insurance is a great option to start generational wealth and leave an inheritance to your children and partner.

Life insurance provides a safety net for your beneficiaries due to the guaranteed tax-free death benefit. Most life policies also provide the death benefit available if you become terminally ill or unpredictable death.

Many older policy owners strategically take out loans against their policy because they know that the loan balance will be deducted from the death benefit when they die.

Cons of Infinite Banking

It is not weird that infinite banking gained so much popularity in the financial world, but there is always the other side of the coin:

  •  Not Diversified
  •  Cost
  •  Mindset and Disciplined
  •  Qualification

Infinite Banking Doesn’t Provide Diversity

All financial advisors consult people to put their assets in various places. In over-funded life insurance, you put all your money in one place (your whole life insurance policy). Thus, infinite banking is not diversified. Financial experts always point out this as a slippery slope of infinite banking and better investing in other financial products such as mutual funds.

However, there is another perspective. Your money is still growing, and that is what’s important. The difference is that it’s growing in one place, unlike having a diverse portfolio.

The basic idea of diversification is to secure your assets, although the risk is that the market may move against one of your positions. The financial advisor has a job to create a portfolio for the account owner to suit his risk tolerance.

But you do not have to worry about market volatility if you hold an adequately structured dividend-paying whole life policy. As we pointed out, whole life insurance is not correlated to the market. Additionally, some of the most financially sound companies globally offer guarantees for infinite banking policies.

Infinite banking policy provides you guaranteed cash value growth, guaranteed death benefit and fixed premiums, and that eliminate the wish for a diversified portfolio. Another argument is you are engaging in diversification by buying cash-flowing assets through borrowing money from your whole life insurance.

It seems like you don’t have to worry about diversification.


There is no set minimum monthly payment in infinite banking concepts, but if you want to achieve your full potential, you should put around 10% of your income into your policy. If you can put more money, the results would be better.

But on the other hand, for many people, this can be cost-prohibitive, especially if they do not have a stable monthly income.

The opportunity cost, the costs and benefits of each choice must be considered and weighed against the others to evaluate correctly.

Mindset and Discipline

To accelerate the long-term growth of infinite banking, it is not enough to lend against your policy – you must also repay your life policy loans. Nelson Nash, outlined the Infinite Banking strategy in the book ”Becoming Your Own Banker”, said that ”you have to be an honest banker”.

If you are not disciplined and do not pay back your policy, it will slow growth and miss out on maximizing your policy. Infinite banking is not some ‘get rich quick scheme’. Infinite banking is a long-term commitment and requires consistency.

Strong discipline and clear financial goals with the right mindset will reward you ultimately, but for some, this is harder than it looks.


You must qualify for an infinite banking policy just as you would for many other life insurance policies. Because the qualification for all life insurance companies is based on your age and health, it is harder for people with health problems to qualify.

On the other side, qualification for the whole life insurance is more accessible than term life. If you have health issues and want to apply for life insurance, our advice is to skip the term life insurance because it is unlikely to approve you.

You Need an Infinite Banking Concept Calculator

Whether your job is to plan a financial strategy for clients or to plan your financial future, you need a calculator to get the most from investment and increase profits in the long run.

Different Types of Calculators

Depending on your needs, or your client’s, you can use one of many types of calculators. Some of them are:

  •  Borrowing Strategy,
  •  Automobile Purchases,
  •  Cash Flow.

Most of the calculators have to be paid. Before purchasing any of them, search for a trial period. If the trial period is available, it’s an excellent opportunity to see is it efficient for your needs or not and also practise how its work.

Still, we have some excellent news for you – we will show you a step-by-step guide on using a completely free calculator to count your ROR in infinite banking!

Calculate Your Rate of Return for Infinite Banking Concept

This app that we are showing you is available for your mobile phone (Android and IOS) and desktop, so it will be easy to follow these steps whether you are on to go or at your desk. Another reason why we find out this as a great tool is that you have so many options that you can calculate whenever you dream of.

  1. Search for ‘ez calculator’ in your Google. The first result you see is the one we are going to use.

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  1. You will see plenty of options, but we are looking for TVM Calculator. TVM stands out for ‘Time Value Money calculator’.
  1. We are taking as an example the same numbers as we did to make 36% by paying our rent.

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First, make clear the meaning of every field.

The present value represents the value of the item you want to pay off. We are going with the value of our rent; it is $12 900.

In this step, a little warning for you: make a present value a negative because it is a decreasing balance.

Payment is a regular payment that you would be making towards this purchase. Our monthly rent is $1400.

Periods represent a timeframe in which you are going to be paying off. For us, it is an 11 month period.

  1. We want to calculate a ROR, so we choose option ‘Rate’. And that’s it!

Our ROR is 36.9%. We found this fascinating because investing in real estate never made that much return.

Now we challenge you to calculate your profits and try to flip over some in other ways!

Be Your Own Bank

Using a variable or an indexed universal life insurance policy will help you to become your own banker.

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To maximize the fullest potential of infinite banking concept, here are some crucial things to consider and understand, according to Wealth Nation founders:

  •  What results do you want to achieve, and how do you use the resources to achieve them?
  •  Truly understand your finances.
  •  Level up and own your lifestyle, or someone else will.

A key point is a personal development.

Final Thoughts

Calculating your ROR is a fantastic way to see what your savings indeed are. We hope that we brought you closer to the concept of calculating and invite you to try.