How I am Capitalizing My “Banking” System

Paying Substantial Whole Life Insurance Premiums

Austin L Garner
4 min readAug 10, 2023

This is the 2nd article in a series of 3 that shares the financial journey my wife and I went, and are going, through.

The 1st article is: How My Financial Beliefs Have Changed

The 3rd article is: How I am Getting out of Debt and Financing My Life

I do not necessarily recommend others do what we did. To make any changes to your finances, please consult the proper experts. This article is simply the process we went through to adjust our finances, and why.

Photo by Sandy Millar on Unsplash

We had some savings in our bank accounts to cover some major expenses in the next few years that were earning zero interest. We decided to begin transferring this portion to our new “banking” system (high cash-value, dividend paying, whole life insurance policy), knowing that we will borrow from it when the time came but, in the mean time, it will be contributing to our families overall wealth building strategy. We did not have enough in savings to continue capitalizing for the following years, so we assessed other available sources.

Retirement Funds

The next place we accessed funds to implement the IBC was in our “retirement” savings. As soon as my wife and I had begun employment after college, we started contribution to retirement plans. We also started Roth IRA’s to build tax free future income.

I should note that at the time we began implementing the IBC, we were not regularly saving each month or contributing to any retirement plans. By this time, my wife had already left her incredibly fruitful career to raise our two children full time. I was early in my role as a financial advisor with a modest base salary while I built up my commissioned income over the next two years. Monthly cashflows were tight most of the time and it was stressful. Especially since we had been saving so well in the prior years with two incomes.

Our 401k’s were very constricting in access to funds, but the Roth IRA’s gave us access to our contributions penalty and tax free, as long as we held the account for at least five years. In 2020, since we had our Roth IRA’s for at least 5 years, we withdrew our contributions and utilized the funds to further capitalize our IBC style policy.

Global government lockdowns in reaction to the 2020 Covid-19 outbreak occurred fairly close to the start of our first policy. The CARES Act was passed in response to provide some financial assistance during this time. One of the provisions in the Bill allowed owners of retirement plans to withdrawal funds early (before 59 1/2 years old) without the normal 10% IRS penalty. However, the taxes on traditional tax-deferred plans (non-Roth) would count as ordinary income for that year, but the CARES Act allowed the taxes to be paid over 3 years.

I waited until the end of the year, to make sure I understood the bill accurately and make sure nothing was going to change, before requesting a withdrawal from my employer 401k. These funds were also designated for capitalizing our new “banking” life insurance policy.

In following years, we also completed a rollover conversion for the remaining funds in our traditional retirement plans (401k’s & IRA’s) to our Roth IRA’s so that after 5 years of holding the funds, we could withdrawal the converted funds to further capitalize our family banking system. We strategically converted the funds in years when we expected our income to be relatively lower so that our taxes would be minimized. We could have converted smaller portions over several years but, expecting our household income to increase each year, our taxes would potentially be greater in the future.

Paying the taxes for both of these events was gut-wrenching. But in the future, when the balances would theoretically be higher and most likely the tax brackets, we were convinced we made the right choice. I can’t imagine the anxiety I would have in taking retirement withdrawals decades later. Now all of our savings is permanently more tax favorable.

Other Funds

We had a small Health Savings Account (HSA) from several years ago that we reimbursed past medical expenses to capitalize our “bank”.

We had a brokerage account from my wife’s prior employee stock purchase plan with a few shares of stock that we sold.

We also had a 529 college savings plan we set up the year prior to begin saving for our kids education. The Tax Reform of the Trump Administration changed the rules for 529 plans to not only include secondary education, but primary also. Now we can reimburse our education expenses while our kids are younger to use the funds in our family “banking” system.

After studying the Infinite Banking Concept and implementing it, we knew the benefits far outweighed these other plans we had been utilizing.

I was so motivated to capitalize our “banking” system that I was now willing to sell personal property (that I hadn’t touched in several years) to pay more premium.

I’ve always thought finances had to be complicated (the more complicated the more sophisticated; right?), but the process of implementing our own family “banking” system has helped us clean up and simplify our finances, as well as improve the outcomes in the important areas of our life.

“[The Infinite Banking Concept] is a simple, stress-free way of life.” -R. Nelson Nash

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Austin L Garner

Founder of Disciple Wealth Strategies (DiscipleWealthStrategies.com). Helping People Serve God & Master Money (Luke 16:13)