What is Infinite Banking?
The Infinite Banking Concept (IBC) is a strategy, not a product. The idea is to build a pool of money inside a participating whole life insurance policy and use the policy’s cash value as collateral to borrow — for your business, an investment or a major purchase — instead of relying only on a bank.
Meanwhile, the policy keeps doing its main job: protecting your family or your business with a death benefit.
Who created it?
It was developed by R. Nelson Nash (1931–2019), an American life insurance agent, in the early 1980s, when bank loan interest rates were very high. He explained it in his book Becoming Your Own Banker, published in 2000, and in 2013 he helped found the Nelson Nash Institute, which teaches the concept.
In Canada the strategy is also known as cash flow banking, and it is applied with Canadian policies and tax rules, which differ from those in the United States.
How does it work?
- You buy a participating whole life policy, usually designed to build cash value faster — for example, with extra deposits that purchase paid-up additions.
- The policy builds cash value with a contractual minimum, and it may receive policyholder dividends, which depend on the insurer’s results and can vary.
- When you need money, you take a policy loan from the insurer or use the policy as collateral for a bank loan. Your cash value can keep growing.
- You repay the loan with interest on your own schedule — with the same discipline you’d have with a bank — and the pool is available again for the next need.
- At death, the insurer pays the death benefit, minus any outstanding loan.
Infinite Banking in your business
Many private corporations in Canada take out the policy in the company’s name. Premiums are paid with dollars taxed at the corporate rate, generally lower than the personal rate; the cash value grows tax-deferred within the limits of an exempt policy; and at death, much of the benefit can be credited to the capital dividend account (CDA) and paid to shareholders tax-free.
Insurers in Canada that offer the product
No insurer sells “Infinite Banking” as such: what they offer is the vehicle, participating whole life insurance (par). These are some of the main ones in Canada and their products, according to PolicyAdvisor (2026):
- Canada Life — Wealth Select, Estate Select
- Sun Life — Sun Par Protector II, Sun Par Accumulator, Sun Par Accelerator
- Manulife — Manulife Par
- iA Financial Group (Industrial Alliance) — iA PAR Estate, iA PAR Wealth
- Equitable Life — Equimax Estate Builder, Equimax Wealth Accumulator
- RBC Insurance — RBC Growth Insurance, RBC Growth Insurance Plus
- Empire Life — EstateMax, Optimax Wealth
Companies such as Desjardins, Foresters, Co-operators and Assumption Life also offer participating whole life. Each has its own dividend history, financial strength, deposit options and loan rules; the choice depends on your goal and on how the policy is designed. Product names can change.
Advantages
- Your own liquidity: access money without having to qualify for a traditional loan each time.
- Cash value with a contractual minimum that grows tax-deferred, plus potential dividends.
- Protection: your family or business receives a death benefit.
- Control: you set the repayment schedule for policy loans.
- In a business, it works together with the CDA and succession planning.
Limitations and risks
- It requires high premiums and a commitment of many years; it is not a short-term strategy.
- Cash value is low in the early years: cancelling early can mean losing money.
- Dividends are not fixed: they can go up or down.
- Loans accrue interest; if unpaid, they reduce the cash value and the death benefit.
- A policy loan larger than the policy’s adjusted cost basis (ACB) can create a taxable gain.
- It doesn’t replace the basics: an emergency fund first, and expensive debt under control.
Good policy design is what makes the strategy work. Review it with a licensed advisor and your accountant before putting it in place.