Reading "Becoming Your Own Banker" Part 2 - A Guided Overview
Part 2 – Understanding the Laws of IBC
Every principle in Becoming Your Own Banker builds toward one goal — control. Nelson Nash wanted us to understand not just the mechanics of Infinite Banking, but the mindset required to make it work. These next few sections dive deep into the “laws” that govern our behaviour around money. Let’s break them down.
Parkinson’s Law
Parkinson’s Law says, “work expands to meet the time envelope allowed.”
That doesn’t sound financial at first — but when you apply it to money, it becomes “expenses rise to meet income.”
Think about it: when you earned your first paycheque, it probably felt like a lot. Now, years later, you earn more — but somehow your expenses have caught up. That’s Parkinson’s Law at work.
Nelson wasn’t trying to shame anyone. He was helping us see that if we don’t consciously control our money, it will control us. Before you can build your own banking system, you need the discipline to overcome this law.
If you build capital but spend it before it can be put to work — before it can be used to recapture debts and finance your life — all you’ve done is created more debt under a new name. Discipline and control are what separate success in Infinite Banking from simply “having a policy.”
Willie Sutton’s Law
Willie Sutton was a famous bank robber. When asked why he robbed banks, he replied, “because that’s where the money is.”
Nelson used this story to make two key points.
First: Wherever wealth is accumulated, someone will try to steal it — even if that someone is you. Don’t be the thief in your own story. Resist the urge to spend what you’ve built.
Second: Understand that the government wants its share too.
In Canada, we’re taught that RRSPs, RESPs, and other “tax shelters” are a gift — but they’re really just tax deferrals. You don’t avoid tax; you postpone it. The balance you see isn’t fully yours — part of it belongs to the CRA.
Contrast that with a participating whole life policy:
Growth inside the policy is tax-free.
You can access the cash value tax-free through collateral loans.
When structured properly, even retirement income can be tax-free using annuitization strategies.
The lesson? You’re going to build wealth — so make sure it’s stored somewhere you control, not where it’s easily taken.
The Golden Rule
“Those who have the gold make the rules.”
If you rely on banks for capital, you play by their rules — credit checks, repayment terms, and ever-changing interest rates. You’re not in control; you’re renting money.
When you take over the banking function in your own life, you flip that power dynamic.
Once your warehouse of wealth is built, opportunities find you — not the other way around. You set the rules because you control the capital. That’s the real meaning of the “golden rule.”
The Arrival Syndrome
One of the biggest barriers to growth is thinking you’ve already arrived — that there’s nothing left to learn. Nelson called this The Arrival Syndrome, and it’s one of the hardest habits to break.
When people think they already know how money works, they stop learning and stop questioning. That’s when they get stuck — financially and mentally.
As Nelson said, “Our hardest job as practitioners is to get people to open their minds and look deeply at what’s actually going on.”
Infinite Banking is all about continuous learning and awareness. The financial world changes constantly — tax laws evolve, products change, and new strategies emerge. If you stop learning, you hand control back to outside forces. Don’t do that. Keep your mind open, and you’ll always stay in control.
Use It or Lose It
Knowledge only matters if it’s applied.
IBC is a new way of thinking — and new thinking requires new habits. You can’t expect to master it overnight, but you also can’t afford to stop practicing it.
If you don’t use the system, you’ll lose the discipline that makes it powerful. Build habits around capitalization, recapturing interest, and managing cash flow. Repetition builds strength — and consistency builds freedom.
Creating the Entity
Now we shift from the human side of the process to the mechanics behind the tool itself: the life insurance company.
When you own a participating whole life policy, you become a part owner of that company — so it’s worth understanding how these policies are built.
How Policies Are Engineered
Life insurance policies are designed by actuaries — the engineers of the financial world. They use mortality tables that represent the average lifespan of healthy, insurable people. They build policies to ensure the company can always pay every death benefit, even under worst-case scenarios. That’s why life insurance companies are among the most stable financial institutions in existence.
Because actuaries “overbuild” for safety, there’s often a surplus — and that surplus is distributed to you, the policyholder, as dividends.
These dividends are technically a return of overpaid premium, which means they’re not taxable as income when reinvested into the policy. That reinvestment creates more death benefit, more cash value, and larger future dividends — a true compounding cycle.
Policy Design for IBC
Nelson emphasized minimizing the base death benefit and maximizing cash value. In practice, that means using Paid-Up Additions (PUAs) — small, fully funded “mini policies” within your main policy that expand your death benefit and accelerate your cash value growth.
At Endurys, we still design for cash value efficiency, but we also factor in human realities — family protection, business needs, and future insurability. That’s why we often pair whole life with a convertible term rider. This allows for:
More space for PUAs.
Future conversion options if health changes.
Long-term strategic flexibility.
These design principles keep your system efficient while still meeting real-world needs.
A Note on MECs (for Canadians)
In the U.S., overfunding a policy can trigger a Modified Endowment Contract (MEC), changing its tax status. In Canada, the same concept exists, but our regulations are tighter and the calculations are done by the carrier. As long as you don’t alter the structure or remove riders without guidance, you’re safe. Always consult your advisor before making changes.
Final Thought
These “laws” form the foundation of everything that follows in Becoming Your Own Banker.
They remind us that money management isn’t just about numbers — it’s about behaviour, discipline, and mindset.
Infinite Banking isn’t magic. It’s a process of taking back control, step by step, by understanding how systems work — and choosing to make those systems work for you.
