Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insur...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years

UPDATED: Jul 29, 2021

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The Brief

  • Cash flow banking is a way of using whole life insurance to save and invest money for the future.
  • By taking out loans against the cash value of your policy, you can avoid paying back bank loans with high interest rates.
  • Individuals with certain medical conditions may be unable to qualify for whole life insurance coverage.

If you have a whole life insurance policy, then you may have heard of the concept of cash flow banking. But what exactly is cash flow banking and how does it work?

In its simplest form, cash flow banking, also known as infinite banking, is a way of using your whole life insurance policy as a personal savings and investment account. We’ll go over how cash flow banking works and why this investment strategy may work for you in the sections below.

Keep reading below to the cash flow banking pros and cons, how much it costs, and where to find affordable life insurance near you. Enter your ZIP code above to get free life insurance quotes from local companies in your area.

How much does cash flow banking cost?

Since cash flow banking requires a whole life insurance policy, you’ll likely pay higher rates than you would for a term life insurance policy. However, as long as you’re in good health, you should be able to secure affordable life insurance rates.

In the table below, you can see average monthly whole life insurance rates by age and gender for non-smokers:

Average Monthly Whole Life Insurance Rates by Age & Gender for Non-Smokers
Policyholder AgeRates for Male with $100,000 CoverageRates for Female with $100,000 CoverageRates for Male with $250,000 CoverageRates for Female with $250,000 CoverageRates for Male with $500,000 CoverageRates for Female with $500,000 Coverage
25$93.70$84.91$201.90$179.97$396.07$352.22
30$107.71$97.35$238.33$211.60$468.50$415.25
35$128.24$112.93$289.26$251.86$569.70$495.33
40$153.90$132.15$350.98$299.62$692.47$590.19
45$190.79$156.17$434.71$365.30$859.29$720.90
50$234.90$191.66$538.74$449.58$1,066.47$888.81
55$294.84$243.17$678.64$574.34$1,344.73$1,137.02
60$399.24$311.63$895.65$735.39$1,777.01$1,457.58
65$528.00$421.69$1177.24$978.84$2,338.00$1,942.51
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As you can see, rates are fairly affordable when you’re young, but get higher as you age. Luckily, whole life insurance rates are fixed, so if you can lock in cheap life insurance quotes early on, you can keep those same rates as you age.

If you’re unhappy with your current life insurance rates or policy, consider switching life insurance companies. Compare cash blow banking rates from at least three different companies to find the best deal.

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What is cash flow banking?

Cash flow banking simply explained is a way of using your whole life insurance policy as a personal savings and investment account. Pioneered by life insurance agent Nelson Nash in the 1980s, cash flow banking has been used by businessmen to secure their fortunes and pass it on to their descendants.

Unlike term life insurance, which only lasts for a set period, whole life insurance covers you for your entire life while building up a cash value that you can access while you’re still alive.

You can withdraw from or take out loans against this cash value and, unlike a traditional bank account, you will not be charged high interest on anything you take out of your cash value.

Also, with a whole life insurance policy, your cash value has a guaranteed interest rate so it grows over time. As long as this stays as part of your whole life insurance policy, it’s tax-free.

What are the pros and cons of cash flow banking?

Cash flow banking may sound great, but you’re probably wondering what the cash flow banking pros and cons are. You may even be wondering, is cash flow banking safe?

Well, cash flow banking depends on several different factors. If you want more control of your finances and protection against losses, then cash flow banking might be for you. Your assets will be protected as long as your provider does not go under.

If you want to see your investments grow, consider the tax advantages of cash flow banking. The interest on your cash value grows tax-free, and if you happen to withdraw from your cash value before your death, you will only be taxed on the interest and not the full amount.

The only cons are that you’ll need to be able to qualify for a whole life insurance policy, which means you must be a non-smoker in good health who preferably does not have any high-risk hobbies. People with certain medical conditions, careers, or hobbies may be unable to get approved for this type of life insurance.

You should also only consider infinite banking if you are able to remain vigilant with your investment portfolio. Be aware of market volatility and how your life insurance company fares in terms of financial strength and stability.

Now that you know all about cash flow banking, start shopping today. Enter your ZIP code into our free comparison tool below to compare quotes and buy life insurance from local providers in your area.