Shifting Bank Accounts Into A Life Insurance Policy Designed For Privatized Banking
Updated June 2026 · by John “Hutch” Hutchinson, ChFC®, CLU®, AEP®, EA
A very technical demonstration — using a pair of pants — of what actually happens when you redeploy an existing asset like a money market account into a life insurance policy built for privatized banking.
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Why a pair of pants
What $100k in a money market nets
Where the return goes negative
The three-to-seven-year break-even
Why I Explain This With A Pair Of Pants
When it comes to redeploying existing assets into a PLI program — a life insurance policy designed for privatized banking — I like to use a very technical demonstration of how the mechanics work.
Okay, it’s not that technical. It’s a pair of pants. But it works better than anything else I’ve found for getting the point across.
Here’s the takeaway I want you to leave with: when you move money from an existing asset into a PLI program, it really is just moving money from one pocket to another pocket. Same pants. Same money. Different pocket.
What A Hundred Thousand In A Money Market Actually Nets You
Let’s say somebody has $100,000 sitting in a money market. Everybody’s situation is different, but for the sake of simplicity and round numbers, let’s use a hundred grand.
And let’s say it’s a great money market — it pays a full 1% annual interest on whatever’s in there. That gives you an inflow of $1,000 of interest, which would be great for something guaranteed and FDIC insured.
Except you don’t get to keep that full 1%, because this kind of account sits in a fully taxable environment at your ordinary rate, each and every year. So we’re going to have to pay some tax on it.
Use a round number for state and federal tax combined — call it $350. After the tax, what are you left with? $650.
Add Term Insurance And The Return Goes Negative
Now combine that money market with another strategy a lot of my clients already have when they come to me: some term insurance. Say the term costs them $700 a year.
That positive $1,000 has now become negative $50. Take the two strategies together and you have a negative return.
Moving The Money Over, And What Break-Even Looks Like
All that said, one of the things you can do is simply move the money from one pocket to another pocket. You can’t do it all at once without losing some key tax advantages, so let’s say we spread it over five years — the hundred thousand moved at a clip of $20,000 a year, times five years.
At the end of that five-year period, or somewhere close to it, the full hundred thousand is there. Maybe it’s actually a little more than that — it picked up some friends along the way. Maybe it’s a little less.
What I can tell you to expect is a little more or a little less after about five years. On average we find a break-even right around the five-year mark.
Everybody’s situation is going to be different and we can’t guarantee it. But when we go and look at real numbers, that break-even lands somewhere between year three and year seven.
What You Pick Up In The Other Pocket
Say the full hundred thousand is sitting there. What else did you pick up, simply for moving money from one pocket to another pocket?
One, you now have the opportunity to earn a better rate of return each and every year. If you choose the type of policy that gives you a guaranteed floor of zero, some years you might earn zero — and some years you may earn double-digit rates of return, which can be very nice.
Two, taxes. Left in the old pocket, that growth would have been taxed. Three, insurance costs. You may not have to pay for term insurance anymore, or at least not as much of it.
So simply by moving money from one pocket to another pocket, you get to cut some of those eroding factors out of the model.
Looking At The Strategy As A Whole
If you can accept that the first five years — call it three to seven — are going to be roughly a break-even, then thereafter you have a much better opportunity to pick up some growth.
You get to cut out the tax man on that growth, and you get to cut out some of those term insurance costs too. A lot of my clients really enjoy that.
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John “Hutch” Hutchinson has no affiliation or association with The Infinite Banking Concept®, The Infinite Banking Institute, or Nelson Nash, nor his book Becoming Your Own Banker – Unlocking the Infinite Banking Concept; nor with Bank on Yourself, Pamela Yellen, or her book The Bank on Yourself Revolution. “The Infinite Banking Concept®” is a registered trademark of Infinite Banking Concepts Inc. “Bank On Yourself®” is a registered trademark of Hayward-Yellen 100 Limited Partnership.