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Privatized Banking: 

A Brief History

Permanent Life insurance has existed for hundreds of years in the United States, dating back to the last 1700’s when this country was founded. The creation of dividend-paying (aka “participating”) whole life insurance occurred way before the Internal Revenue Code (IRC) was established in 1913. Because of this timeline, whole life insurance contracts have preferential tax treatment in the income tax code (see IRC, Section 7702).


Through extensive research and a broad knowledge base on different financial institutions, we believe there are specific types of life insurance companies, called Mutual Insurance Companies, that offer specific types of life insurance contracts with certain beneficial features to build your own privatized banking system. A properly trained financial professional can use these contracts to offer you a tremendous alternative to traditional banking methods.


Please understand that we are not actually creating a real bank for our clients or communicating that life insurance companies are the same as a bank. Rather we are attempting to design a financial vehicle that can mimic certain banking functions in one’s personal/business economy for the purpose of saving, storing, spending and utilizing your money.


The concept of privatized banking is known by several names – infinite banking, specially designed life insurance contracts (SDLIC), bank on yourself, 702 Accounts, a Super Roth IRA, etc. It was brought into the main stream by R. Nelson Nash when in the Year 2000 he wrote his book “Becoming Your Own Banker.” And while the concept still has a lot of misconceptions surrounding it, it is our intention to demystify the idea so that Americans can protect the personal and business economies through this cutting-edge financial strategy.

We believe that there are three primary elements to banking today and that it is critical for people to understand how each

one impacts your personal or business economy. The three primary elements are:

  1. Paying your bills out of your checking account on a month-to-month basis (Managing your finances)

  2. Financing purchases with money you don’t currently have in your possession (Borrowing money)

  3. Paying cash for a purchase out of your savings/money market account (Saving money)


Privatized banking, also known as infinite banking, is focused on helping Americans with

good money habits take control of how they SAVE and BORROW MONEY!

Through extensive research and a broad knowledge base regarding different financial institutions, we believe there are life insurance companies that offer specific types of specially designed life insurance contracts with certain beneficial features to a conservative saver. A properly trained financial professional can use these contracts to offer a conservative saver a tremendous alternative to traditional banking methods. Please understand that this process does not create a real bank nor are we claiming that life insurance companies are the same as a bank. Rather we are attempting to design a financial vehicle that can mimic certain banking functions in one’s personal/business economy – like financing big ticket purchases and controlling where your cash flow is stored.

Not all life insurance companies or products fit the infinite model. Certain components must be present for infinite banking to be optimized:

  1. Become insured by a Mutual Insurance Company with strong financials

  2. Use a participating whole life contract with design flexibility

  3. The contract must allow for access to the policy cash value through policy loans while the policy is being capitalized (the first 5-7 years of the policy)

  4. Use a contract that allows for policy loans that do not interrupt the compounding of the guaranteed interest and dividends within the policy (These are called a direct and non-direct recognition loans)


Very few life insurance companies have contracts with all of these components. Very few financial professionals have the knowledge base on how to assist clients with their infinite banking systems.

To learn more about this concept, we encourage your to visit our video vault where we provide additional details and background on Privatized Banking. 

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