Cash Flow Banking Explained

Cash flow banking allows you to borrow money from your whole life insurance policy. As you pay back your loan from the life insurance company, your cash value will gain interest over time. Cash flow loans that aren't paid off before you pass away will be deducted from your death benefit, which is the life insurance coverage amount. Compare companies and shop around to secure the best whole life insurance rates.

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Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Benjamin Carr was a licensed insurance agent in Georgia and has two years' experience in life, health, property and casualty coverage. He has worked with State Farm and other risk management firms. He is also a strategic writer and editor with a background in branding, marketing, and quality assurance. He has been in military newsrooms — literally on the frontline of journalism.

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Reviewed by Benji Carr
Former Licensed Life Insurance Agent

UPDATED: Jul 19, 2021

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Quick Facts

  • Cash flow banking means you can use a whole life insurance policy to finance expenses for investments.
  • You can borrow money from your life insurance company using your whole life cash value as collateral.
  • Walt Disney and Ray Kroc used their whole life insurance policies to pay to start their creative visions.

Some of the most popular companies have used cash flow banking to jumpstart their passions into massive empires. Cash flow insurance isn’t insurance, but it allows a policyholder to use their whole life policy as a means to invest in themselves or other business ventures.

Please read our cash flow banking review before you speak to a cash flow banking specialist. We’ll explain why whole life is considered permanent life insurance.

If you want the best life insurance company, enter your ZIP code to find affordable whole life insurance with cash flow banking in your local area.

What is cash flow banking?

Cash flow banking is more of a concept than an insurance program. Technically, cash flow banking allows a whole life policyholder to use the cash value of their whole life insurance policy as collateral to receive a loan from a life insurance company.

In other words, you can use your life insurance as a bank account, but you won’t be making daily transactions from your life insurance collateral.

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What are the advantages of cash flow banking?

Here’s a list of benefits when you use your whole life insurance as cash flow banking.

  • You earn interest while borrowing from your whole life insurance policy.
  • The money that you don’t pay back is taken out of your death benefit if you pass away.
  • There’s no credit check.
  • Funds are available anytime you need them.
  • Interest rates are lower than the average loan at the bank.
  • The money you borrow from the whole life insurance policy is tax-free.
  • The cash value isn’t affected by the market.

What’s an example of earning interest while borrowing from a whole life insurance policy? If your whole life insurance policy has a cash value of $250,000 and you borrow $50,000, you’ll earn interest on the $250,000 cash value.

The tax-free option rivals the retirement withdrawal such as 401(k). According to the Internal Revenue Service (IRS), retirement incomes can’t be moved around like life insurance policies. Whole life insurance policies are more flexible and have less severe penalties to personal finances.

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How does cash flow banking work?

The money from a whole life insurance policy isn’t your own money — it’s borrowed money from the life insurance company’s “general fund.” Your life insurance policy is collateral. To get access to cash flow banking loans, you’ll need to get a Wealth Maximization Account.

A Wealth Maximization Account is most effective when a portion of your premiums is taken out per month from the account. This will allow the Wealth Maximization Account to grow more rapidly and skips expense charges when you want to take money out.

What things do you get with whole life policy loans?

  • Business Expenses or Starting a Business
  • Buying a New Car
  • Paying for College Tuition or Other Education
  • Purchasing a Home or Other Real Estate Ventures
  • Investing in Dividends and Various Financial Opportunities
  • Adding Tax-Free Money to Retirement Income
  • Using Money for Extravagant Vacation

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Where can you get whole life insurance with cash flow banking?

If you want to use cash flow banking, you’ll need to find a life insurance company that carries whole life insurance. We did some research for you and found the top 20 life insurance companies in the United States. Check out this list below.

Top 20 Whole Life Insurance Companies by Market Share
CompaniesDirect Written PremiumsMarket Share
Northwestern Mutual$10,517,115,4526.42%
Metropolitan Group$9,821,445,9536.00%
New York Life$9,925,848,3005.68%
Prudential$9,128,805,0605.57%
Lincoln National$8,769,303,7745.36%
MassMutual$6,854,713,0574.19%
Aegon$4,809,856,6502.94%
John Hancock$4,640,905,0172.83%
State Farm$4,633,004,9632.83%
Minnesota Mutual Group$4,422,100,0282.70%
Guardian Life$4,033,541,4012.46%
Pacific Life$3,755,606,2132.29%
Nationwide$3,364,808,1812.05%
AIG$3,336,397,4532.04%
AXA Equitable$3,051,945,8491.86%
Voya Financial$2,526,828,2681.54%
Brighthouse Financial$2,519,733,1161.54%
Protective Life$2,403,640,8251.47%
Primerica$2,375,786,1901.45%
Sammons Enterprises$2,321,529,7221.42%
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These are the top 20 companies because they have the highest market share in the life insurance industry and some of the highest direct premiums.

What is the cash flow banking history?

By 1980, the cash flow banking system gained popularity after Robert Castiglione wrote and published his book LEAP – The Lifetime Economic Acceleration Process: The Key to Financial Success.

However, cash flow banking started with a seasonal farmer group who took out life insurance policies just in case they passed away. Many farmers were using income from their harvest to cover living and farming expenses for the next season.

Life insurance companies considered the seasonal farmers as low risk to insure and decided to loan them money against the cash value of their policies until the farmers earned money back from their harvest.

Years later, cash flow banking spread to cities. Life insurance policyholders began using this strategy to fund businesses and other financial ventures.

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Cash flow banking: What’s the bottom line?

The idea behind cash flow banking is to give you several options for financial management. You’ll be able to borrow money and make payments without the stress of hurting you as much.

How so? What you don’t pay will be deducted from the death benefit, but you still want to make timely payments to maintain your relationship with your life insurance company.

Ready to buy life insurance? Compare life insurance companies in your local area using our FREE online tool to see which has the most affordable life insurance rates with cash flow banking options.

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