If inflation is on your mind, you’re not alone. With three years of high inflation figures and your pocketbook saying it’s even higher every time you buy groceries, how will your money keep up? Can Infinite Banking overcome inflation and provide a long-term solution?

https://www.youtube.com/watch?v=-6wZtPKGOHI

Today, we discuss a listener question about how Infinite Banking can be used to combat inflation. We also discuss the five tenants of infinite banking, such as 'don't do business with banks,' how it can help in an inflationary environment, and how life insurance policies are interest rate driven. Finally, we explore stewardship and generational wealth, discussing the concept of 'human life value' and how clever insurance strategies can be leveraged to benefit future generations.

How Does Inflation Happen?Can Infinite Banking Overcome Inflation?Inflation vs. Death BenefitOvercoming Inflation in a Tax-Free EnvironmentPremium Improves with InflationFamily Banking - The Next GenerationsBook A Strategy Call

How Does Inflation Happen?

[1:47] “Inflation is simply the increase of the money supply. And people argue about this all the time, but Milton Freeman said that only the government can increase the money supply, so the government is solely responsible for inflation.” 

When the money supply increases too quickly, there’s an oversaturation of money compared to goods on the market. This raises demand for goods, while supply is low, and prices increase to account for that. When prices for certain products or goods increase, this tends to affect the prices of other correlated goods. 

Can Infinite Banking Overcome Inflation?

We recently had a very thoughtful question from a podcast listener that we wanted to address. It’s such a powerful question that we think you’ll benefit from reading it in his own words, as follows: 

“Thanks for the content. I'm of the belief that inflation is not transitory (I'm 44 yrs old and I remember when a candy bar was $.50). I am a student of the Austrian School of Economics and only think that inflation will be exponentially worse as the U.S. monetary policy continues to stay the same (increasing the money supply) as that is their only option unless politicians want to be responsible which we know they won't be.  

A method that has worked in the inflationary environment since 1971 when gold was dropped completely is to borrow money and pay it back in cheaper dollars (think 30-year mortgage on a house).  

I love the thought of IBC in normal monetary times but I just can't wrap my head around how a death benefit (30 years from now (ideally)) will be worth much as prices continue to increase. And I think I would rather borrow from the bank and pay them back with the cheap dollars instead of doing that disservice to myself.....

I just think that the dollar will only devalue more and more and I'm not understanding how IBC has any defense against that. Everything else is great about it in my mind.”

As you can see, he’s put a lot of thought into this topic, and we’re excited to unpack it with you now. 

Inflation vs. Death Benefit

There are several reasons that your whole life insurance Death Benefit is still a powerful tool even with inflation. First and foremost, the whole life insurance dividend is interest-driven. This means that as the Federal interest rate rises and falls, so does the dividend. This also affects the guaranteed interest portion, too. This means that you tend to do better than in a savings account alone. Add this to the compounding effect of your cash value, and that slow and steady growth is going to be powerful.

Remember, too, that with PUAs as your Cash Value grows, so does your Death Benefit. The two are intrinsically linked since the Cash Value represents the equity of your Death Benefit. You could start with a DB of $1 million and end up with several million by the time you pass, or your policy endows. 

Remember, too,