When most people first hear about Infinite Banking, one of the first questions that comes up is: “But what are the risks of Infinite Banking?”
It’s a fair question. We live in a financial world where we’ve been conditioned to look for the fine print, the hidden traps, and the potential downsides of anything that sounds “too good to be true.”
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I get it. When you first hear the concept of becoming your own banker through whole life insurance, the mind immediately goes to skepticism: Are the premiums too high? Is whole life a bad investment? What if I can’t afford it later?
Here’s the truth: most of what people call the risks of Infinite Banking aren’t really risks at all. They’re misconceptions, misunderstandings, or simply the result of looking at Infinite Banking through the wrong lens.
In this blog, we'll pull back the curtain and unpack the myths, expose the real risks, and help you see why Infinite Banking—when understood and implemented correctly—is not risky, but rather one of the most powerful financial strategies you can use to take control of your wealth.
Common Misconceptions About Infinite BankingMyth #1: Whole Life Insurance is a Bad InvestmentMyth #2: The Premiums are Too HighMyth #3: Infinite Banking = Life InsuranceThe Real Risks of Infinite BankingRisk #1: Not Understanding the Problem You’re SolvingRisk #2: Poorly Designed PoliciesRisk #3: Dipping Your Toe InRisk #4: Wrong Perspective (Consumer vs. Owner)Why Infinite Banking Works When Done RightControl vs. DependencyRecapturing Opportunity CostMutual Companies Align With OwnersShould You Be Worried About the Risks?The Bottom Line on Infinite Banking RisksBook A Strategy CallFAQ: What Are the Risks of Infinite Banking?Is Infinite Banking risky?What are the downsides of Infinite Banking?Is Infinite Banking a scam?Can I lose money with Infinite Banking?
Common Misconceptions About Infinite Banking
Myth #1: Whole Life Insurance is a Bad Investment
This is the first thing most people say when they hear about Infinite Banking. They’ve been told for years by financial gurus that whole life insurance has a low rate of return and is therefore “a bad investment.”
But here’s the problem: Infinite Banking is not an investment. It’s a system. It’s about controlling the flow of your money, not chasing the next hot stock. Whole life insurance is simply the tool that makes Infinite Banking possible—it provides the guarantees, safety, and contractual structure you need to run your own banking system.
So when someone says Infinite Banking is risky because life insurance is a “bad investment,” they’re comparing apples to oranges.
Myth #2: The Premiums are Too High
Another common objection: “What if I can’t afford the premiums long term?”
Here’s what most people miss. Premiums are not a bill—they are a way of paying yourself first. Every premium dollar you pay is a contribution to your own financial system. Unlike money you pay to a bank, that premium isn’t lost—it builds guaranteed cash value that you can use for opportunities, emergencies, or expenses.
The real risk isn’t paying premiums. The real risk is not valuing your own capital and continuing to let someone else profit from your money.
Myth #3: Infinite Banking = Life Insurance
This is one of the biggest misconceptions. People hear Infinite Banking and immediately equate it with whole life insurance. But Infinite Banking is bigger. It’s about a process—the flow of money, storing it, using it, replenishing it. Life insurance is just the storage tank that makes the process efficient.
Confusing the two is like saying “banking equals a vault.” The vault is just the tool. The banking process is much bigger.
The Real Risks of Infinite Banking
Now let’s get into the real question: What are the actual risks of Infinite Banking?
Risk #1: Not Understanding the Problem You’re Solving
The biggest risk isn’t the product—it’s starting with the wrong perspective. If you think Infinite Banking is just about getting a higher rate of return, you’ll miss the point.
Infinite Banking is about taking control of the banking function in your life. Every dollar you earn flows through someone’s bank. If it’s not yours, it’s theirs. If you don’t understand that problem, you won’t value the solution.
Risk #2: Poorly Designed Policies
Yes, there is risk in design. A policy can be built to maximize early cash value at the expense of long-term efficiency. Or it can be set up with the wrong company—one that doesn’t prioritize policyholders.
This is why working with the right advisor matters. A properly designed policy with a mutual company keeps you, the policyholder, in control. A poorly designed policy can cause frustration, disappointment, or even lapse if you don’t know how to manage it.
Risk #3: Dipping Your Toe In
Bruce often says this: “If you try to dabble in Infinite Banking, that’s risky.”
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