Some of you have probably heard about infinite banking, but what does it actually mean? Here to help host Domenic Rinaldi to unpack this concept is the foremost expert on the infinite banking, Jim Oliver. Jim is the owner of CreateTailwind and the host of the podcast, Breakaway Wealth. To help you understand this concept better, Jim explains the difference between the actual rate of return versus the average rate of return in your financing instruments. He also notes the different ways to look at financing, acquisition, and the growth of your business. Sharing real-life scenarios using the infinite banking concept, Jim notes that it might not be for everyone. If you want to learn more about this interesting concept, you wouldn’t want to miss this discussion.

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Infinite Banking With Jim Oliver

M&A Unplugged Community, we are being joined by Jim Oliver, the Owner of CreateTailwind, the host of the podcast, Breakaway Wealth, and the foremost expert on the Infinite Banking Concept. If you’re like me, you might be saying what exactly is that Infinite Banking Concept? The concept was developed back in the 1980s by R. Nelson Nash as he was struggling to become financially independent. Jim spent several years under the tutelage of Mr. Nash learning how best to leverage this concept and leveraged it, he has. Jim has built a successful business helping other people adopt this concept. He has acquired businesses and real estate using this platform and he speaks all around the country about the benefits of the Infinite Banking Concept. Jim, welcome to the show. I look forward to having you unpack this concept for our audience, so they can perhaps leverage this opportunity in their own businesses for growth and acquisition.

Thanks, Domenic. It’s great to be with you. I look forward to going down this path and telling you how I’ve used infinite banking and how you can use infinite banking as wealth for real estate businesses, all kinds of stuff.

I’m excited to have you go through the details and explain this to the M&A Unplugged Community. Let’s start first with CreateTailwind. Talk a little bit about your business, what you do and we’ll get to the Infinite Banking Concept.

Domenic, in 1988, I started in the financial services industry. I learned how to do financial planning, the old traditional way, fee-based planning, building these 200-page plans with leather binders, Modern Portfolio Theory, and Nobel Prize-winning theories on investing. Several years into doing that, I realized that when we were doing the math, our average rates of return looked good, but our actual rates of return and the net rate of return didn’t look good. What I mean by that is it was about 9.38% was our average rate of return at that time when we were looking back over ten years. The actual rate of return was around 4%.

Can you explain to the M&A Unplugged Community the difference between your average and your actual way? How do you have such a delta?

Here’s the easiest way for me to explain that. We’re going to go for four years, Domenic. I’m going to give you an example. Let’s say I have $100,000. In the first year, I gain 100%, so now what is my balance?

It’s $200,000.

The next year I lose 50%, I’m back to my $100,000. In the third year, I gain 100% again. Now, I’m back to $200,000. In the fourth year, I lose 50%, so I still have the $100,000 that I started with four years later. What’s my average rate of return? It’s 25% because I was up 200% and down 100%. That’s 100% average positive divided by 4 is 25%. My statement would say that I earned 25% over those four years. My balance would say that I or nothing. That’s average versus actual. It’s much more subtle in the real world, Domenic. When somebody says, “This fund is averaged 8% something or 12% something, that doesn’t mean that’s the actual rate of return.

Because of the downturns in the market, that affects it and it’s not what you think. If you’ve ever noticed in a prospectus, the fees are over maybe 4 pages to 10 pages. It’s hard to understand all of the fees. I’ve never run into anybody that can tell me all of the fees and cash drag and everything else in their investments. You’d take average versus actual. You take taxes. You take the fees. You take all that stuff out. The net of the growth in your account, that’s your net rate of return. Your actual rate of return.

MAU 28 | Infinite Banking

Infinite Banking: The infinite banking concept is taking over the banking function away from commercial banks to a banking system that you control.


You’re in the financial world. You’re managing accounts. You’re living through this. I’m assuming you picked up your head one day and go, “This doesn’t feel right to me. We’re promoting these average returns, but our actuals are less. There must be a better way.”

I looked at my clients that were truly wealthy and had built wealth from the ground up. A lot of times in a relatively short period of time. They were in two categories, businesses, and real estate. That’s where they happen to be at that time when I analyzed it. I thought, “That’s interesting. What prevents people from buying businesses? How do people buy businesses? How do people buy real estate? How do people find these HUD loans at 100% for a 100-unit apartment complex for 40 years at 3%? How do they do that? How do they buy businesses on an earn-out basis?” All of these things like wouldn’t I rather put my money towards those assets versus those financial instruments that I don’t control? That’s where that journey started.

At that point in time, you met R. Nelson Nash. How did you get exposed to the Infinite Banking Concept? Let’s talk a little bit about what it is.

It’s about that time that I had some friends that were aware of infinite banking. I tried to get the concept and understand it from them. My paradigm as a financial planner was so in cement and I struggled to understand it. I flew to Houston to see R. Nelson Nash in-person. Before I did that, I bought the CDs and I listened to them. I didn’t get the impact. When I met Nelson in person and he walked me through for nine hours. This class was either 9 or 12 hours for over two days and it was like a light bulb went off. It’s like, “This is what I’m missing.” This is the missing link to going out, buying real estate, buying these businesses, and taking over the banking function in my life.”

What is the Infinite Banking Concept? It’s taking over the banking function away from commercial banks to a banking system that you control. Domenic, you’d do it with a certain type of insurance contract. Sometimes as soon as I say insurance contract, people will have this paradigm and this view of, “It’s insurance. I’ve heard insurance doesn’t have a good rate of return. It doesn’t have this.” Life insurance agents are not trained to design insurance contracts the way that you design it for a corporation or for a bank or for that matter, for infinite banking.

They’re not trained on why and how loans work against that policy. That’s a big word against because what most insurance agents are licensed selling this stuff, they don’t realize that when you take a loan from your whole life insurance policy, but it has to be specifically designed, they’ll be cash-oriented. When you take a loan, your money does not leave your account. Your money stays in your account compounding uninterrupted while you borrow the insurance company’s money to invest. The Infinite Banking Concept was started to pay off debts and things like that. The way that we use it at CreateTailwind is to build wealth. You take the insurance company’s money and you put it in the apartment complex.

Jim, before we get into how you use the money to acquire businesses and real estate, let me go back to a couple of things. You mentioned you become your own bank. Immediately I’m thinking and maybe the M&A Unplugged Community is thinking, “Become my own bank. That sounds right. It’s awfully difficult. We know all the regulation that goes into it. It’s risky.” Alarm bells go off immediately when you say create your own bank. Explain that to us. How does that happen? Is it a true bank?

It is not a true bank. It is a money pool. The more appropriate term would be, “I build my own money pool that I can collateralize and use other people’s money to build my wealth.”

The infinite banking concept was started to pay off debts. Click To Tweet

It’s not a fixed structure, but is it an entity that has this money pool? What is the formation? What does the bank look like?

The bank is owned individually. There are certain things that you want, like creditor protection, etc., that are afforded inside of a life insurance contract in most states. You own it individually. You could loan it to an entity that you own or control and that entity could put it to work. It is a contract with a mutual insurance company. The only reason that we have to use a mutual insurance company or not the only reason, but one of the big reasons is mutual insurance companies are owned by the policyholders. The company is required by law to distribute the profits of that company to the owners, the policyholders in the form of a dividend, which is not taxable. We have this tax shelter that we’re holding our money in, that we have access to other people’s money because we have this contract. That is like a banking system.

What you’re saying is you open up this insurance contract and is it a whole life insurance policy? What kind of insurance is it exactly?

It’s a blend between a whole life policy and a rider called a paid-up additions rider, which is like a one pay policy. The whole thing can’t be that since 1988 because the government changed the rules on taxation inside of life insurance, and it has to have something at risk. The one pay policy used to be Domenic, you’d put in a dollar and you had a dollar you could take out. There’s nothing at risk. There’s no cost. By the way, audience, that’s why you’ve never heard of this paid-up addition thing is because if I put in $1 and I could take $1 out, how much do you think they pay the insurance agent? Not much. Insurance agents don’t like it because there’s no commission on that piece of it. We combine that piece with the whole life policy to get it right focused on cash. It’s the highest cash value legally available under the IRS Code 7702 for life insurance contracts.

Without getting too far down into it, you open up an insurance contract. You have this additional rider. That now becomes your platform for this Infinite Banking Concept, is that what I understand?

That’s your source of funds. That’s your capital, your money pool. Then you start to act like a banker.

Let’s use a real-life example. I take out this whole life policy, which I want to come back to, but I take out this blended whole life policy. Let’s say my premiums are whatever they are, $3,000, $5,000 a month, whatever it is. This rider allows me to put in an extra tranche of money. Maybe I put in $100,000 or $200,000. Do I understand that right?

It’s more like 30% or 40% base and 60% to 70% paid-up additions rider, but you got the right concept.

I’m putting in this pool of money in addition to the premiums I’m paying in. What you’re saying is now I have this platform to borrow money against, which is the Infinite Banking Concept. If I’ve put in between my premiums and my paid-up rider, let’s say I have $300,000. I can borrow against that $300,000 without touching any of the principals. That principal stays there and continues to earn whatever the rate of return is that the mutual fund is earning. Do I get to borrow 100% or I get to borrow 50%? What percentage of money can I borrow against?

It’s up to 100% of the money. Domenic, that’s the difference. If somebody is out there and saying, “I have a bond account. I could collateralize that or I have a stock account.” A bond account, you can get about 80%. In a stock account, you can get about 50%. You still have to get the bank to approve the loan. There is no approval. You tell the insurance company to send me the money and that’s it. They have to. It’s a unilateral contract.

MAU 28 | Infinite Banking

Infinite Banking: Whole life insurance has a guaranteed growth, and it declares a dividend every year.


I’m assuming they’re charging you interest. What is the interest rate that you’re paying to access your money?

It’s 4% to 5% interest only, Domenic.

What is that based off of? Is that off of LIBOR?

It’s declared by the insurance company on an annual basis. To give you an idea, there is one of the insurance companies out there that we use and we can use anybody. There’s one out there that their loan rate is 4.4% and their dividend crediting rate is 5.4%. They have a 4% guarantee. The dividend is made up of more than that interest component. It’s the mortality experience of the company. It’s the expenses and the expense management of the company. They declare a dividend. The dividend throughout history has always been higher than the loan rate.

If I’m using this for business purposes and it’s deductible, the money that I’m earning inside of my insurance contract is tax-free. It’s growing tax-deferred tax-free. It can be tax-free. I say potentially tax-free because you can’t let the policy implode down the road. It won’t as a whole life policy. That’s why we don’t use universal life or anything else because those can implode. Your money is growing and you’re not paying taxes on it, but the money that you’re paying to the insurance company to use their money is deductible like it would be at the bank. The difference is you’re controlling it.

That interest rate, 4% to 5%, is that a variable rate? Is it a fixed rate? When they come out with whatever the rate is for the year, do they lock that in or can it float?

Once they lock in the rate for the year, that’s locked in. There are variable rates and fixed rates depending on the insurance company. That’s why we use a half a dozen different companies because our clients have preferences of, “I want to fix rate.” There’s a company out there that has a fixed rate of 5%. That’s strong because if you look throughout the history of interest rates, having a locked-in contractual for the rest of your life, 5% interest-only loan, it’s good while your money is inside there earning money tax-free. The 5% deductible earning in there even let’s say 5% tax-free, I’m creating an arbitrage. I’m going to make money.

When you look at it, if you think about this money pool and you think of this ledger left side of the page, the right side of the page, the left side is the policy. Now, I have the use of somebody else’s money to buy a business and real estate. Those businesses or that real estate or that stock is going to make money hopefully. I get both sides of the ledger because I didn’t lose my left side of the ledger, the policy. I added the right side of the ledger, my behavior. It’s an and asset, not an or asset.

Your money’s continuing to grow and yet you’re borrowing against it at interest only. You’re writing off the interest like you would the bank, but you’ve preserved your capital and let it sit there and grow. Jim, I’ve got to ask you this question because you hear it. There are lots of rumors out there and you hear people talk about whole life insurance. For a lot of people, alarm bells go off. I’ve always heard that it’s a waste of money. It’s very expensive. There are lots of fees. You don’t realize the value of your whole life policy unless you live to 90-plus. Talk a little bit about this as an instrument and why people shouldn’t be worried or should they be worried a little bit about the nature of whole life policy?

If you took a whole life policy, let’s say after twenty years and you looked at the rate of return depending on the company, depending on dividends. By the way, dividends are down, they’re lower than they’ve ever been because interest rates are low. It’s not a universal life or variable universal life where we’re taking the money and putting it in the stock market or putting it in the index. The reason we’re not doing that is universal life policies are a projection. Failure can’t be an option in this. We use a whole life because it has guaranteed growth and it declares a dividend every year.

You can build your own money pool that you can collateralize and then use other people's money to build your wealth. Click To Tweet

The companies that we use have declared a dividend virtually every year for the last 100, 150 years, however long the company has been around. The whole life policy itself over the next twenty years would say do 4% or 5% net. Remember net, not average, not gross. This is the actual rate of return. We add this paid-up addition rider, which is cash-on-cash. It’s 100%. If you put in $1, you have $1. That rider earns a dividend too. Now, we’re earning dividends on top of dividends and we get the dividends paid in paid-up additions.

It’s a compounding effect inside the insurance contract the way that we design it. We design it to be the lowest death benefit, the highest cash value available. In a whole life policy, Domenic, here’s what my guaranteed cash will be and what my market condition not projected. Universal life is projected. Projections mean nothing. It’s like when you go buy a business and you look at the P&Ls of what is this business doing now? Not what could this business do? You would never buy the business on what it could possibly do. You’re going to pay for the business if you’re buying it from somebody else on what it’s doing now. That’s why we like the whole life. It’s like that. It’s market conditions which are low.

What’s clear to me is that this is a complex instrument. It sounds like it has tremendous upside, but if people are going to consider doing something like this, they need an expert like you to walk them through. You’ve been there and done that. You’re drinking your own Kool-Aid. Why don’t we move there? When we first talked, you told me that you’ve been using this instrument to buy businesses and real estate. What would be helpful is let’s talk about an example of where you used this Infinite Banking Concept to acquire or invest in a business. It’d be helpful to put some structure and some real-life scenarios around that.

I’m going to give you an example. I bought nine businesses or started a couple of those nine, I own nine businesses, but I bought all of the businesses using this concept. I’m going to give you one example. I bought this company and I bought it from a company that was a large $200 million company. This little subsidiary of that company didn’t fit in their overall vision because it wasn’t in line with what the bigger company was doing. It had its own little niche. They had gotten a VC infusion of about $20 million. The VC group, they wanted to be clean because what’s their goal? Sell the company in 3 to 5 years.

What industry is this business in?

It’s in electronics. It’s electronics sales refurbishment and reverses logistics. The other company was a high-end eBay. What we did is we bought this on an earn-out basis. We knew what the revenue was. We knew what the EBIDTA was. We said, “We’ll buy it. We’re going to give you a minimal amount upfront, but then on the increase, we will then pay you 20% of that increase until we pay you $3.5 million.” Domenic, we only had to come up with $75,000 to close on this business.

Did that $75,000 come out of the infinite banking platform?

It did. We bought this business. We took a loan from the insurance contract for $75,000 on August 1st. At the end of the year, because after Christmas, everything else, we had a $400,000 distribution out of the company that we acquired. Remember, everything else is on an earn-out basis. How much did it cost me to buy this company? Number one, look at my rate of return, but my rate of return wasn’t $400,000 on a $75,000 investment. My investment was interest to the insurance company for four months. That’s it. My rate of return is massive at that point, after four months. When that business gets a purchase order and needs some money to take care of the purchase order or whatever, I’ve loaned the company money, I take part of the profit. I’m 50% owner, but I’m also now financing. I’m acting as the bank. I use it for that.

There are purchase orders and you funded, you mean, the Infinite Banking Concept funds it. You’re taking withdrawal out and then you’re paying yourself back. Are you paying yourself the interest? How are you paying yourself back? There’s some mechanism there.

What we did is we set up a three-year amortization that we came up with. That was what we wanted to do because the insurance company does not set an amortization. It’s interest only. We said three years, but then at the end of the year when we had this $400,000 distribution, we paid the loan off at the end of the year. When we paid the loan off, all we had as an expense to buy this company was the interest on the $75,000 for four months. Now, that $75,000 is available to use again, which then we started a subsidiary of the smaller company to get into the cryptocurrency market in the form of manufacturing cryptocurrency mining computers. We went and bought a bunch of parts and everything else started this company. That company grew wildly in 2018, not so much. At the end of 2018 at the beginning of 2019, the “crypto winter,” the way we’ve been experiencing that we’re coming out of. I used the money twice. I used the same money to buy one company and start the other company.

MAU 28 | Infinite Banking

Infinite Banking: Not paying interests reflects or comes out on your cash value.


Jim, it’s a fantastic rate of return but there must be some downside. If things hadn’t turned out the way that you wanted them, let’s say the business didn’t do $400,000 of EBITDA and experienced flat growth or a loss. What happens inside of your Infinite Banking Concept in the contract that you have? What would you have done at that point in time?

At the end of the year, the August or the end of July the following year, I owe them a 4.4% interest. That is the downside. If the investment doesn’t work out, it doesn’t cashflow but I had more money in there to help the business if it didn’t cashflow. If it needed money, I had more money in there. Think of it like this, Domenic, this is a question I like to ask people. If I would loan you $100 million and your only obligation in one year, you have to pay me 5% interest. You don’t have to pay me any of the $100 million back or you can. You can pay part of it, all of it. The only thing you’re required to do is give me 5% interest. Would you take the money?

It depends on the circumstances, but when you look at loans that are being given now, they’re much higher rates than that. You’ve got a principal and interest payment that you have to worry about. If the circumstances were right, it sounds like an interesting concept.

If you knew what to do with the money, it’d be a no brainer. Let’s play my little scenario. I take the $100 million and I buy $500 million with the real estate. I have a 6% cap. I’m going to make $30 million. This isn’t a real-life scenario. It assumes I got that that 6% for the whole year and everything else. I’m going to make $30 million and I got to write you a check for $5 million. I’m okay with that. That’s the concept because I’m going to use this other person’s money or other entity’s money, the insurance company and I’m going to make money with it.

Can the insurance company at some point in time call that loan? What happens if you start missing payments on the interest? What happens in that scenario?

If I don’t pay the interest, it’ll come out of my cash value. If I get to the point where I don’t have it in my cash value, it could lapse the policy. There is the management and coaching back to make sure you have the right coach, show you how thin or what margin, and everything else that you can use for this. If you borrowed 100% of it, at the end of the year you got to write them a check for the interest. You got to have that money. You have to have that interest payment. There’s no free lunch in anything. There’s always a risk, but I’ve never had that be an issue with one of my clients because we always talk about that way before it’s going to happen or they’re going to have the cash value or they’re making regular payments back to the loan. When they make regular payments, if they set up an amortization that they’ve decided on and they are in control of, they’re going to have plenty of money in there to pay the interest.

I’ll go back to what I said before, people in the M&A Unplugged Community, it is definitely an interesting concept. It’s an alternative way to look at potentially financing business acquisitions, real estate, or a combination thereof and many other things, working capital in your own business. Jim, if there’s one big takeaway as we wrap up here, what is it that you would leave the community about potentially using the Infinite Banking Concept to fund acquisitions, real estate and to grow their businesses?

I would tell you that somebody in that equation is going to be the banker. Business owners use lines of credit and loans, amortized loans. This is an alternative bank that you control. If you think, “I’m using a bank and it’s FDIC-insured,” there’s $88 billion in the FDIC reserve to protect depositors. There’s $7.1 trillion of deposits. That’s less than 1% that you’re protected. The insurance company is highly-regulated and you control it. I would leave you with this, Domenic, and I know this is whoever controls the money, makes the money.

Jim, if people in the M&A Unplugged Community needed to get in touch with you or interested in this concept, how could they reach you?

Go to is the easiest way. We’ve got lots of great free material on there and schedule a one-on-one meeting. In that meeting, there is no call to action and there’s no close. My style in this is to do what we’ve been doing as we educate you from soup to nuts how this works and then you decide. We give you some reading or some videos or whatever to watch or read or book. At some point in time, you either say, “This is for me or it’s not for me.” That’s our style. That’s our business model.

Jim, thank you. I appreciate you being here. This is great information and an eye-opener for me for sure.

Thank you for having me, Domenic. I love talking to people like your audience who are out there trying to break away from the herd, be different, and build a wall.

Thank you, Jim.

To summarize some key points, some key takeaways, things that I learned, the actual rate of return versus the average rate of return in your financing instruments, there’s a big difference. Make sure you understand that difference. The big takeaway here is there are many different ways to look at financing, an acquisition, or the growth of your business. The Infinite Banking Concept might not be for everyone, but maybe it’s something that is interesting enough that you want to check it out and give Jim a call. If you would like to learn more about the process of acquiring or selling a business, please visit us at or feel free to reach out to me at [email protected]. I look forward to seeing you again on the next episode of the M&A Unplugged show. Until then, please remember that scaling, acquiring, or selling a business takes time, preparation, and proper knowledge.

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