Infinite Banking: Dave Ramsey Gets It Wrong

Infinite Banking Dave Ramsey

Radio host Dave Ramsey’s Criticisms of the Infinite Banking Concept

Dave Ramsey, a popular radio host, has frequently criticized the Infinite Banking Concept, even calling it a “scam” on his show in 2020. However, financial experts, including Ramsey, have misconceptions about the concept, which can be explained by analyzing its various aspects.

Misconception: Infinite Banking is just an Investment in Whole Life Insurance

One of the primary misconceptions about infinite banking is that it is merely an investment in whole life insurance. While whole life insurance is a critical component of infinite banking, it is not the only one. The concept involves building cash value in the policy, which can be used to finance other investments, providing higher returns and growth opportunities while keeping the money in motion.

Financial experts often underestimate the potential of whole life insurance while overestimating the potential of mutual funds or stock investments. Mutual funds can potentially see 8 to 10% annual growth, but fees can eat up much of that value. With whole life insurance, growth is often quoted at 1 to 2 percent but typically ranges between 4 to 5 percent annually over 30 years, with a guaranteed return. Moreover, it grows tax-free, and alternatively, term policies become more expensive as you age.

Buy Term, Invest the Difference

Dave Ramsey promotes the “buy term, invest the difference” mantra. However, without knowledge or resources to invest the difference, one may end up paying fees without gaining wealth. Additionally, it may be challenging to obtain a new policy once the term is over, especially if there are health changes as you age. Furthermore, 98% of term life insurance never pays a death benefit due to people outliving the term of the policies and/or the prohibitive renewal costs later.

Infinite banking is not just about parking your money in whole life insurance; it is a system or concept of using a policy to become your own banker. By financing other investments you want to make, it becomes a versatile tool for your financial portfolio. Consulting an Authorized IBC Practitioner is crucial in determining whether it is the right fit for your needs.

Flexibility and Control

Infinite banking allows you to bypass traditional financial institutions and gain more control over your finances. By using your policy as collateral, you can secure loans to make large purchases or investments, without worrying about credit checks or other restrictions imposed by banks. This means that you can access cash quickly and easily, without relying on the whims of banks or lenders.

Here’s the best part: while you’re paying interest on the amount borrowed on your policy loan, the cash value of your policy continues to earn interest and dividends on the full cash value as though you hadn’t touched a loonie of it, regardless of the amount of the loan!

Infinite banking policies offer steady and reliable tax-exempt returns daily, regardless of market fluctuations, providing a sense of security and peace of mind that other investments may not offer. Traditional investments, such as mutual funds and stocks, are often subject to market volatility, making it difficult to predict returns.

Tax Advantages

Infinite banking policies offer tax advantages that can help you save money easily and efficiently both in the short term and long term. The cash value in your policy grows tax-deferred, meaning you don’t have to pay taxes on the gains until you withdraw the money. This can be a significant advantage, especially if you are in a high tax bracket or plan to use your policy to supplement your retirement income.

When it comes time for retirement these policies can be turned into “Insured Retirement Plans”, IRPs, where your cash value is used as collateral for a line of credit for a third-party bank loan where the borrowed funds are received TAX-FREE, and the outstanding loan is not repaid until death – with the death benefit. Thus, your cash value continues to grow uninterrupted inside the policy allowing you additional money to borrow as you age.

Infinite banking can help you build generational wealth. When you pass away, the death benefit paid out to your beneficiaries is typically tax-free, allowing them to inherit your wealth without having to worry about tax liabilities. This can be a powerful way to leave a lasting legacy for your loved ones and ensure that your hard-earned wealth is preserved and passed down to future generations.


Critics of the Infinite Banking Concept like Dave Ramsey may dismiss it as a scam, but the benefits of this innovative financial strategy are clear. Using your whole life insurance policy as a financing tool, you can gain greater control over your finances, access cash quickly and easily, and build lasting wealth for you and future generations. Whether you are a young investor just starting out or an experienced professional looking for a more secure way to grow your money, infinite banking is a concept worth exploring.

What’s Next?

View this informative video on “Discovering the Keys to Financial Prosperity.” Listen to two experts in the Infinite Banking Concept (IBC) as they discuss how the reliance on traditional banking is significantly reduced.

Get a hold of our latest eReport “How Canadians Can Beat Inflation” by downloading it now.

Contact one of our certified IBC practitioners in your area by clicking here to schedule a consultation that’s free of obligation.

Picture of Will Moran

Will Moran

Will has published numerous articles as well as two books on Infinite Banking and taking back control of the money you are giving away to everybody else. His most recent book is Think Like a Banker.

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