Member Login to Circles

Back

Why Using a HELOC to Fund Your Infinite Banking Policy is a Bad Idea

👇WATCH EPISODE 👇

Before we start, what if you could keep more cash… without working harder or increasing revenue?


7 hidden money leaks are costing business owners thousands every year. In 30 seconds, you can see how much extra cash could be staying in your pocket each month.


Click HERE to reveal your results.


Why Using a HELOC for Infinite Banking is a Dangerous Strategy


If you’ve been told that you can use a home equity line of credit (HELOC) to fund an infinite banking policy, I’m going to be very direct with you:


Don’t do it.


I know it sounds clever. I know it might even feel like a “next-level” financial strategy. But in reality, it’s one of those ideas that looks good on paper and completely falls apart when you actually run the numbers.


Today, I want to break down why this strategy doesn’t work, where people get misled, and what you should be doing instead if your goal is to create real passive income and long-term wealth.


The Idea Behind This Strategy (And Why It’s So Tempting)


The concept usually goes like this:

  • You take out a HELOC at around 7–9% interest
  • You use that money to fund a whole life insurance policy (infinite banking)
  • Then you borrow from the policy to pay back the HELOC or invest


Sounds smart, right?


You’re “recycling” money. You’re leveraging debt. You’re creating your own banking system.


But here’s the problem You’re stacking debt on top of fees on top of more debt.


And that’s where things start to break.


The Hidden Costs Nobody Talks About


Let’s get real about what actually happens when you fund a life insurance policy.


Even when we design policies the right way (and we minimize costs as much as possible), you’re still going to see about 20–25% in costs in year one.


That means if you put in $25,000:

  • You might only have about $20,000 left after costs
  • You can only access about 95% of that
  • So now you’re working with roughly $19,000


But you borrowed $25,000 from your HELOC.


You’re already behind.


And now you’re paying interest on money that no longer exists.


The Double Interest Trap


Here’s where it gets even worse.


Now you have:

  1. A HELOC charging you around 8%
  2. A life insurance loan charging you around 5–6%


So instead of simplifying your finances, you’ve created two separate interest payments.


Even if you’re not required to make payments on the policy loan, guess what?


Interest is still accruing.


And if you don’t manage that correctly, it compounds against you.


You’ve Just Made Your Life More Complicated


Let’s say your original plan was simple:

  • Save $500/month
  • Build a policy
  • Grow your wealth over time


Now, with this strategy, you’re:

  • Paying HELOC interest
  • Funding policy premiums
  • Managing policy loans
  • Trying to “balance” everything


You’ve turned a simple strategy into a financial juggling act.


And for what?


No real gain.


The “Infinite Loop” Myth


I’ve also heard people say “What if I borrow from one policy to fund another policy… and then another?”


No.


This is like trying to carry water in a bucket full of holes.


Each time you move the money, costs get pulled out, and eventually there’s nothing left to work with.


It’s not a strategy, it’s a slow leak.


If You Want to Pay Off Debt, Keep It Simple


I had a guy tell me he wanted to use a HELOC + policy strategy to pay off credit cards.


I told him: Why not just use the HELOC to pay off the credit cards directly?


Let’s say:

  • You borrow $25,000 from a HELOC
  • You pay off high-interest credit cards
  • That frees up $500/month


Now you’ve:

  • Reduced your interest burden
  • Increased your cash flow
  • Simplified your finances


That’s a win.


Then you can take that freed-up cash flow and fund a policy the right way.


When Infinite Banking Actually Works


I’m a big believer in infinite banking but only when it’s done correctly.


Here’s what I recommend instead:


1. Use Real Cash Flow (Not Borrowed Money)


Fund your policy with money you already have or free up.


2. Start Smaller


You don’t need to dump $250,000 into a policy.


In fact, that often creates more problems than it solves.


3. Let It Mature


By year 2–3, your policy starts to grow more efficiently.


That’s when it becomes more powerful.


4. Use Investments to Fund It


If you’re investing in real estate or other assets, let those returns help fund your policy.


Now your money is working smarter not harder.


Why Simplicity Always Wins


One of the biggest mistakes I see people make is overcomplicating their finances.


They chase “creative” strategies.

They try to outsmart the system.


But the truth is: The simplest strategies are usually the most effective.

  • Pay off high-interest debt
  • Increase cash flow
  • Invest wisely
  • Use tools like life insurance properly


That’s how you win.


Final Thoughts


If someone is telling you to use a HELOC to fund an infinite banking policy, take a step back.


Ask yourself:

  • Am I actually gaining anything here?
  • Or am I just creating more complexity and risk?


Because from what I’ve seen over the years, this strategy doesn’t create wealth.


It creates confusion.


And confusion is expensive.