IBC, also known as Becoming Your Own Banker©, Bank On Yourself© and a few other terms, is the process of using cash value life insurance as a personal bank to fund transactions that would typically be funded by a regular bank. By eliminating the banks from the equation and funding all your purchases through your Infinite Banking policy, you transfer the interest paid to banks into your own account. In essence you accelerate your own cash value accounts and recapture your own interest.
I’m assuming you already know about IBC if you’re interested in looking for the top 10 companies that offer it. If not, please visit our article on Infinite Banking Pros and Cons.
In this article we at I&E are going to do our best to provide you with 10 solid and reputable insurance companies that offer cash value life insurance. Truth be told, the best life insurance companies actually offer much more.
You see, the best companies to use for IBC provide riders and policies that are ideal for IBC use and also have a proven track record of long-term success and stability.
Some of these companies actually train their agents and home office staff in the Nelson Nash (creator of the Infinite Banking Concept) method in order to provide clients with a greater understanding of how to create wealth beyond the confines of Wall St.
Top 10 Best IBC Companies Criteria
Before we jump right into the companies themselves, let’s look at our reasoning behind the top 10 list. We have certain criteria for Infinite Banking and we want to share it with you.
In addition, it’s helpful to know that the criteria for our Top 10 Infinite Banking companies is identical to the criteria for our Top 10 Dividend Paying Life Insurance Companies – due to the fact that we value the same criteria for both (stability, performance, flexibility, etc.).
Keep in mind that ultimately the success or failure of a given methodology will come down to execution. You can have the perfect product, but if you fail to implement it, you won’t see the results you anticipated. In other words, the best microphone in the world can’t make you into a phenomenal singer. It takes diligent, disciplined practice to get good at something.
Having said all that, it is important to note that there are companies out there that are not ideal for Infinite Banking, so it pays to know who does and who does not.
Simply a Guide
And finally, we want to say that this list is to be used only as a guide, and ideally only as a starting point in conversing with a qualified representative that is familiar with these companies and the concept.
Life insurance requires underwriting, which means that not all people are treated the same. If you’re a smoker or have a history of cancer in your family, you will have less options than those with ideal health.
So even though we provide this list as our top 10 companies for Infinite Banking, we know that your top 10 companies may differ because of your unique situation.
Needless to say, our top 10 companies all provide cash value life insurance, and they also provide policies that are meant to maximize cash value growth and accumulation. Ultimately we hope this guide provides a glimpse of what to look for when shopping for an Infinite Banking policy.
Criteria 1 – Mutual Company vs. Stock Company
According to Kiplinger’s Personal Finance Magazine, when searching for cash value life insurance, “a mutual company is your best bet.” The reason that a mutual life insurance company is ideal verses a stock company is that the policy holder is a “member” in a mutual company. The member is one who “participates” in the insurance company’s investment gains.
As a participant, the policy holder in a mutual company receives “dividends” on the cash value of their policy. The dividends are considered a return of premium, not income – so they are tax free.
Just to be clear, the dividend is considered a return of overpaid premium (this is the profit the company made throughout the year, it goes back to the policy holder). In a stock company much of the profits would go to the share holders, not the policy holders.
In addition, mutual life insurance companies tend to focus on long-term growth and stability. In contrast, stock companies must appease long term policyholders and meet the short term goals of stockholders, creating somewhat of a conflict of interest.
Due to these key advantages, we tend to prefer mutual companies in our top 10 Infinite Banking insurance companies.
One of the criticisms of mutual life insurance company dividends is that the “overpaid premium” essentially means that they charged you too much during the year. Critics will suggest getting a policy from a stock company because they don’t “overcharge.”
We believe this criticism fails the test upon implementation because stock companies are not noticeably cheaper on average than mutual companies – their premiums are roughly the same, but the profit (the amount above the cost) goes to stock holders instead of going to policy holders in the form of dividends.
One More Thing
Another reason why a mutual life insurance company is ideal for our purposes is because excess profits are NOT used for purposes that do not benefit the policy holders – for things like large executive bonuses.
The largest mutual life insurers have an AA+ rating. In contrast, the largest stock (i.e. public) companies have ratings that are two tiers lower with an AA- rating. From 2008 to 2014, publicly traded insurers increased life insurance assets 1.9% a year on average, while during the same time frame mutual life insurers averaged 6.6%. Source.
Criteria 2 – Performance History
(cash value accumulation, loan rates, dividend payments)
Whole life cash value growth is essential to the Infinite Banking Concept because the cash value is the pool of money that provides the funding for all your banking needs. Without a substantial cash pool the banking options are seriously limited.
As always, we emphasize that the dividends are NOT guaranteed, and this fact is trumpeted often by the critics of whole life insurance. While it may be true that the dividends are not guaranteed, based upon history, our selected whole life insurance companies have a solid track record of continuing to pay dividends through all kinds of economic conditions and cycles, including the Great Depression and Great Recession.
Loan rates are another key factor in the infinite banking approach. When designing a whole life policy for infinite banking, the cost of loans verses ongoing dividend rates is of course a key emphasis because the goal is often to keep a desirable “arbitrage“. We aim to focus on the top whole life insurance companies for building cash value with ongoing cash value growth regardless of life insurance loans because this allows for leverage and multiple levels of wealth building. So a company’s history of loan interest rates is important.
Our top 10 Infinite Banking life insurance companies have a solid track record for paying dividends, as we believe that this is key to providing a reliable expectation for enhanced cash value growth.
Criteria 3 – Stability
(company history, reliability)
Our top 10 Infinite Banking life insurance companies have a solid track record for stability as we believe this is essential to building your owning bank and funding your banking needs.
So we’re only focusing on well established mutual whole life insurance companies with solid financial strength and a top credit rating. We used A.M. Best rating as a benchmark when comparing these companies. In addition we referenced Standard & Poor’s, to gain some additional insight.
Criteria 4 – Flexibility
(products, design, convertibility, options for paid up additions)
Simply put, some companies are more flexible than others when it comes to premium design AND “paid up additions” (which is adding cash value to your policy) and structuring a policy that suits your goals.
For our purposes, flexibility refers to both the availability of various products, flexibility in allowing for paid up additions AND other ways of accommodating those seeking to maximize cash value accumulation.
Flexibility is critical for those that are interested in Infinite Banking because there are a variety of strategies for maximizing growth and funding your banking needs. Some companies offer one way to bank via your policy, so the agents may tell you that it’s “perfect” for Infinite Banking. But in reality they are forcing you to bank in a confined space – something that might be a serious hindrance down the road.
Criteria 5 – Overall Suitability
(for strategic purposes, infinite banking, conduit wealth building)
The suitability of a given company for Infinite Banking is based on the criteria mentioned above as well as the training and education of the agents and home office. Companies that have been given training in the banking concepts are easier to communicate with when you’re attempting something you haven’t done before in the banking sphere.
Finally, it is also worth mentioning that our top Infinite Banking companies are all licensed to offer its whole life insurance policies in at least 40 of the 50 states.
A Few Notes on Direct vs. Non-Direct Recognition
This distinction refers to whether policy loans will negatively impact the dividend rate paid on the policy cash value. Obviously taking policy loans are a major aspect of the policy growth in the infinite banking world. It simply means that the policy will continue to perform normally. This includes the payment of dividends at FULL rates, regardless of the amount of policy loans owed.
Although non-direct recognition companies tend to hold great reverence in the Infinite Banking world as opposed to direct recognition companies, we’ve found that many direct recognition companies have a record of solid performance EVEN where Infinite Banking strategies are used.
So, without further delay, our top 10 Infinite Banking life insurance companies, in alphabetical order are:
Top 10 Infinite Banking Life Insurance Companies
- American United Life
- Lafayette Life
- Mutual Trust
- National Life Group
- Ohio National
- Penn Mutual
- Security Mutual Life
AUL is a good mutual company (A+ rating with A.M. Best) and also made our top 10 list because it is a “non-direct recognition” company that offers tremendous flexibility with its paid up additions rider option for their whole life policy.
Standard & Poor’s highlighted these factors of AUL when giving them a AA- (the fourth highest rating of 22):
- Strong competitive position, supported by leading market position in niche Care Solutions (combo product) business. The mutual company holds No. 1 position in annuity-based long-term care (LTC) and No. 2 in life-based LTC market.
- Very strong growth, especially in Retirement Services (RS) line of business
- Extremely strong capital, demonstrated by ‘AAA’ redundancy
- Extremely strong financial risk profile, underpinned by extremely strong capital adequacy, an intermediate risk position, and adequate financial flexibility
American United Life also offers what is called a declining paid up additions load. This just means that folks can slowly decrease the amount of paid up additions being paid. However, this can come back to haunt you if people decrease the paid up addition too much. By doing so, it can undermine their strategy for growing the cash value.
Indexed Dividend Crediting Option (IDO) Rider – Legacy and Legacy 121 policyholders can participate in market moves earning up to double their dividend, without sacrificing whole life guarantees.
For more on this member of our top 10 Infinite Banking insurance companies, please check out our American United Life review
Foresters Financial offers one of the only participating no medical exam whole life insurance policies in the industry. You can get up to $400,000 20-Pay or Paid-Up at 100 whole life insurance without an exam.
Foresters Financial is proud of their A rating with A.M. Best and they are an innovator in the world of life insurance underwriting. With a guaranteed insurability rider option, we recommend considering this option while shopping for a company.
Foresters has a strong dividend history. The dividend interest rate has remained above 6% for the past 13 years (8.6% dividend in 2005), and was at 6.2% for 2016.
For more on this member of our top 10 Infinite Banking life insurance companies, please stop by our Foresters Financial review.
Guardian is a top rated company (A++ superior Best, AA+ – second highest among 22 ratings by S&P), and also direct recognition, but one that is committed to the concept of treating whole life insurance as an asset.
They promote a type of Infinite Banking strategy among their agents. And even though they are a direct recognition company, it hasn’t negatively impacted policy performance in most cases.
When it comes to accumulating cash value, Guardian’s 10 pay limited pay life insurance product, when structured properly, is apparently their strongest offering (blended with paid up additions).
One word of caution, watch their career agents closely if you choose to work with them. The career agents have a tendency to prefer the less advantageous Guardian L-99 product.
It is worth pointing out that Guardian also has excellent customer service ratings. They also get extra marks for flexibility due to the variety of options for premium payment models.
The Guardian’s 2017 dividend interest rate is 5.85%. For more on this member of our top 10 Infinite Banking insurance companies, please check out our Guardian Life review.
Lafayette Life is a non-direct recognition company that has captured a good segment of the infinite banking zealots. We believe this company’s popularity stems from its non-direct recognition status, sound business rating (A+ Best, AA second highest rating out of 22 by S&P) and excellent track record.
Standard & Poor’s gave the following as a reason for their rating:
- Very strong financial security characteristics
For us, this company doesn’t stand out with any specific product or service offering, we’re somewhat neutral. Lafayette Life’s dividend rate was unchanged at 5.10% for 2016.
For more on this member of our top 10 Infinite Banking insurance companies, please stop by our Lafayette Life review.
MassMutual is a juggernaut in the whole life insurance market and sits among the top choices for all kinds of reasons which include cash value accumulation and wealth building.
Mass Mutual is a mutual company that is continuously among the top performers in the critical category of the history of payment of dividends. MassMutual’s whole life insurance dividend history is superb, with its 2017 dividend rate at 6.70%.
They offer an excellent model for paid up additions and their 10 pay product is tremendously effective at maximizing cash value growth.
MassMutual has won the coveted A.M. Best rating of A++ Superior, and a AA+ rating from S&P, and makes the cut as an overall suitable whole life insurance product for anything from wealth building to obtaining a permanent death benefit for family security.
In addition the company was given a 2016 World’s Most Ethical Company award – seems like a decent company to choose in our opinion.
For more on this member of our top 10 Infinite Banking insurance companies, check out our MassMutual review.
Mutual Trust Life Insurance, aka MTL Insurance Company, aka Mutual Trust Financial Group, aka “The Whole Life Company”®, was founded in 1904 as a mutual insurance company. In 2015, Mutual Trust became part of Pan American Life Insurance Group, which deals in insurance and financial services.
MTL knows IBC, having designed a proprietary dividend option geared towards the idea of maximum cash value accumulation. The Maximum Accumulation Dividend® option works in tandem with the Flex Pay Paid-Up Additions Rider or Annual Premium Paid-Up Additional Insurance Rider, providing maximum cash value accumulation on a continual basis, while avoiding a modified endowment contract.
We at I&E believe this is a great company. However, if we had one negative to speak of it would be the lower ratings it has received in contrast to its peers. MTL has a Comdex ranking of 78, which reflects a lower overall financial rating vs the competition. As of April 2018, MTL has an A rating from A.M. Best and an A rating from Fitch.
For more on this member of our top IBC companies list, please visit our Mutual Trust Life Insurance review.
With an A.M. Best rating of A, an A+ for S&P and a Comdex ranking of 80, National Life Group (NLG), aka National Life VT, aka Life Insurance of the Southwest, is a mutual insurance company offering competitive dividends among its peers.
Accelerated benefits for both chronic illness and terminal illness are available.
For more on this member of our top 10 Infinite Banking insurance companies, please check out our review of National Life Group review.
Ohio National is a solid mutual company (A+ by A.M. Best) that has consistently gained high recognition as a strong contender for offering policies that foster cash accumulation.
Standard & Poor’s gave them a A+ rating and stated the following:
- Very strong competitive position supported by a long track record of year-over-year (y/y) consecutive sales growth
- Very strong capital and earnings anchored by our expectation that capital will remain significantly redundant at ‘AA’
- Intermediate risk position reflecting relatively well-diversified investment portfolio with limited exposure to defined-benefit pension liabilities
Although a non-direct recognition company, recently they’ve been edged out by our other choices for a few reasons. They seem to lack some flexibility for paid up additions. Another apparent issue is that, similar to Guardian, many of the agents promote certain whole life products that may not be ideal for cash accumulation as some of their other products.
For more on this member of our top 10 Infinite Banking insurance companies, please visit our Ohio National review.
PennMutual is another excellent mutual company (A+ by A.M. Best) and gets very high marks in a number of areas.
Penn Mutual’s Standard & Poor’s rating is A+, which is the fifth highest of 21, and they highlighted the following reasons for their rating:
- Very strong financial risk profile
- Very strong capital adequacy
- Strong business profile
They are a direct recognition company, and yet their track record of policy performance for cash accumulation is exceptional.
They ALSO score among the highest on our list for flexibility in paid up additions payment options.
Another exciting thing about this company is that their sales data reveals a large following of independent brokers. This is in contrast to some of our other choices who operate largely through a captive sales force.
Penn Mutual’s dividend rate has stayed level or increased every year since the 2008 financial crisis. Its 2017 dividend award payout is up 21% from 2016. For more on this member of our top 10 Infinite Banking life insurance companies, please check out Penn Mutual review.
Security Mutual Life is a non-direct recognition company that offers participating whole life insurance focused on personal banking strategies, such as the infinite banking concept.
SML has an A- rating from A.M. Best, which is the 4th highest rating of 15 offered by Best Company.
Security Mutual Life offers four different types of whole life insurance policies as part of its Security Designer WL4U product line, which include:
- WL4U LP121
- WL4U LP100
- WL4U LP65
- WL4U 10Pay
The most popular product for personal banking is the WL4U LP 100. This is a whole life insurance policy that is payable to age 100. Among the many riders offered are a Chronic Illness Benefit, Enhanced Paid-Up Additions rider, and a 5-year Own Occupation Disability Waiver of Premium rider.
For more on this top infinite banking company, please see our Security Mutual Life review.
So there you have it, our Top 10 Infinite Banking insurance companies. Our sincere hope is to help provide information that guides and instructs consumers in acquiring their financial needs and desires.
The real trick however…
Will be to find an veteran life insurance agent who is not only experienced in helping folks qualify for these types of life insurance policies, but is also patient enough make sure that all of your questions are answered well before you decide to apply for coverage.
The good news is…
That we have a great team of life insurance agents just like this waiting for you to give us a call here at I&E! So, what are you waiting for? Give us a call today and see what we can do for you!