R. Nelson Nash developed the Infinite Banking Concept in the 1980s when interest rates hit 21.5% on his real estate debt. He discovered dividend-paying whole life insurance policies offered lower-rate, tax-advantaged access to cash value. Nash later wrote Becoming Your Own Banker to share the method.
This gentleman that you see, the late R. Nelson Nash, is the pioneer, the developer of the infinite banking concept. And what gave rise to the concept was that in the early 1980s, when interest rates skyrocketed, if you were a prime customer of the bank, you were paying 21.5%. I'm not a prime customer of the bank and I've never met anybody who's a prime customer of the bank. And neither did Nelson. And so he found himself in a position where he owed a half a million dollars on real estate. He was very active in the real estate space, so at that time he was already paying tens of thousands a year in interest. And you can imagine when the interest rate skyrocketed from 8% to 21 and a half plus, he found himself owing a heck of a lot more interest than he had planned to pay. And people would say to him, just sell the real estate. And he thought, what fool is going to buy this real estate in the current interest rate environment? He had the solution to the problem right in front of him. And he didn't even realize it because he didn't understand the problem. And so when he thought about his thinking and said, wait a second, I can get access to money from life insurance companies at 8%, pay off the snakes and dragons at 21 and a half plus control how I finance everything that I'll need for the rest of my lifetime, he realized that the solution to the problem was paying more premium into dividend paying life insurance contracts that accumulate cash value right from the get go. He paid no tax on the daily buildup of cash value. He paid no tax on the annual dividends which once declared can never be repossessed, can't lose value. He took 13 years, the next 13 years to get rid of the snakes and dragons. He could have taken the comfort route and filed an assignment in bankruptcy because his real estate partner did that. So Nelson wasn't only on the hook for his portion of the liability, he took care of the other portion as well. He didn't file that assignment in bankruptcy, although it was his right to do. And when he dug his way out of that financial mess, he thought to himself, this is something that I believe needs to be shared. And that's what gave rise to the phrase, unless you understand the problem, the solution just won't matter to you. He had already been paying large premiums into his dividend paying whole life insurance contracts, but he saw them as dividend paying whole life insurance contracts. He failed to recognize the financing characteristics which there are far more financing characteristics than there are death benefit characteristics. And so, once Nelson understood the problem, which was he was not in a position of total and absolute control as it related to to how he financed that real estate, the solution to the problem was right there. And once he saw it, there was no turning back. And that's why he would often say, once you see the infinite banking concept, there's no unseeing it. And he would also say, the more you see the infinite banking concept, the more you'll see you didn't see. And all of that is outlined in this book that will absolutely change your life. This book is titled becoming your own banker. There will be a Link on the YouTube, still be a link in the snackable content. Get your hands on a copy of this book because it will truly change your life.
