The Best Whole Life Insurance For Infinite Banking
What Type of Life Insurance is Used For Infinite Banking?
Typically, a dividend-paying Whole Life insurance policy from a mutual insurance company is used to practice Infinite Banking. However, Indexed Universal Life (IUL) can also be used for Infinite Banking, even though it lacks Whole Life’s stalwart guarantees.
In general, we recommend having a solid base of Whole Life insurance as the foundation before adding more aggressive and riskier components to a comprehensive private banking system. You can read our in-depth article to learn more about the difference between Indexed Universal Life (IUL) vs. Whole Life and their implication on Infinite Banking.
Ranking the best Whole life insurance policies for Infinite Banking is somewhat subjective and depends on which of these aspects you value the most:
- Ongoing flexibility needed
- Top insurance company ratings
- Highest early cash value accessibility
- Best long-term cash value performance
Table of Contents
Many newbies researching Infinite Banking concept will naturally gravitate to the policy with the highest early cash value. However, if they worked with an independent agent to compare the best dividend-paying Whole Life companies, they’d find that having access to 4 figures of additional cash value in year three isn’t worth giving up 5-6 figures in year twenty-five.
Looking through this lens, the best policy for Infinite Banking early on may not be the best Whole Life insurance for retirement and vice versa. However, any Whole Life insurance policy can be used for both, regardless of whether it is optimized for early or long-term performance.
As one of my early mentors said:
“It doesn’t matter which benefits you like best about Whole Life, because you get them all”.
This article takes a deep dive into understanding the key drivers behind what qualifies the best dividend-paying Whole Life companies to be an ideal fit for the Infinite Banking Concept.
What is the Infinite Banking Concept?
The Infinite Banking Concept, originally discussed by the late Nelson Nash, is a cash flow management system that primarily uses Whole Life insurance as the hub for liquid capital rather than traditional banks.
By funneling your income and expenses through a specially designed Whole Life insurance policy, you keep your cash value riding on a continual compound interest curve by borrowing against it as liquidity needs arise. Over time, this continuous tax-exempt compounding produces significantly more family wealth vs. saving and spending using the same inflows and outflows inside a traditional high-yield savings account.
Needless to say, the success of your Infinite Banking strategy will rely heavily on the overall quality and design of the insurance policy you choose.
What Features Should My Infinite Banking Life Insurance Policy Have?
The amount of features and riders available on Whole Life can be overwhelming when it comes to specifically designing it for Infinite Banking and cash value performance.
To simplify things, we’ve separated all of the things you hear about into different categories of importance and relevance.
Must-Have Features of An Infinite Banking Whole Life policy:
The following features of a Whole Life policy are the key drivers that distinguish the top policies for Infinite Banking vs. lackluster offerings.
When performing a competitive analysis of the best whole life insurance policies for infinite banking, these are the most critical factors in narrowing down the ideal candidates.
A "True Mutual" Insurance Company
A mutual insurance company is a company owned solely by its Whole Life policyholders, whereas a fluctuating set of stockholders trade shares of stock insurance company ownership on an exchange. Furthermore, the fickle demands of Wall Street’s quarterly earnings reports often heavily influence a stock insurance company’s short-term decision-making, unlike mutual companies, which are focused solely on creating value for their long-term obligations to the policyholder owners.
However, a “Mutual Holding Company” is a weird middle-of-the-road ownership structure when it comes to vetting the best dividend-paying Whole Life companies.
What is a "Mutual Holding Company"?
A mutual holding company is actually a mutual insurance company that is reorganized into a stock company, but the stock is still wholly owned by its Whole Life policyholders.
This can be done to raise capital by classifying itself as a subsidiary under another mutual company as its parent company. Historically, though, mutual companies who adopted this structure, did so before demutualizing into a pure stock company to be sold on an exchange.
Since a Whole Life policy for Infinite Banking is one you want to last your “whole life,” it’s probably ideal to stick with the oldest true mutual companies rather than a mutual holding company, which has clearly taken an extensive legal step toward demutalizing.
Below, we denote in our reviews of the best-performing Whole Life insurance policies, which are true mutual life insurance companies vs. mutual holding companies.
Paid-Up Addition Rider + Term Insurance Riders
Although Infinite Banking can technically work with just some company’s base Whole Life insurance policy, it would take several years to get it properly capitalized for it to become your own bank. Not so when adding a Paid-Up Addition rider, especially when paired with a term insurance rider allowing you to max fund with a disproportionate amount of PUAs.
Have no illusion though, what sets the best performing Whole Life insurance policies apart from the rest isn’t the amount of PUAs or term, but the quality and performance of the underlying policy ingredients. We shatter this myth in our review of a 10/90 policy vs. the top 2 Whole Life policies.
Even though the base Whole Life policy is seen as a kind of entry-level necessary evil to getting the best whole life insurance policy for infinite banking, Paid-Up Additions are really just miniature versions of that base policy. Furthermore, any PUA premiums plus dividends converted to PUAs get added to the guaranteed growth curve of your base policy.
Solid Performance & Dividend History
Notice how I broke up this header into two parts:
- Contractual Performance
- AND the Company Dividend History?
In an attempt to simplify an overcomplicated subject, consumers often try to latch onto a simple metric like the picking the top Whole Life companies’ current dividend rate to help them choose the best Whole Life policy for Infinite Banking.
Sorry, I wish it were that easy, but it’s not.
Unfortunately, you can’t even compare one Whole Life company’s dividend rate to another’s. It’s apples to oranges, since they all have their own internal metrics as to how that internal factor enhances the growth of their particular policy. Have you heard that “Whole Life is a black box?” Well, each company has their own black box, which may be similar, but not uniform.
Similar to how the best Whole Life companies for Infinite Banking aren’t the same ones that allow for the most term and PUA rider, the same is true for those with the biggest dividend number. Believe it or not, the company with the highest dividend rate doesn’t have the best early cash value numbers, nor the best long-term performance.
What does that tell you?
Not only that, but in 2025 many Whole Life insurance companies raised the interest component of their dividend (a credit), but then simultaneously raised the expense component (a debit), creating a “large print giveth, but small print taketh away” effect on their dividend.
This graphic above from my extensive Whole Life dividends article is from an actual Whole Life carrier explanation on dividends.
Remember how dividend performance is just one of two components for total return?
It’s because once a dividend is rolled back into the policy as a Paid-Up Addition, it then rides on the guaranteed growth curve of the base Whole Life policy, which is hard-coded from the onset.
So when comparing the best whole life insurance policies for infinite banking, you need to consider both:
- The hard-coded performance of the base policy
- The Whole Life company’s relative dividend performance
And this can only be measured by having an independent Infinite Banking expert, run the same premiums into the best dividend-paying Whole Life companies, and stress test them under different scenarios to see which will be best for your particular policy.
Above you learned about the most important features to demand, and below are some additional options to consider as well as which to completely disregard.
Maybe-Have Features of an Infinite Banking Whole Life insurance policy:
The following features of a Whole Life policy are optional offerings that may or may not be important depending on your exact circumstances and how you plan to use the policy.
Overloan Protection Rider
We almost put this rider on the must-have list. It’s a shame that not every carrier offers it.
Let’s say that during retirement, you take recurring policy loans as a tax-exempt income stream that you have no intention of repaying. With almost every Whole Life policy, you’ll have to constantly manage your loan-to-cash-value situation and possibly even make payments deep into old age to keep your policy from lapsing.
Otherwise, if your policy lapses and you took out more money than you put in, you may get stuck with a huge tax bill when you can afford it the least!
An Overloan Protection Rider solves this impending problem when using Whole Life for retirement. If you borrow 99% of your cash value during retirement, an Overloan Protection Rider automatically freezes the last 1% of non-loaned cash value to preserve a minimal amount of Whole Life death benefit for your heirs.
Doing so ensures your whole life policy stays in force, preserving the tax immunity of all your prior lifetime distributions (policy loans or withdrawals).
Chronic Illness Rider
Although most of our clients are concerned mainly with Whole Life’s cash value growth, private banking loans, and future tax-exempt retirement distributions, many of them overlook or underestimate the value of a Chronic Illness rider.
A Chronic Illness rider allows tax-free access to the death benefit (over and above the cash value), even though nobody dies. There’s a catch, though. The insured has to be too sick or hurt to ever work again or fully care for themselves on their own.
Although the math says you may not ever need this rider, it’s better to have it and not need it than to need it and not have it. If you do need it, having a windfall when you can no longer work or for your final days may be precisely what the doctor ordered.
Some of the best whole life insurance companies only offer these living benefits or a chronic illness rider for an additional charge, while some offer it as a free rider.
High Death Benefit-to-Cash Value Ratio
Hear me out before you go telling me:
“I don’t care about the death benefit. I only want Whole Life for the cash value!”
First of all, the Chronic Illness rider above is based on the death benefit.
But also, did you know that a higher death benefit equates to more cash value on a guaranteed basis with Whole Life? Here’s why:
- Any Whole Life’s cash value MUST equal the death benefit at death or by age 121
- The lion’s share of this contractual guaranteed growth is realized by life expectancy
- Dividends into a Paid-Up Addition raises the death benefit bar by pulling up the cash value.
- The dividends a Whole Life policy is entitled to each year are determined not only by the cash value, but also by how much permanent death benefit the policy has.
So even though the death benefit may not be the main reason you’re looking into a Whole Life policy, it will affect your cash value whether you like it or not.
Keep in mind too, that having extra Whole Life death benefit in retirement can allow you to more aggressively spend down less tax-efficient assets like 401ks and IRAs when it’s optimal to do so.
Some of the best Whole Life policies for Infinite Banking artificially inflate the early cash value by lowering the guaranteed growth rate of the cash value (which allows them to lower the death benefit). You’ll often find this negatively impacts their long-term performance, since the cash value must equal the death benefit in the long run.
Features That Don't Matter with an Infinite Banking Policy:
We find all too often that many agents will mislead the public about ancillary factors that don’t matter nearly as much as the policy features discussed above.
Don’t be misled into thinking these are anywhere in the same realm as the overarching quality and performance of consistently delivered by the best dividend-paying Whole Life companies.
Single-Premium Dump-in Rider
We find all too often that many agents will mislead the public about ancillary factors that don’t matter nearly as much as the policy features discussed above.
Don’t be misled into thinking these are anywhere in the same realm as the overarching quality and performance of consistently delivered by the best dividend-paying Whole Life companies.
Single-Premium Dump-in Rider
Often, clients want to kick-start the compounding of their Whole Life policy by front-loading it with a lump sum. This sounds great, but there’s a catch!
Even though certain companies have a rider allowing for a massive lump sum dump-in premium payment, it comes at the cost of adding an ongoing fee drag onto your policy. Here’s why:
The IRS requires a larger death benefit to support larger premiums to keep your policy from becoming a modified endowment contract (MEC) and losing its tax advantages.
Adding this exorbitant amount of extra death benefit needed to support such a large dump-in isn’t nearly as efficient as breaking up that single dump-in payment over the first 2-4 years into a smaller policy that’s optimized for cash value growth.
See for yourself in our detailed case study showing a lump sum dump in vs. breaking the lump sum up into 2-4 bigger initial premiums.
Non-Direct Recognition Loans
Many Infinite Banking agents claim that the best Whole Life policies for Infinite Banking must have a feature called “Non-Direct Recognition loans.” This means that the Whole Life insurance company pays the same dividend rate whether your cash value has loans against, or not.
Direct Recognition companies, on the other hand, has different dividend payouts for the portion of cash value with loans and without.
Non-Direct Recognition may sound really great, but intuitively, you know there’s no free lunch, right?
Direct Recognition is not a penalty, it’s simply a fair methodology to treat all policyholders fairly (both borrowers and non-borrowers) at all times.
Here’s how it works:
- When Direct Recognition policyholders borrow at rates below the dividend rate, the dividend paid on loaned money will be adjusted downward (to compensate for the cheap loan rate)
- When Direct Recognition policyholders borrow at rates above the dividend rate, the dividend paid on loaned money will be adjusted upward (to compensate for the expensive loan rate).
- Non-Direct Recognition policyholders who borrow will get the same dividend, and the loan rate will fluctuate to be lower or higher than the policy crediting. There is no safeguard.
In fact, right now one of the most popular Infinite Banking policies just raised their loan rate from 5% to 7% even though their dividend is much lower.
I’ve found when explained properly, most people looking to practice Infinite Banking would rather control their cost to borrow, since they plan on earning alpha from what they’re investing in more so than the policy.
Be sure to check out our analysis (with math) on the difference between Direct and Non-Direct Recognition.
I’ll leave you with 2 pieces of factual evidence as to why you shouldn’t accept the myth that Non-Direct Recognition loans are a must-have, and why you need to do more research on the matter:
- Every single example from Nelson Nash’s original book on Infinite Banking was from a Direct Recognition company.
- I have owned Whole Life for over 18 years now from three top Mutual companies, and every single one of my family policies is Direct Recognition. This includes one of the companies that gives you the choice to choose between Direct vs. Non, and I willingly chose Direct Recognition.
The Best Dividend-Paying Whole Life Companies for Infinite Banking
Penn Mutual
In terms of “what have you done for me lately,” Penn Mutual has consistently been the best dividend-paying Whole Life insurance company for over the last decade and a half. They not only illustrate the best, but they’ve delivered.
Penn Mutual also happens to be the 2nd oldest life insurance company in America. Along with New York Life, they are the only mutual insurance companies that can boast that they’ve paid their Whole Life policyholders a dividend every single year since 1847 (during the Civil War even).
In addition to its solid history, Penn Mutual has recently revamped its product to have all the necessary attributes of the best Whole Life policy for Infinite Banking, such as:
- Increased Term Rider for greater PUA’s and early cash value
- A flexible PUA Rider requiring overfunding only once every 5 years
- A built-in Chronic Illness Rider that can be added for no additional cost
- Highest death-benefit-to-cash-value ratio with both their Base Policy & PUAs
- Built-in Overloan Protection Rider allowing 99% access to cash value for retirement loans (only true mutual company to offer this).
Any Whole Life policy for Infinite Banking for will always have certain tradeoffs, and it’s up to you to decide what those tradeoffs are most important to you.
But here are the most commonly discussed downsides of Penn Mutual:
- At $34 Billion in assets, Penn Mutual isn’t as big as other big mutual companies. To put it in perspective, that’s comparable to Hershey or eBay and twice the size of Southwest Airlines.
- Penn is a Direct Recognition company, meaning loaned money will receive a different dividend payout than non-loaned money. This however, can benefit borrowers during periods of rising rates.
- Penn Mutual’s Whole Life policy focuses more on having the best long-term cash value & death benefit performance than the highest early cash value. Their recently enhanced term rider does create more early cash value, but not as much as some of the other Whole Life companies.
Mass Mutual
At over $200 billion of assets, Mass Mutual is the true 800-lb gorilla in terms of the best dividend-paying Whole Life companies. Their long-term performance is second only to Penn Mutual, and their ranking for the highest early cash value is second only to Lafayette Life.
Mass Mutual’s sheer size, solvency rating, steady performance, and the fact that you can choose between direct or non-direct recognition at the onset of the policy makes it one of the top Whole Life companies across the board.
However, certain qualitative factors make them less than ideal as the best Whole Life policy for Infinite Banking:
- Their flagship performance product, 10-Pay Whole Life, requires higher structured payments for the first 10 years and also has lower guaranteed growth, making it more dependent on dividends.
- Their LISR term rider and ALIR paid-up additions rider are much less flexible than other Whole Life companies. It’s possible to readjust from your originally scheduled payments, but it entails officially readjusting your policy’s payment schedules with the insurance company.
- Whatever you pay in the very first year will be the cap for all future overfunding payments. So, you cannot “limp-in” the first year and increase your max funding later on. Also, you must max-fund at least once every 3 years, or you lose the ability to do so in future years.
- The lack of an Overloan Protection Rider often causes premiums or loan payments to be due near life expectancy when heavily borrowing for retirement income to keep the policy from lapsing.
- There is no free chronic illness rider, only a true long-term-care rider that comes at a cost that drags on cash value growth.
Don’t get me wrong, Mass Mutual is a great Whole Life company if you have steady cash flow, and flexibility won’t be needed. Or, when getting policies on multiple family members, adding a Mass Mutual into your family portfolio can be prudent.
Guardian Life
Although not the gold medalist in any category, Guardian Life is definitely on the podium for best Whole Life policies for Infinite Banking. With over $80 Billion is assets, Guardian isn’t as big as Mass Mutual or New York Life, but it is bigger than Penn Mutual.
Guardian offers a free chronic illness rider, but also has a very inexpensive true “Long-Term Care” rider, which can be used for temporary conditions, unlike the chronic illness rider where the debilitating condition needs to be diagnosed as permanent.
Guardian allows for a large term rider and PUA payments that can be as high as 9x the base premium. Their policy started the 10/90 buzz, where you can pay 10% base premium and the other 90% in PUA premiums. However, a 10/90 policy limits how many future premiums you can pay and often doesn’t outperform Penn or Mass Mutual with higher base and lower PUA premiums.
That said, one of Guardian’s key strong suits is their flexible PUA rider where as long as you pay at least $250 per year into the PUA rider, you maintain your right to max-fund in any given year.
However, if you skipped the prior year’s overfunding (beyond the $250 minimum mentioned above), you can’t make up for the prior year, unlike with Penn Mutual where you can make a full catchup payment, You can only add catchup PUA payments equal to 1x the base premium.
Historically, Guardian was always a Direct Recognition company, but implemented a feature where the policyholder can irrevocably flip to an adjustable non-direct recognition loan rate in the 11th policy year. Again, we believe you’re better off always controlling your cost to borrow by maintaining the native Direct Recognition status after the 11th year.
What’s concerning about Guardian Whole Life policies:
There’s not much, really.
Guardian’s one-time PUA load is definitely on the high side at 10% charged in any year a PUA is paid, which definitely hinders their long-term performance.
Guardian was once more competitive with their dividend, continuously going neck and neck with Mass Mutual, but they seem content to stay tied for third place, and instead rely on their large career sales force incentivized to recommend Guardian over the other top dividend-paying Whole Life companies.
New York Life
New York Life is unquestionably the oldest mutual company on the list and still one of the biggest with over $400 Billion in stated assets.
Unfortunately, the performance of their standard Whole Life overfunded with a PUA + term rider pales in comparison to the other true mutuals on this list. However, their “Custom Whole Life” product is a solid performing Whole Life policy as long as you can do without premium flexibility
You see, the Custom Whole Life product is like a 10-pay Whole Life policy, except you get to pick the number of years whether it’s a 5-pay or a 19-pay. Then your base premium will be higher than a standard Whole Life policy, since you’re essentially scheduling your overfunding into the base premium.
New York Life is a massive company with an impeccable credit rating for those that demand absolute perfection when it comes to creditworthiness. When dealing with massive premiums, New York Life can be a good diversifier, and they will also underwrite very large policies.
When families are doing large dump-ins (such as reallocating large savings account balances into a family portfolio of Infinite Banking policies), New York Life offers competitive premium deposit accounts, where you can make big deposits without turning your policy into a MEC.
Even with the rigid premium structure of their Custom Whole Life policy, New York Life will allow for some amount of an additional term rider with PUA payments.
What’s concerning about New York Life:
Unfortunately, no matter how much term we blend and PUAs we add onto their policies, it simply seems to lag Penn Mutual and Mass Mutual with the same inputs. Obviously, actual performance will differ from a static illustration run in any given year, but it is what it is.
Similar to the Mass Mutual 10-pay, the New York Life Custom Whole Life product has a rigid base premium that’s higher than normal because you’re basically baking in overfunding into a limited pay policy.
Also, their PUA rider is of the “use-it-or-lose-it” variety and therefore much less flexible than the other true mutual companies on this list. If you want to skip paying PUAs one year, you won’t be able to pay them again in the future. That’s a dealbreaker for most infinite bankers.
Lafayette Life
Lafayette Life is the highest ranked mutual holding company on the list. Needless to say, the fact that they’re a mutual holding company is unto itself somewhat concerning for a lifelong investment. However, Lafayette Life does have some unique features and also seems to be a bit more accepting with underwriting certain financial situations than the true mutuals.
Lafayette comes in #1 for the highest early cash value out of all the best Infinite Banking companies. This is because, similar to Guardian Life, Lafayette Life lets you add more of a term rider and more PUAs, which accelerates those early cash values.
Lafayette Life is known for having what we call the “lump-sum-dump-in-rider”. Their Single Premium Paid Up Additions rider is essentially just a mash-up of a term rider and PUA rider that allows for enough capacity to fund large lump sums into a policy without making your Infinite Banking policy a MEC (nullifying your tax exemption).
Lafayette Life does have a chronic illness rider you can add to your policy for no extra cost.
What’s concerning about Lafayette:
Although they have the best early cash values, their long-term performance drags due to low death benefit and PUA ratios, and this translates to their initial high early cash value sprint fading after the first 5-7 policy years.
What’s Not Impressive:
The low death benefit and therefore lackluster guaranteed growth component of the policy really leaves a lot to be desired, especially when using Whole Life for retirement. However, for clients demanding the highest early cash value, there’s no question Lafayette Life will often provide that.
John “Hutch” Hutchinson, ChFC®, CLU®, AEP®, EA
Founder of BankingTruths.com