The 4 Phases of Infinite Banking
People solve for their need for finance in many different ways. Nelson’s contention is that the most private, free, life-giving, profitable way to do this is to do it at a mutual life insurance company via permanent, dividend-paying, whole-life insurance.
When we first begin to see this truth, we soon come into contact with another difficult truth: “the more premium I pay, the bigger my family banking system gets!” This kind of thinking is so against our training (again, generationally) that our entire mental system rebels against it. “Premium is not a good thing. Premium is an expense. Premium is scary. Premium is capital leaving me, not capital coming to me.” And so on, and so forth, and so on.
As soon as our mind enters this phase of inner counsel, a pathway of thinking emerges that is essentially identical for almost everyone who is becoming their own banker. Nate Scott originally called this pathway of thinking “the four stages of infinite banking commitment.” I call it the “four phases of infinite banking” as that seems a more apt description to me. Call it what you like: as you make your way through the concept, you will find that your thinking will go through four distinct stages or phases of thinking, almost like clockwork. These phases have to do with overcoming the fear of premium, and reprogramming our thinking to think of premiums as capital contributions to a private banking system, not as expenses.
A tragic thing that can too easily happen is that people will shrink away from the infinite banking concept because they sense a danger that is not there. The Four Phases of Infinite Banking will help you see the truth clearly about what infinite banking really requires as a strategy, and what the real pros and cons of infinite banking really are. It’s totally ok to choose not to do infinite banking, just don’t choose not to do it based upon something that isn’t true.
The Four Phases are:
Saver Phase - The phase where people move their savings account from their current bank and into life insurance. Simple.
Capital Builder Phase - The phase where people begin building policies for specific large upcoming purposes, start using their policies more often, and might even begin moving long-term nest-egg capital out of its current home and into life insurance.
Entrepreneur/Business Phase - The stage where, after monthly expenses and charitable giving and taxes, every dollar of free cash flow goes into policies before it goes anywhere else. This is where people really start treating their system of policies like a business. Every large purchase is made from policies, every investment, etc.
Lifestyle Phase - This is the phase where even the capital for monthly expenses, charitable giving, and taxes goes into a policy before it goes anywhere else. Nelson calls this the phase when “premiums and income should match.” He also says that it takes 20 years to get to this phase, because of the timing of building a policy to maturity in the first 5 years of each policy. This stage requires the most attention to detail and the most refined strategy, but it also yields the most desirable results.
Please click here for the link to this week’s podcast episode on this topic, which fleshes out each of these stages in greater detail. Remember, infinite banking is simple: every dollar that passes through my hands must pass through my banking structure at some point. Why not have it pass through a banking structure that I own, instead of someone else’s? This is how we earn the cost of capital, rather than only paying it.
I want to stress how important it is to realize that there is a mental battle going on for everyone who embarks on the journey of becoming your own banker.
The battle is against the fear of premium.
The purpose of the four phases of infinite banking is to put words to the battle you are already experiencing.
This battle is usually about a fear of what might happen to you, not a battle of what is actually happening to you. It is so important to base our strategy and our decision-making, in all areas of life, on what is actually happening and what that indicates about the future, not on what might happen based on no current evidence or reality of any kind. One of my great mentors once said to me, “You are not afraid of what happens to you. You are afraid of what might happen to you.”
Remember: do not be hard on yourself when it comes to learning infinite banking. Just keep leaning in, and I can promise you from experience, the knowledge and understanding will follow. He who seeks, finds.
