How Private Banking Works

How Private Banking Works

Plant surrounded by coins

Private banking offers a secure alternative to centralized banking, which often leverages clients’ deposits for profit through fractionalized lending. Unlike traditional banks, private banking, primarily through whole life insurance contracts, ensures stability, tax-free growth, and unparalleled liquidity. With compounding interest rates ranging from 4% to 7%, individuals can steadily increase their wealth without taxation while maintaining control over their funds. This approach empowers individuals to safeguard their assets and build a more secure financial future.


Private Banking vs Branch Banking

Private banking represents a pivotal shift in our approach to managing finances. Over the past several decades, Americans have become accustomed to the convenience of branch banking, a system governed by centralized banking. However, this centralized model is a scam. It allows banks to leverage clients’ deposits for their gains, utilizing a practice known as fractionalized lending.


Here’s how fractionalized lending works: When you deposit $100,000 into a centralized bank, the bank is only required to keep a fraction of that amount on reserve, often as little as 10%. The rest is loaned out at interest, generating revenue for the bank without any benefit to you, the depositor. In essence, your deposit becomes the bank’s capital to generate profit, leaving you with no return and no share in the bank’s profits from your deposit that it lent out.


Furthermore, recent legislation like the Dodd-Frank Act has raised concerns about the safety of deposits in centralized banks. In the event of a bank insolvency, the bank has the authority to use depositors’ funds to make the bank solvent.  This is now known as a “bail-in.” If that bank bails in on your deposit to become solvent, you (the depositor) will likely get pennies on the dollar or bank stock – neither of which you want.


In contrast, private banking offers a more secure and beneficial alternative, primarily through adequately structured whole-life insurance contracts. Unlike centralized banks, insurance companies must maintain a dollar in reserves for every dollar received, ensuring stability and security for policyholders.


Moreover, funds deposited into whole life insurance contracts grow tax-free, providing a significant advantage over traditional banking methods. With compounding interest rates ranging from 4% to 7% currently, policyholders can steadily increase their wealth without the burden of taxation or market risk.


Additionally, these policies offer unparalleled liquidity, allowing policyholders to access their funds without penalties or tax consequences. This flexibility starkly contrasts government-sponsored retirement programs like 401(k)s and IRAs, which have tax consequences along with penalties for early withdrawals and late withdrawals.


Private banking strategies empower individuals to take control of their finances, offering total liquidity and tax-free growth opportunities. By embracing these strategies, individuals can safeguard their assets and build a secure, predictable financial future.


Empowering Individuals with the Infinite Banking Concept

The concept of infinite banking builds upon the foundation of whole life insurance contracts, allowing individuals to create their banking system using their cash reserves. Individuals can leverage the cash value of their insurance policies to finance various expenses, such as purchasing a car, a home, an investment property, or funding a business venture.


Here’s how it works: Instead of borrowing from traditional banks like Wells Fargo or Bank of America, individuals create their own family banking entity, which borrows from their own life insurance contract. This life insurance contract provides cash liquidity so that there are no financial hurdles or qualifications necessary, which is typical with centralized banks. You effectively set up a loan transaction with your family banking entity, which mirrors the loan transactions of traditional bank loans.  You pay your banking entity the principal and interest in a tax-free environment and make the interest profits that the banks generally make off of you. 


Ideally, these loans should be used for asset acquisitions or business purposes rather than personal consumption, as assets typically provide a cash flow, appreciate in value, and offer a calculated return on the investment. For instance, individuals can borrow from their life insurance contract to purchase an investment property that provides cash flow and appreciation, thereby providing a repayment structure to the family banking entity and replenishing the cash value in the life insurance contract.


The rental income generated from the investment property is used to repay the loan to the banking entity, along with any accrued interest. Importantly, all transactions occur within a tax-free environment, allowing individuals to repay the loan without incurring any taxable events. Additionally, individuals can charge themselves interest on the borrowed amount, thereby accumulating more cash within their banking system.


This strategy enables individuals to maintain liquidity within their banking system, allowing them to access funds for additional investments or expenses. By recycling the same dollar multiple times through various transactions, individuals can maximize the efficiency of their cash reserves—a concept known as the velocity of money. In essence, infinite banking offers a sustainable and tax-efficient way to manage finances while building wealth over time.


Real-Life Impact: Transforming Financial Situations through Private Banking

We’ve had some remarkable success stories with our clients, illustrating the transformative power of infinite banking strategies. Take, for instance, a single mother from central Texas who began with a modest sum in her policy. Over the course of four to five years, she utilized the cash value of her policy to make the down payment on her first rental property. From there, she diligently repaid her bank, gradually expanding her financial resources and acquiring additional investment properties. Today, she boasts a real estate portfolio valued at over $1 million—a remarkable achievement considering her modest beginnings.


Another inspiring example involves a chiropractor and his wife grappling with nearly a million dollars in debt, including credit card debt and business loans. On the brink of seeking bankruptcy relief, they sought our assistance. We developed a comprehensive eight-year analysis plan, demonstrating how they could utilize the cash value of their insurance contract to eliminate their debt strategically. Following our plan, they systematically paid off their debts, ultimately achieving financial stability within five years. Not only were they debt-free, but they also expanded their chiropractic practice, opening multiple offices and securing their financial future.


These real-life success stories exemplify the tangible benefits of adopting infinite banking strategies whether you are starting small, in debt, or already ultra-wealthy. By leveraging the cash value of life insurance contracts, individuals can achieve financial independence, overcome debt, and build wealth for the future.


Debunking Misconceptions: The Truth about Private Banking

Critics often advocate for a “buy term life insurance and invest the rest” approach, dismissing whole life insurance as a banking system. However, this perspective overlooks the significant benefits of private banking and infinite banking concepts. Firstly, term life insurance is like renting, not owning.  And it becomes more expensive the longer you own it.  Whole life insurance contracts, on the other hand, are like owning and building equity year after year.  Whole life contracts offer consistent returns, typically ranging from four to seven percent annually, with historical peaks reaching as high as 18% during inflationary periods like the 1980s. Unlike the volatility of equities or stocks, these returns are stable and reliable, requiring no active management and eliminating all the risk.  While your cash value compounds and grows tax-free year after year, you still have access to it with full liquidity, effectively allowing you to use it in two places at the same time – inside your contract where it continues to grow and for investment or other purposes.


Moreover, whole life insurance contracts provide unparalleled asset protection, particularly in many southern states like Arkansas, the District of Columbia, Iowa, Kansas, Texas, South Dakota, Virginia, Florida, and Oklahoma, where legislation ensures 100% protection of funds and distributions. This legal safeguard was established post-Civil War to prevent predatory practices, offering individuals peace of mind and security for their assets—a level of protection unavailable with traditional investment vehicles.


Financial privacy is another significant advantage of whole life insurance contracts. Unlike centralized banks, insurance companies are not obligated to report or scrutinize individuals’ financial transactions. This means policyholders can access their funds without invasive questioning or compliance measures, preserving their financial privacy and autonomy.

In summary, whole life insurance contracts offer a unique combination of stability, security, and privacy that traditional banking cannot match. By embracing private banking strategies, individuals can achieve financial growth and protection while maintaining control over their assets and financial future.



Private banking stands as a beacon of financial security and independence in a landscape dominated by centralized banking practices. By embracing the stability and tax advantages of adequately structured whole life insurance contracts, individuals can protect their assets, achieve tax-free growth, and maintain control over their financial future. With unparalleled liquidity and steady wealth accumulation, private banking strategies pave the way for individuals to navigate uncertain economic terrain confidently, ultimately building a legacy of financial stability for generations to come.


 If you are interested in private banking, claim your complimentary e-book today!