Whole Life, Hollow Legacy

The Illusion of Financial Sovereignty

In seasons of economic instability, certain financial narratives gain traction. One of the most persistent is the idea that a properly structured whole life insurance policy can replace your need for a traditional bank. These strategies promise independence, control, and legacy. You have likely heard the pitch: ditch the banks, build your own vault, and pass it on tax-free. The message is simple: use a whole life policy, borrow against it, and let the compounding do the rest.

The structure appears straightforward. Fund a whole life policy aggressively. Access liquidity through policy loans. Let your cash value continue growing inside the contract while using borrowed dollars to finance your needs. This proposition, marketed under phrases like "Be Your Own Bank", sits at the heart of many Private Family Banking (PFB) presentations. It borrows heavily from the Infinite Banking Concept (IBC), but with new packaging, less accountability, and often looser standards.

Let us be clear from the outset: this article does not question the value of life insurance. We are a life insurance agency among other things. We regularly broker for term, and indexed universal life (IUL) policies when they serve a client’s needs. We even have access to some of the best preforming Whole Life policies on the market. Properly structured, permanent life insurance can support legitimate financial strategies. The issue is not the product category; it is the assumptions, illustrations, and sales tactics that accompany many PFB and increasingly, even some IBC recommendations.

After reviewing dozens of real-world cases, we see a consistent gap between what is promised and what actually occurs. The question is no longer whether life insurance has utility. The question is whether these strategies are being applied with wisdom, or simply marketed with tradition and emotion in place of mathematics and discipline.

The ABCs of IBC

The Infinite Banking Concept (IBC), originally developed by R. Nelson Nash in Becoming Your Own Banker, offers a principled framework for rethinking personal finance. Nash’s goal was not to outperform markets, but to redirect the flow of capital through a structure that the individual owns and controls. Specifically, he advocated the use of dividend-paying whole life insurance from a mutual insurer as a financial warehouse that could store capital, provide liquidity through loans, and preserve wealth for long-term stewardship.

“You finance everything you buy,” Nash wrote. “You either pay interest to someone else, or you give up the interest you could have earned on that money.” His aim was not to eliminate interest payments, but to internalize them; to keep more financial activity within the household by building a stable, long-term structure that rewarded patience and prudence.

Nash emphasized that the value of the system was not found in high returns, but in consistent control. “The Infinite Banking Concept is not a get-rich-quick scheme,” he warned. “It requires long-range planning and determination.” He likened the policy to a warehouse of wealth; a contractually guaranteed environment for capital accumulation. Even more importantly, Nash insisted on discipline. Policy loans, while flexible, were to be treated as real obligations. His famous phrase, “Don’t steal the peas,” was a rebuke to those who would borrow against their policy but fail to repay. Access to liquidity was not free money. It was a responsibility.

Sadly, much of what passes for IBC today has drifted far from Nash’s original vision. Many policies are sold on the promise of immediate liquidity, riskless arbitrage, or tax-free retirement income, all while glossing over the structure required to make the system work. In numerous cases we have reviewed, the illustrations downplay the required capitalization, obscure the long-term nature of the strategy, and omit the actual cost of borrowing. What remains is a hollowed-out version of IBC, one that retains the branding, but abandons much of the substance.

A properly structured whole life policy can provide stable access to capital. It can preserve wealth. It can add predictability to a household’s long-term plan. What it cannot do is replace production, prudent budgeting, or thoughtful deployment of capital. Nash himself was clear: “You can’t start this process too early… and you can’t put too much in it.” But even that statement presumes the user understands what IBC is—and what it is not.

For those seriously considering IBC, we recommend working with a Nelson Nash Institute (NNI) Authorized Practitioner. These advisors are trained not only in the mechanics of policy design, but in the underlying philosophy Nash advanced. They are generally more committed to the integrity of the model and far less likely to package it as a shortcut to wealth.

IBC remains a useful, albeit niche, tool for those who understand its design, accept its trade-offs, and commit to its structure. Anything less becomes a distortion of the product and of the original intent of its founder.

Private Family Banking: Undefined and Unaccountable

If Infinite Banking suffers from misapplication, Private Family Banking (PFB) suffers from misidentification. It has no foundational text, no training institution, no standardized structure. It is not recognized by the Nelson Nash Institute. It lacks a defined framework or guiding philosophy. Despite being presented as a system, it functions more like a marketing category; a catchall term used to describe a loosely connected set of strategies involving whole life insurance.

PFB borrows much of its language from IBC. Terms like “uninterrupted compounding,” “control over capital,” and “legacy through leverage” appear frequently. Yet, behind the familiar words, the mechanics have often shifted. Policies in PFB illustrations frequently emphasize early liquidity, minimal base premiums, and rapid borrowing cycles. The familiar phrase “be your own bank” remains, but the discipline behind it is often absent.

In our review of various PFB proposals, a concerning pattern emerges. Loan interest is minimized or not discussed. Dividends are presented as guarantees rather than projections. Assumptions about growth and repayment are overly optimistic or simply unmentioned. In some cases, projected loan gains are shown without disclosing the opportunity costs or the required repayment structure. The result is a client who believes they are guaranteed to profit from borrowing, when in fact they are simply taking on internal debt against a slow-growth asset.

The confusion is compounded when theological language is layered onto the sales pitch. Phrases like “stewardship,” “dominion,” and “covenantal legacy” are used to baptize a product that may or may not serve those aims. While Scripture clearly affirms multi-generational vision and wise household management, those theological truths must be paired with financial strategies that actually function. Product marketing and biblical stewardship are not interchangeable disciplines.

Not all PFB practitioners act in bad faith. Many genuinely believe in what they are offering. The lack of oversight, combined with the complexity of the product, creates fertile ground for confusion. That confusion is often profitable for the seller and costly for the client.

PFB is not inherently fraudulent. It is simply not a system. It is a flexible, loosely defined idea that can mean almost anything depending on who is presenting it. Until it is defined, standardized, and subject to consistent evaluation, it should not be adopted wholesale. Nor should it be offered as a substitute for a coherent financial strategy.

Families considering PFB-style strategies should ask direct and specific questions:

• What kind of policy is being proposed—participating whole life, indexed universal life, or something else?

• How does the carrier credit dividends, and what are the actual historical performance figures?

• How is loan interest charged, and at what rate?

• What assumptions are being used in the illustration?

• How long until the policy breaks even?

• What happens if market conditions change?

  
  

And perhaps most importantly: if the proposal sounds like IBC but lacks its safeguards, why has it abandoned the structure?

A Better Alternative? The IUL Advantage

The Infinite Banking Concept (IBC) is defined but often misused, and Private Family Banking (PFB) is undefined and often oversold, but both share one significant limitation: they rely on traditional whole life insurance as their foundation. Whole life offers stability and contractual guarantees, but it tends to do so at the cost of flexibility, responsiveness, and long-term growth potential. For those who want more adaptable structures with higher upside potential while still preserving tax advantages and policy loan access Indexed Universal Life (IUL) may be worth serious consideration.

IUL is a form of permanent life insurance that ties interest crediting to the performance of a market index, such as the S&P 500. The policyholder does not directly invest in the market. Rather, the insurer credits interest based on the index’s performance, subject to limits. Most IULs include a 0% floor, protecting against negative years, and a cap or participation rate that limits upside. These mechanics aim to offer better-than-fixed returns while limiting exposure to market volatility.

Several financial educators, including David McKnight (The Power of Zero) and Douglas Andrew (The LASER Fund), have helped popularize the use of IUL in long-term tax-advantaged planning. Their strategies typically involve overfunding the policy, minimizing the death benefit relative to premium, and accessing the cash value through policy loans in retirement. These loans are not income, they are legally debt, but when managed carefully, they can provide tax-sensitive liquidity during critical financial seasons.

As with whole life, loans from an IUL accrue interest and reduce the death benefit and surrender value if unpaid. If mismanaged or if the policy lapses with an outstanding loan, there could be serious tax consequences. However, many IULs offer two types of loan structures:

• Fixed (or Wash) Loans: These remove borrowed funds from the crediting strategy and apply a fixed interest rate. Some carriers credit an equal or near-equal amount on the loaned funds, offsetting the interest charge in part or entirely. These mechanics vary by contract and are not always guaranteed.

• Participating (or Indexed) Loans: These allow borrowed funds to remain in the crediting strategy, potentially earning interest while the loan accrues at a higher stated rate. The strategy here is to earn more than you are charged, but this is not assured and depends heavily on policy structure and index performance.

  
  

When structured with care, IULs may offer several features that align with long-term planning goals:

• Interest crediting based on market indices rather than internal dividend declarations.

• Downside protection through a 0% floor, limiting exposure to market downturns.

• Upside potential through caps or participation rates that exceed typical whole life dividend scales.

• Greater funding flexibility and more responsive loan structures.

  
  

It is important to note that these features carry risks. Cap rate compression has been widespread in the industry in recent years, which reduces growth potential. In our practice, we often explore volatility-controlled indices or uncapped participation models, which may offer more predictable outcomes over long time horizons. These are not guaranteed and must be evaluated for fit based on the household’s goals, timeline, and tolerance for risk.

When properly funded and maintained within IRS guidelines (to avoid MEC status when that is not desired), IULs can support meaningful long-term capital accumulation. They are not substitutes for qualified retirement plans. They are not miracle solutions. They are supplemental tools, often more efficient than whole life in scenarios where growth and flexibility are the priority; which has been the case for nearly all of our clients.

If your goal is to build long-term, tax-sensitive capital and access it through loans during retirement or transitional periods, IUL may provide better math, better structural flexibility, and greater adaptability than most of the whole life-based models we’ve reviewed under IBC or PFB.

Still, even IULs are not foundational tools. They are enhancements, not replacements, for a well-structured financial plan.

Theology and Stewardship: A Necessary Correction

One of the more troubling developments in the rise of PFB and derivative models is the increasing use of theological language to validate what are, at the end of the day, complex financial products. The pitch is rarely just about spreadsheets or policy mechanics. It often comes cloaked in moral or spiritual appeals: “Don’t rent money from the banks.” “Be the bank.” “Build legacy.” “Protect your family from the State.” These claims resonate—especially with Christians committed to stewardship and sovereignty—but resonance is not a substitute for scriptural warrant.

Biblical stewardship begins with clarity, humility, and obedience, not clever mechanics. Proverbs 22:3 praises the prudent man who foresees danger and hides himself. Ecclesiastes 11:2 commends diversification. Luke 14:28 instructs us to count the cost before building. These are not abstract platitudes, they are financial principles grounded in wisdom literature and affirmed by the teachings of Christ. They apply directly to decisions about policy design, liquidity strategy, and legacy planning.

Nelson Nash himself understood the covenantal implications of financial stewardship. He regularly connected IBC to categories like dominion, inheritance, and long-range planning. His use of theological language, while imperfect, aimed to draw attention to long-term responsibility, not short-term gain. Unfortunately, many modern adaptations of IBC (and nearly all PFB messaging) collapse these categories. They preach dominion while pitching products that require minimal effort, rapid payoff, and almost no downside. That is not dominion, but fantasy.

A man who borrows at 8% against an underperforming asset is not exercising stewardship. He is subsidizing a strategy with borrowed hope. Biblical dominion does not consist in borrowing one’s way to leverage. It consists in productive labor, disciplined financial management, and a multi-generational view that measures risk accurately, not aspirationally.

This distinction matters. Theological vocabulary should not be used to compensate for weak mechanics. Nor should it be wielded to discourage honest inquiry. Stewardship is not at odds with financial skepticism; it requires it. Dominion does not mean adopting a strategy that feels Christian. It means understanding the tools, counting the cost, and choosing the ones that serve the long-term flourishing of the household. Projection is not wisdom. Clarity is.

A Place for Everything: How Whole Life Can Fit in a Balanced Plan

Used correctly, both whole life and indexed universal life (IUL) insurance can serve legitimate financial purposes. These are not inherently flawed tools. They are simply tools that must be used in the proper context, for the right reasons, and at the right time.

Whole life, for instance, is suited to several slow-burning, high-value planning strategies:

• Estate equalization – providing liquidity to divide an estate fairly among heirs.

• Business succession – funding buy-sell agreements between partners.

• Asset repositioning – moving taxable assets into a more tax-advantaged framework.

• Charitable giving – leveraging small premiums for outsized gifts at death.

• Supplementary retirement income – offering liquidity during poor market years.

  
  

These are real, time-tested applications. None of them promise immediate returns. None of them work well without adequate funding, and all of them function best with a 20+ year time horizon and a client who is trying to preserve rather than multiply.

There is irony here. Whole life, when used as it was originally designed, shines precisely in the areas that many PFB promoters ignore. It is not dynamic, but it is dependable. It is not a generator of wealth, but a preserver of it. The trouble begins when preservation gets rebranded as growth. A product that, under ideal conditions, barely beats inflation is not a magic key to multigenerational wealth.

You can use cash value life insurance as a bank account. Just as you could use a ratchet as a hammer. It works in a pinch, and if your expectations are aligned, but it is not what the tool was made for, and repeated use in the wrong context may cause more harm than help.

A mature financial strategy should almost always begin with the following components:

• Emergency fund – 3–6 months of expenses in a liquid, high-yield savings account.

• Debt reduction plan – prioritized by interest rate and impact on cash flow.

• Term life insurance – cost-effective protection during high-liability years.

• Retirement savings – structured for your timeline, tax goals, and risk tolerance.

• Estate documents – including a will, powers of attorney, and healthcare directives.

  
  

Only after these foundations are in place should a household consider whether permanent life insurance has a strategic role. Occasionally, we build them in tandem, but never in reverse order. Capital preservation is not a substitute for capital creation.

To be clear: we do not oppose whole life or IUL policies. We oppose the distortion of those tools for the sake of commissions, shortcuts, or false promises. When placed correctly, in the right season of life and financial stability, permanent life insurance can offer real value. But it is a support beam, not the foundation.

Conclusion: Clarity Before Strategy

Both Infinite Banking (IBC) and Private Family Banking (PFB) attempt to offer an alternative financial framework; one built around control, liquidity, and legacy. These instincts are not wrong. In fact, they are commendable. A desire to build multigenerational capital, preserve wealth, and escape dependence on unstable systems reflects biblical stewardship at its best. However, instincts must be shaped by clarity, not just conviction.

IBC, as originally developed by Nelson Nash, is a principled and structured approach. It comes with published literature, defined expectations, and a strong emphasis on personal discipline. Nash did not promise arbitrage or early windfalls. He modeled a strategy for long-term capital access, built slowly and stewarded carefully. Unfortunately, many modern presentations of IBC sacrifice these principles in favor of convenience. What was once a tool for slow and deliberate financial control has often become a pitch for shortcut prosperity.

Private Family Banking takes this further. It borrows the language of IBC but sheds its constraints. There is no standard. There is no governing philosophy. It can mean nearly anything—and often does. Some PFB models are cautiously structured, but many are built around unrealistic projections, partial disclosures, and heavy theological overtones designed to shut down scrutiny. We have seen illustrations that assume uninterrupted compounding while ignoring policy charges, repayment risk, or loan interest mechanics. That is not financial strategy. That is underhanded marketing.

If your goal is long-term capital accumulation with flexible liquidity, Indexed Universal Life (IUL) policies frequently offer better growth potential and more responsive structures than traditional whole life. They are not flawless, but in many cases, they simply make better mathematical sense assuming they are used correctly, and within the bounds of a well-built financial plan.

That is the key. These policies are not plans in and of themselves. They are tools. Tools that, when misunderstood or misused, can cause significant financial harm. You should not sacrifice your emergency fund, home equity, or retirement assets to chase a tax-free borrowing strategy. Liquidity should never be built at the expense of stability.

Our goal is not to eliminate these tools, but to put them in their proper place. Stewardship demands that we align our tools with our goals, our theology with our tactics, and our projections with reality.

You do not need to mimic Wall Street or flee the banks to walk in wisdom. You need clarity, discipline, and trusted counsel. And that counsel should tell you the truth—even when the truth does not close a sale.

If you already own a policy and are unsure how it fits into your broader plan, or if you are considering a strategy promoted online or from a seminar, we invite you to pause, reflect, and ask questions. Our team would be honored to help you assess your options with honesty, humility, and a commitment to sound stewardship.

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Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, investment products, or financial instruments. Dominion Wealth Strategists is not a registered investment advisor, and no portion of this content should be construed as investment advice, recommendation, or endorsement of any particular investment strategy. Readers should consult with a licensed financial professional before making any financial decisions.