The MyForeverBank Factory - Bank-Free Banking

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Welcome to the MyForeverBank Factory! This is where we begin to put together your customized MyForeverBank, your own bank. First, we are going to take a brief tour of the machinery that builds MyForeverBanks, and then in the next lesson we’ll take a look at one of the MyForeverBanks that come off the assembly line here, and finally, we’ll introduce you to the MyForeverBank Simulator that we are going to send you home with.

How to Work This Course

This Bank-Free Banking course uses a hands-on approach to the concepts and workings of MyForevderBank – the bank that attends to your banking needs without helping to build the tallest building in town. I introduce you to the vocabulary of the Infinite Banking Concept (IBC) in The Industry Vocabulary and show you how it works in the present lesson.

Infinite Banking (the name used by its most famous advocate, R. Nelson Nash in his book) now has several names: “Be Your Own Banker”, “Cash Flow Banking”, “Bank on Yourself”, “Cash Flow Banking”, and “770 Account” (referring to the IRS provisions for whole life insurance), all of which point out various aspects of the method. I first learned of the idea because John Ward, a provider in Massachusetts, had read Nash’s book that quoted my writings and looked me up.

I recommend that you begin this course by reading through The Industry Vocabulary, which unfortunately, is a little like eating sawdust. But the good news is that it only takes 10 minutes to consume it and you get a good introduction to the concepts that make the system work. But if you prefer, you can certainly dive in right here and take this tour of the MyForeverBank Factory. If you are already familiar with financial concepts and life insurance, keep on reading right here.

The Tour

We begin the tour by reading this summary of whole life insurance, the investment instrument that is the primary engine of the money making machine I call Bank-Free Banking.

Whole Life Insurance Policy – In summary: a type of life insurance policy typically having the following attributes: fixed amount premiums are paid as long as the insured lives, constantly increasing cash value, dividends (refund of premiums) that represent passive income, and a fixed amount death benefit.

In detail: a contract between a person or other entity and a Life Insurance company (carrier). The carrier sells its services and its guarantees to the buyer (hereinafter called the owner). The owner is obligated to make payments (premiums) to the carrier, and the carrier is obligated to perform certain financial services, including a death benefit upon the death of the insured person (not necessarily the owner). The other financial services include the following: a steadily growing cash value that is available to the owner in the form of policy loans, reduction of the death benefit, or reduction or elimination of premiums, refunds of previously paid premiums (dividends), and withdrawals. Withdrawals reduce the cash value but loans and reduction of the death benefit do not.

Notable characteristics of Whole Life Insurance:

Guaranteed Growth & Stability
You get guaranteed cash value: some policies guarantee growth. You own a contract not a stock.
The cash value does not decline during stock market downturns.
Some whole life policies guarantee dividends.
DIvidends can be applied to reduce premiums and can even pay them entirely.¹
Loans & Accessibility
The cash value can be used as collateral for loans so the interest rate is low.
Cash value loans preserve the cash value and maximize dividends.
You can withdraw money from the cash value instead of using it for loan collateral.
You can withdraw or borrow against it. You own it. There is no application process or credit check.
You set the repayment terms.
You can choose not to repay the loan or part of it. The “penalty” is reduction of the death benefit.
Flexibility
The insured and the owner may or may not be the same person. You have choices.
Cash value can be withdrawn piecemeal during retirement to provide a tax-free income.
Unlike 401(k)s or IRAs, there are no restrictions or penalties for accessing your money.
Unlike 401(k)s or IRAs, there are no limits on how much you can put into your policy.²
A Paid Up Addition Rider lets you increase cash value and death benefit anytime you want to.
Dividends
“Participating” whole life policies pay dividends.
Dividends can: give you cash, decrease premiums, increase cash value, buy higher death benefits, repay policy loans, or pay you interest.
Hedge Against Inflation
Whole life insurance premiums never increase.
Borrowing against the cash value means you pay low interest.
The tax advantages help offset inflationary disadvantages.
The cash value growth of Universal Indexed Life Insurance is tied to the market as a direct hedge.
Tax Advantages
Tax-free dividends – because dividends are actually refunds of premiums paid, they are not taxable.
Tax-free growth: Cash value growth is not taxable.
Tax-free death benefit: Beneficiaries receive the payout without income tax liability.³
Riders Let You Customize Your Contract
Disability Waiver of Premium and Chronic Care riders pay your premiums when you can’t.
Purchase Paid-Up Insurance lets you increase cash value and/or death benefit when you want to.
Living Benefits can give you a monthly income if the insured becomes terminally ill.
Accidental Death rider can double the death benefit – a good hedge for the bread winner.
Protection
Cash value and death benefits are protected from bankruptcy and creditors in many states.
Premiums cannot be increased by the carrier.
Provides for Free Inter-Generational Transfers
Because the death benefit is not taxable it can transfer wealth without loss.
Because you can direct the death benefit to any heir, multiple policies give you infinite choices.
The MyForeverBank concept includes perpetuating itself across generations through a Family Office.

¹ This depends on the success of the carrier’s investments of premiums.
²If a policy contains too much cash value, the policy may be re-classified by the IRS as an investment rather than a life insurance policy.
³If the named beneficiary receives the policy death benefit in a lump sum.

A MyForeverBank Examples

Melissa Carter’s Story

This example will show you in detail how a Participating Whole Life Insurance policy could work for a 35-year-old, non-smoking woman with average health and 3 children. (I choose to use the “participating” version of whole life because it pays dividends but it also has somewhat higher premiums.)

At 35, Melissa Carter had her life planned out as best she could. A single mother of three, she worked tirelessly as a nurse in a bustling hospital. Though money was tight, she believed in securing her children’s future, so she purchased two participating whole life insurance policies—one for $50,000 and another for $100,000. These policies weren’t just about a death benefit; they were the beginning of Melissa’s MyForeverBank.

The $50,000 policy had a monthly premium of $90, totaling $1,080 per year and the other premium was $175 per month for a total of $265, or $3,180 per year.

She dutifully paid the premiums month after month, even when unexpected expenses arose. For 15 years, she remained committed, watching the policies accumulate value while also benefiting from the dividend payments that she reinvested.

The Hardship

When was 50 her youngest child, Ethan, was diagnosed with a rare medical condition requiring expensive treatments not fully covered by insurance. Medical bills stacked up, and even though she was earning more—now making $85,000 per year as a senior nurse—she still faced a tough decision on how to cover the costs.

She checked on her investments in life insurance and found that they had accumulated a cash values of $23,000 and $48,000. (Note that she has paid premiums of $47,700 which had grown to $71,000, a gain of $23,300, or she had recovered all the premiums paid on the smaller policy.

She met with her insurance agent, who laid out some options:

Surrender one of her policies and take the accumulated cash value.
Borrow against the cash value of one policy while keeping both active.
Reduce coverage to lower premiums, though this would shrink her future benefits.

After reviewing the numbers, Melissa decided to take out a policy loan of $40,000 to cover Ethan’s medical costs.

The loan came with a 5% annual interest rate, and she was advised to make regular payments to prevent the loan from reducing the death benefit significantly.

Loan Repayment Plan

Melissa structured her loan repayment over 9 years while continuing to pay premiums on both policies.

She set up monthly payments of approximately $500 to repay the $40,000 principal plus interest.
Over 9 years, she would pay back a total of about $54,500, including interest.
Meanwhile, her policies continued to grow in value, and dividends helped offset some of the interest.

She Set the Terms for Repayment

Melissa decided how much and when she wanted to make payments on the load and notified the company of those terms. They did not ask her questions of check her credit score. It was a loan guarenteed by cash. She said she would begin making payments a year after receiving the loan and make $300 payments for 2 years then make $500 payments until the balance was paid. The insurance company reminded her that she had the option to change her payment plan at any time up to and including not making any payments. The unpaid portion would just decrease the death benefit.

The Outcome

By age 59, Melissa had fully repaid the $40,000 loan plus interest, restoring her full $100,000 death benefit. Because she had kept up with her premium payments, both policies had continued to grow, providing her with even more security for the future.

By age 65, when she was preparing for retirement, Melissa had paid premiums for a total of 30 years:

The $50,000 policy:
- Total premiums paid: $32,400 ($1,080 × 30 years)
- Cash value at age 65: about $42,000
The $100,000 policy:
- Total premiums paid: $63,000 ($2,100 × 30 years)
- Cash value at age 65: about $90,000

With $132,000 in total cash value, Melissa had several options. She could borrow against it again, withdraw some funds tax-free, convert the cash value into an annuity that would give her income for years, or simply let it continue growing. By holding onto both policies, she had built a financial asset that could supplement her retirement income or remain as a legacy for her three children.

Ethan’s health had improved, and Melissa looked back with gratitude. Had she surrendered the policy outright, she would have permanently lost its benefits. By borrowing strategically and repaying the loan, she had leveraged the policy while keeping her long-term security intact.

She had learned that life insurance wasn’t just about preparing for death—sometimes, it was about ensuring you could navigate life’s toughest moments and still come out ahead.

To estimate Melissa’s total dividends received on her whole life insurance policies by age 65, let’s make some reasonable assumptions based on industry standards.

Key Assumptions:

Dividend Rate: Whole life policies from mutual insurance companies typically earn 4-6% annual dividend rates, based on total cash value and premiums paid. A conservative estimate of 5% is used.
Dividend Payout Method: Melissa reinvests dividends into the policy to purchase paid-up additions (PUAs), increasing her cash value and death benefit over time.
Annual Dividend Growth: Since dividends are based on growing cash value and premium payments, they start lower and increase over time.

Dividend Calculation Breakdown:

First 15 Years (Age 35–50) Before Loan

In early years, dividends are low since cash value is growing.
By year 15 (age 50), the total dividends received so far are estimated at $13,500.

Next 9 Years (Age 50–59) While Repaying the Loan

Since Melissa borrowed against her policy, her dividends are slightly reduced but still growing.
By age 59, she has received about $22,000 in total dividends.

Final 6 Years (Age 59–65) After Loan Repayment

With her full $100,000 death benefit restored and both policies intact, her dividends grow faster.
By age 65, she has received about $35,000 in total dividends.

The Final Outcome (Age 65)

Total Policy Metrics

Total premiums paid:
- $50,000 policy: $32,400
- $100,000 policy: $63,000
- Total paid: $95,400
Cash values at age 65:
- $50,000 policy: $42,000
- $100,000 policy: $90,000
- Total cash value: $132,000
Total dividends earned (age 35–65): $35,000

Melissa could withdraw some dividends tax-free (if structured properly), leave them to increase her cash value, or use them to buy additional paid-up insurance.

Conclusion

By consistently paying into her participating whole life policies, Melissa not only secured a death benefit for her children but also built a cash reserve and earned $35,000 in dividends. Had she not used her policy for a loan, the dividend total could have been higher, but her strategy allowed her to handle financial hardships without sacrificing coverage.

The Fundamentals of Finance

I’ll talk about these in the next lesson. You may be surprised at how I present them. I don’t like the typical instruction format of academic presentation, I like to use stories. They are easier to remember. This is the next lesson. But then, some of them can be covered with just a few words so a story isn’t very efficient.

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Jackson Pemberton

Jackson has written an online training course in Bank-Free Banking (often called Infinite Banking) in terms that an ordinary citizen can understand.
He writes from a background as a family man (raised ten children) with degrees in Physics, Mathematics, and Business. HIs vocation has been mostly Engineering and Financial Business, Accounting and Banking software. He is a Christian, a Philosopher, and an Author writing mainly about rights and government. He lives off-grid most of the year in the tops of the Rocky Mountains.