I’ll never forget the day a specialty physician walked into my office and asked, “Why do I have to buy life insurance and then use that to buy a sports car? Why can’t I just buy the car?”

That question stuck with me. 

He wasn’t being difficult—he was genuinely confused. And honestly, I don’t blame him. A lot of people come in asking, “How do I become my own bank?” because they’ve seen flashy YouTube videos or heard friends talk about “infinite banking.” It’s a compelling concept—but one that’s often presented without much context. 

Let’s take a closer look at how it really works. 

How Permanent Life Insurance Functions in the Right Context 

I’m not anti–cash value life insurance. In fact, I own it. My husband and I have whole life policies we bought nearly 20 years ago. I also own a significant amount of term insurance. Why? Because they serve completely different purposes. 

  • Term insurance is there to protect my income. If I pass away unexpectedly, I want my family to stay in our home, continue their education, and live the life we’ve planned—without financial disruption. Term life allows for that. It’s income protection, plain and simple. 
  • Permanent life insurance is a long-term financial tool. It offers tax-advantaged access to capital and stability that isn’t tied to market performance. But it only works when it fits inside a broader, more structured plan. 

Real-Life Examples of When It Worked 

  1. The Home We Didn’t Want to Miss
    In 2015, we found our dream home—a foreclosure with potential. We still had our old house to sell and didn’t want to trigger capital gains by liquidating brokerage assets.So we took a policy loan. It bridged the gap. Once our house sold, we repaid it. No taxes. No forced decisions. 
  2. The COVID-19 Slowdown
    During COVID, our business experienced a slowdown. The markets were down, and we didn’t want to lock in losses.Again, our whole life policy created liquidity. No correlation to the market. No pressure. Just access and control, when we needed it most. 

But—And This Is a Big “But”—The Fundamentals Must Be in Place 

Before anyone considers infinite banking or cash value life insurance as a financial strategy, I walk them through this checklist: 

  1. Do you have income protection in place (term life, disability, liability)? 
  1. Is your emergency fund fully stocked (3–6 months of expenses)? 
  1. Are you contributing to your employer’s retirement plan—at least up to the match? 
  1. Do you have a taxable investment account growing for medium- and long-term goals? 
  1. Are you consistently saving for retirement? 

Once those foundational elements are in place—and if you have additional capital to allocate or want to explore alternative liquidity strategies—that may be the right time to start thinking about how permanent life insurance could fit into your broader plan. 

And only if you’re truly interested in learning how permanent life insurance works. 

Otherwise? Just buy the car.

Because financial strategies should add control, not complexity.