Where Clients
Become Capitalists

Griggs Capital Strategies is the main point of contact for members of the public who wish to work with Ryan Griggs in order to acquire dividend-paying whole life insurance built for the Infinite Banking Concept (IBC). It serves as the host domain to howtobuywholelife.com where visitors can purchase hardcover and paperback versions of Ryan’s book How to Buy Whole Life: A Framework for Becoming Your Own Banker. Finally, it’s where visitors and clients can login for free access to GCS 101.

It’s basically the digital headquarters for Ryan Griggs’ businesses.

Griggs Capital Strategies LLC is a Texas based single-member Limited Liability Company (LLC) where Ryan Griggs is the sole member-manager. The company is licensed in its home state of Texas to sell life insurance. It maintains and actively obtains “non-resident” licenses to sell insurance in other states in order to serve clients residing in those states.

The Griggs Capital Strategies LLC National Producer Number is 21422735.

Ryan Griggs is the founder and principal advisor of Griggs Capital Strategies. He is the author of How to Buy Whole Life: A Framework for Becoming Your Own Banker—the first, and probably still only, book on the philosophy behind whole life insurance design for the purposes of the IBC. He is the creator of the Whole Life Insurance Mechanics YouTube lecture series and served as co-host of the Banking with Life podcast on over 100 episodes.

Ryan earned his BA and MA in Economics from California State University, East Bay in 2015 and 2016, respectively. He met Nelson Nash at one of Nelson’s final two-day, ten-hour seminars in May of 2016. He was a student, friend, and mentee of Nelson’s for the last three years of Nelson’s life, enjoying regular phone calls, emails, and occasional in-person visits over that time.

Ryan’s initial career ambition was to become a professor of economics, specializing in a particular school of economic thought called the Austrian School. To that end, he completed one year of a four year PhD program in Agricultural and Applied Economics at Texas Tech University in Lubbock, TX in the 2016-17 academic year. The experience was successful, at least on paper: Ryan passed comprehensive examinations in Microeconomics and Econometrics in the first sitting (along with about half of his class), but grew disillusioned with the prospect of learning and eventually teaching sound Austrian Economics as a professional academic economist in US.

In October 2017, Ryan met James Neathery as part of the Nelson Nash Institute Authorized IBC Practitioner mentorship program. Since then, Ryan has been a licensed life insurance agent based in Texas and operating in nearly every US state.

Ryan continues to pursue his study in Austrian Economics, expecting to earn a PhD in Austrian Economics through the Universidad Francisco Marroquin in Guatemala City, Guatemala (the only university in the world that offers a doctoral degree in that specific field) in 2026 under the supervision of Mises Institute Senior Fellow and Nelson Nash Institute co-founder Dr. Robert Murphy.

The subject of the dissertation is the ontology of economic principles, with special emphasis on capital theory.

Ryan is known for his no-holds-barred public speaking style and contrarian approach to the financial services business. He rejects “promotion-style” business practices including cold calls, cold emails, sales and click funnels, and sales scripts, opting instead for the “attraction” approach that emphasizes education, visibility, and intention in client interaction.

Ryan resides in Rockwall County, TX with his Great Dane Lucy.

Yes.

Life insurance sales is the primary business activity of Griggs Capital Strategies. Secondary business activities include the distribution of free and paid educational resources pertaining to life insurance, the Infinite Banking Concept (IBC), personal finance, and Austrian Economics.

Ryan is licensed in 45 states as of this writing (May 2026). “Non-resident licenses” are promptly and properly obtained in order to work with and submit applications on behalf of clients who reside in states outside of Texas.

Griggs Capital Strategies operates entirely on a remote and virtual basis, conducting its activities via phone and web-based communications across the country. Some clients even reside abroad.

Categorically, no.

Neither Griggs Capital Strategies nor Ryan Griggs carries, nor do they seek to obtain, licenses in investment, tax, or legal domains. Please always seek advice from licensed and qualified professionals in these areas before doing anything with your money.

Griggs Capital Strategies receives commissions for the sale of life insurance from life insurance companies and it receives revenue from the sale of educational material available at griggscapitalstrategies.com. On occasion, Griggs Capital Strategies receives fees for consulting services.

Life insurance clients are not charged or billed for services pertaining to the acquisition of life insurance through Griggs Capital Strategies. No purchase on griggscapitalstrategies.com is expected or necessary in order to acquire life insurance through Griggs Capital Strategies.

We no longer provide direct one-on-one coaching or mentorship services to those seeking to become a life insurance agent specializing in the Infinite Banking Concept (IBC).

A full essay on this subject is available here.

The first step toward acquiring a policy through our office is to request an introductory, no-obligation, 20 minute phone call with Ryan, directly. Please fill out the Request a Call form in the Contact section at griggscapitalstrategies.com/contact.

Then, consider creating a free profile at platform.griggscapitalstrategies.com. There you will find a three-part video series GCS 101 and an 8-page flyer that provide a rigorous overview of our New Client Preparation and on-going client support processes.

All new clients seeking to implement the IBC with our office are required to read Nelson Nash’s book Becoming Your Own Banker: Unlocking the Infinite Banking Concept available on Amazon and at the Nelson Nash’s Institute’s web store at infinitebanking.org. In all things, go to the source!

Furthermore, we strongly recommend watching the seven part lecture series Whole Life Insurance Mechanics available for free on YouTube. Many will also find value in the Banking with Life podcast. The vast majority of Griggs Capital Strategies clients will have already taken these steps prior to engaging with us—in fact, these resources are often the reason why members of the public choose to implement the IBC with us.

As you’ll learn in the preparatory materials, the total process from initial call to policy delivery runs 8-10 weeks.

Please note that our process is slower than that of many other agents. If you don’t have time to do a thing wrong, you definitely don’t have time to do it over!

Ryan provides value-add advisory services for clients of Griggs Capital Strategies to assist them in the process of applying for life insurance.

We do not currently offer any fee-based consulting or advising services.

No.

We encourage those who are interested in these products to contact other qualified and licensed professionals.

For those considering implementing IBC with these other products, we recommend Chapter 9: My Thoughts on Universal Life, Variable Life and Equity Indexed Universal Life in Nelson’s second book Building Your Warehouse of Wealth: A Grassroots Method of Avoiding Fractional Reserve Banking—Think About It! An excerpt from that chapter, written by Todd Langford follows:

“As stated earlier, all Universal Life policies are a side fund (money market for regular UL, mutual fund-like separate accounts for VUL, and index fund-like accounts for EIUL) plus annually renewable, or one year increasing premium term insurance for the death benefit.

#10 Internal costs are not guaranteed
#9 Morality charges are not guaranteed
#8 Market drops cause double pain
#7 Late premiums kill any guarantees
#6 Dividends from the index don’t get credited
#5 Participation ratios are often less than 100%
#4 Returns are usually capped at various interest rates
#3 Guarantees are not calculated annually
#2 All of the above can be changed by the company
#1 The risk is shifted back to the insured”

—pp. 75-76

Clients report several reasons for choosing Griggs Capital Strategies to implement the IBC in their own lives. Some of these include:

• Our “slow-and-low” educational approach

• Zero sales pressure

• What they learned on the Whole Life Insurance Mechanics series

• Reviews and testimonials they found on Reddit

• What they learned in the How to Buy Whole Life book

• What they learned on the Banking with Life podcast

• Our prioritization of on-going client support after the initial sale of a policy

• Direct access to Ryan Griggs

• The methodical, IBC-centric approach to company selection

• The methodical, IBC-centric approach to policy design

• Our responsiveness to client inquiries

• Our emphasis on traditional, Nelson Nash-style IBC and rejection of new-age marketing approaches

• Our staunch, public defense of and advocacy for Nelson Nash’s IBC

• The integration of the lessons of Austrian Economics with personal finance

• A high-touch, interactive approach to managing the life insurance application and underwriting process

• Our near 100% persistency ratio (percentage of policies sold that clients actually keep)

We appreciate that some in and around the world of the IBC have recommended contacting a life insurance agent or agency to request a life insurance illustration or “quote.”

We do not participate in this practice.

A thorough line-by-line review of the relevant life insurance policy illustration(s) comes at the conclusion of our educational advisory process.

In our video call illustration review, all proposed policies to insure adults will be illustrated at least two ways. Ryan will show you how you can see for yourself that the premium design and level shown on the page corresponds that which was established in the advisory consultations. Then comes a thorough analysis of the various policy value growth patterns depicted in the Tabular Detail. A review of this level is not possible unless the necessary educational foundation has first been laid.

Even then, a whole life insurance illustration is not a policy contract. Pre-application illustrations should only be understood as approximate drafts of a potential life insurance policy, and then as confirmation that the policy discussed is the policy for which one will apply.

At the conclusion of the underwriting process, in the event a life insurance company is willing to offer the policy or polices for which you’ve applied, we provide lots of information, including what we call your “best case scenario” illustration of your policy, a guide on how to compare the illustration with the Data Page of your policy contract to confirm accuracy, and much more.

In the United States, a whole life insurance policy is a unilateral contract offered by a life insurance company to an individual or entity upon successful application. The contract obligates a life insurance company to perform certain actions under certain conditions.

For instance, if the policy owner pays the base premiums according to a contractually specified schedule, the life insurance company is legally obligated to pay the Initial Death Benefit (or “base death benefit”) upon receipt of a valid death claim consisting of proof of death of the insured.

There may be additional contractual provisions, called riders, added to the whole life policy which obligate the company to perform other actions under certain conditions. The most common rider to the IBC community will be the Paid-Up Additions (PUA) rider, which obligates the company to pay additional death benefit over and above the Initial Death Benefit in the event that the policy owner pays PUA rider premiums.

What makes a whole life policy “participating” (or “dividend-paying”—the two terms mean the same thing) is a contractual provision in the whole life policy language, which states that the policy owner is entitled to receive a share of the surplus (or what we would call “profit” outside of the mutual life insurance world) generated by the company in the prior fiscal year, if any. Dividends are always “non-guaranteed” since no one can guarantee that a company will be surplus-generative (profitable).

For instance, one of Ryan’s own policies contains the following language: “Every year We [the company] determine an amount, if any, to be paid as dividends on eligible policies and whether this policy is eligible to receive any dividends for that year.”

Several US companies have paid dividends to policy owners for over 100 consecutive years.

Whole life policies have cash value, also known as surrender value or cash surrender value. The cash value is the amount payable in cash to the policy owner upon surrender of the policy back to the life insurance company. Mathematically speaking, the cash value of a whole life policy is the net present value of the total, guaranteed death benefit currently payable (or “in force”) on the policy.

Many whole life insurance policies contain a policy loan provision. Typically, a policy loan provision articulates the policy owner’s right to borrow money from the life insurance company, using the policy itself as loan collateral. The cash value of the policy determines the upper limit on the amount available to borrow by policy loan. In practice, companies specify an Available Loan Value, which is the cash value minus certain reserved amounts in order to decrease the chance of policy lapse (if policy loan indebtedness exceeds the cash value, the policy will lapse, which may trigger negative tax consequences).

For instance, in determining the Available Loan Value on a policy, the company may subtract recent or upcoming scheduled payments and the maximum possible policy loan interest that could accrue during a policy year. This way, if a recent or upcoming payment fails, or if the policy owner makes no loan repayments throughout the policy year such that accrued interest compounds (gets added to) the principal balance at the end of the policy year, there will still be sufficient “uncollateralized cash value” to keep the policy in force.

The tax treatment of various aspects of traditional, ordinary, participating whole life—including dividends, death benefits, policy loans, and cash value—is almost universally regarded as extremely favorable to the policy owner and to beneficiaries.

We should note that several sources, including the one given above, will claim that whole life insurance has an “investment” component. This is false. Agents and agencies that sell whole life insurance are not required to carry licenses to sell investment products. The Securities and Exchange Commission (SEC) does not govern the sale of whole life insurance; individual state insurance commissions and departments do. Cash value growth is not determined by index performance or by trading activity in the public markets. Technically speaking, we say participating whole life insurance is “non-market-correlated.”

Economically, cash value is capital. It is monetary value of property. Conventional finance, economics, and political science is ill-equipped to understand the difference between capital and investment. Business people, in contrast, have understood the concept for centuries.

The IBC is a capitalization strategy that we implement through the use of dividend-paying whole life insurance to take the best advantage of these and other features of the whole life contract.

Participating whole life insurance is the ideal vehicle for capitalization, or the process of securing, growing, accessing, and—ultimately—transferring monetary value. If properly designed and managed, participating whole life allows the policy owner to accumulate and access capital without increasing income tax liability. Whole life insurance is a private contract formed through mutually beneficial exchange between consenting adults—it is not a government program and does not rely on government programs or “loopholes” (contractual features of whole life insurance predate most Western state taxing authorities).

Participating whole life insurance is the epitome of financial conservatism and safety. At least 15 different US companies have sold participating whole life insurance for over 100 consecutive years. Mutual life insurance companies (which means, companies that sell participating whole life) are held to stricter financial reporting and investment standards called Statutory Accounting Principles (SAP), as opposed to the ever-loosening Generally Accepted Accounting Principles (GAAP).

Whole life insurance returns the locus of control over access to capital away from third parties like banks and lending institutions back to the individual. The policy owner decides what to take loans for, when to take them, and when to repay them. By accepting the prerequisite responsibility to allocate money to premium to the life insurance company, the policy owner also reclaims the right to remuneration for the performance of the money-lending and money-repaying (loan origination and repayment) function through the receipt of a dividend, which, if properly allocated, occurs without triggering taxation.

At scale, whole life insurance presents the possibility for individuals to access credit for large purchases without contributing to the business cycle. Life insurance companies cannot create money out of thin air like commercial and central banks do, because they lack the necessary feature for it, which is reserved exclusively for the commercial banking system: the manufacture ex nihilo of checkable deposits.

Therefore, strategically-designed and competently-managed participating whole life insurance is the basis on which individuals can become literal capitalists, enjoy their share of the profits generated from the performance of the money-lending function, eliminate reliance on conventional sources of credit, and do their part to reduce demand for business-cycle-inducing inflationary loans.

No.

Life insurance companies do not limit policy ownership by the number of policies. At the height of his ownership, Nelson Nash owned 49 policies insuring himself, family members, and business partners.

The limit to life insurance ownership is specified in terms of insurable interest and maximum insurability, not the number of policies. Individual states’ laws specify the circumstances in which an insurable interest arises (here’s California’s, for example). To have insurable interest in the life of a person means that you suffer loss in the event of that individual’s death. In theory, one’s insurable interest in one’s own life is infinite (i.e. you lose everything if you die). However, in practice, life insurance companies have methods for calculating the precise magnitude of insurable interest (and therefore maximum insurability) depending on the relationship between the proposed policy owner and the proposed insured.

Calculating maximum insurability under the “income protection approach” to the justification of death benefit for a proposed insured with a given company consists of simple multiplication: in most cases, you multiply the insured’s gross annual income by an Income Factor (i.e. a number of years, based on your age, over which the company assumes you will continue to generate your annual income).

For instance, a 30-year-old who earns $100,000 before tax may have an Income Factor of 35 at a given life insurance company (different companies use different Income Factors). Since $100,000 times 35 is $3,500,000, this individual’s maximum insurability, or the magnitude of his insurable interest in his own life (with this company), is $3,500,000 under the income protection approach. That is, the total amount of death benefit he may apply to own on his own life at age 30 is $3,500,000.

Articulating, supporting, and justifying the maximum insurability necessary for the individual to acquire the policy that will allow him to pay the premium he wants to pay is one of the tasks of a professional life insurance agent. But in any case, it’s this amount—the maximum insurability—and not the number of policies that determines the limit on life insurance policy ownership.

Note that in situations where the proposed policy owner and the proposed insured are different people, different rules to determine maximum insurability will apply. Likewise, in some cases, a different approach to justifying proposed death benefit will generate higher maximum insurability (like the “estate value protection” approach).

Yes.

However, the drawbacks to this approach for the purposes of the IBC are wide-ranging. But first, whole life insurance available online is still sold by a person, since the sale of life insurance requires that a human being pass a life insurance sales license exam. You may not interact directly with the agent, but that does not mean that there is no agent on the policy.

Next, whole life insurance sold through online sales tools is typically non-participating, i.e. policy owners are not entitled to dividends in the event that the company generates a profit.

While we’ve seen automated, whole life sales sites, we’ve not seen automated (or even guided) whole life company selection. The closest approximation one may find on this front is a comparative quote generator where you may see different premiums charged by different carriers for a given amount of death benefit. While potentially useful information, this has little to do with accumulation of cash value, much less the favorability of the contractual features which permit the policy owner to build and access it.

As much as the technology enthusiasts might hate it, you can’t automate everything. Some things just should be done between two living, breathing, spirit- (or soul-) animated human beings.

The degree of support, if any, provided to the policy owner after the fact by the selling agent or agency is completely unknown. And no “just call the carrier” does not count for professional support after the point of sale.

Purchasing whole life insurance for the purpose of the Infinite Banking Concept (IBC), be it for the first time or to expand one’s system of policies, is an intimate and educational process that requires professionally-tuned human judgement that the AI models—bless their all too metaphorical hearts—do not possess. 

In the most literal sense, you can do whatever you want.

But we should realize that the term “Infinite Banking Concept” (IBC) was coined by one man R. Nelson Nash in his book Becoming Your Own Banker and expanded upon in his second book Building Your Warehouse of Wealth. If we want to “do IBC,” then, ostensibly, this means “doing” what Nelson Nash taught.

This is not to say that one must choose to implement the IBC. There are other approaches to personal finance out there in the big wide world and many of them use terminology that is eerily similar to the IBC, perhaps to give the impression that they are somehow affiliated or related. But it is to say that if one decides not to follow Nelson’s teachings, then in a technical sense, one is not implementing the IBC. Which may all be well and good, but words do have meaning, and it’s completely OK if people want to implement different strategies. (In fact, if one were confident in an alternative approach, then one might expect to use terminology that clearly and prominently distinguishes it from the IBC).

You may be wondering what it means to “follow Nelson’s teachings.” Excellent! We strongly encourage and support this. In fact, we recommend that you take no one’s word for what the IBC is; instead, we encourage you to visit the source and see for yourself. Nelson’s book Becoming Your Own Banker is the (as in, the only) resource on what the IBC is, since, of course, he came up with the name! This book is available on Amazon and through the Nelson Nash Institute here and here.

For more up to date insight on how we apply what Nelson Nash taught today, consider the Whole Life Insurance Mechanics series, the Banking with Life podcast, and Ryan’s book How to Buy Whole Life: A Framework for Becoming Your Own Banker.

There are several companies that sell participating whole life insurance. A selection of company names that you often hear in and around the IBC-footprint are given below in alphabetical order:

• Ameritas

• Guardian

• Lafayette Life

• MassMutual

• Mutual Trust Life

• New York Life

• Northwestern

• OneAmerica

• Penn Mutual

• Security Mutual Life

Though this is not an endorsement of all of these companies, it is true that each of these companies provides participating whole life insurance and has paid dividends for at least the last 100 consecutive years; therefore, they meet Nelson’s two criteria for implementing the IBC.

Since have so many to choose from, at Griggs Capital Strategies, we apply three additional criteria—non-direct recognition, long-dated level term riders, and highly-flexible PUA riders—to narrow the field and optimize our selection specifically for IBC-purposes. This video gives an overview of all five criteria.

Griggs Capital Strategies and Ryan Griggs do not, and have never, publicly endorsed a particular company or companies. We disagree with the propriety of doing so on the grounds that the favorability of the products and company practices for IBC purposes may change over time, and we would like to avoid distributing what may eventually become out-dated or misleading information.

In practice, most independent agents and agencies like Griggs Capital Strategies will contract with two or three carriers (we call life insurance companies “carriers”) for access to products to design and provide to clients. You can understand why: developing expert product knowledge; nurturing relationships with New Business, Underwriting, Policy Services, and Executive staff and management in order to ensure top-rank client experience; and improving efficiency with company processes all requires incredible time and resources.

As in other aspects of the business, our exclusive approach to the IBC works well, given these facts. We focus on product knowledge, relationship development, and process mastery at the companies we identify as most amenable for IBC purposes, and leave it to other financial services businesses to develop their product knowledge, relationships, and processes according to the purposes of product acquisition in other aspects of finance: like property and casualty insurance, securities trading, tax and accounting, alternative investing, and so forth.

A policy loan collateralized by a participating whole life insurance policy is the most favorable credit instrument from the perspective of the borrower on the face of the planet. It is the only credit instrument where you’ll find that the lender and the guarantor of the value of the loan collateral to be the same entity (the life insurance company).

Literally all other lenders must account for the possibility of borrower default and the associated losses. They do so with loan use restrictions, invasive and lengthy application procedures, over-collateralization (requiring a collateral assignment to property that is of greater value than the loan principal), strict repayment schedules and penalties, administrative costs, high interest (especially on amortized loans), recurring audits, and more. Borrowers are conditioned to accept these practices, since in no other instance is the value of loan collateral guaranteed by the lender itself.

Technically, a policy loan is the name we give to the credit instrument available to policy owners with which they borrow money from the life insurance company. The loan collateral is the policy itself. The cash value of the policy determines the upper limit on the total policy loan indebtedness outstanding.

For (a lot) more information about policy loans and how they work, including policy loan interest, refer to lecture four on Non-Forfeiture Options & Policy Loans in the Whole Life Insurance Mechanics lecture series and chapter four on Policy Loans in Ryan’s book How to Buy Whole Life.

The cash value, or surrender value, of a whole life policy is the net present value of the guaranteed death benefit. The guaranteed death benefit consists of the Initial Death Benefit put in force through the policy owner’s on-going base premium payments, additional permanent death benefit purchased with past PUA rider premiums, and additional permanent death benefit purchased with PUA premium paid to the policy from past dividends.

Because cash value is the result of a present valuation calculation, it changes based on what happens to the future value in question, i.e. the guaranteed death benefit. That is, as time passes, as the policy owner pays base premium, as the policy owner pays PUA rider premium, and as non-guaranteed dividends return to the policy as PUA premium.

The passage of time shortens the duration involved in the present valuation (i.e. cash value grows with interest); base premium payments reduce the outstanding cost associated with the future cash flow (i.e. reduces the “net” drag on the present valuation); and PUA premium—from the policy owner’s own pocket and from dividends—increases the amount of permanent death benefit (i.e. increases the magnitude of the future value). All four of these elements cause cash value to rise.

For (a lot) more information on the relationship between cash value and death benefit, refer to lecture two on Policy Infrastructure in the Whole Life Insurance Mechanics lecture series and to chapter one of Ryan’s book How to Buy Whole Life.

Not that we know of.

First, a whole life insurance illustration consists of definitions of policy features, required disclosures (including whether the policy, as illustrated, is or will become a Modified Endowment Contract), a breakdown of where premium dollars go within a given policy year, and a depiction of future policy values—including cash values, death benefits, and dividends—from the first year of the policy through the insured’s age 121.

Life insurance companies license their illustration software to their agents. We expect that in the majority of cases, individual life insurance agents do not generate their own life insurance illustrations, but instead leave it to the agency’s back office, or, more likely, to the staff at the  Home Office (i.e. headquarters) of a life insurance company. This is based on seven years’ interaction with outside agents and life insurance company staff.

Life insurance companies and their regulators are very strict about the use and distribution of illustrations. The National Association of Insurance Commissioners (NAIC), a Washington DC-based lobbying group run by various state insurance commissioners, develops model regulation for individual state legislatures to adopt in order to promote uniformity around life insurance regulation. NAIC has a model regulation specifically addressing the use and abuse of life insurance illustrations. You can read it here.

Illustrations are used as a blunt sales instrument in high-volume sales practices. Non-agent advocates of whole life insurance promote the idea that what the consumer should do is contact multiple sales agencies to get illustration “quotes” and compare them. This assumes, of course, that the individual is cognizant of the contractual differences in the policy terms and conditions and rider language and familiar with the assumptions one must make in order to generate an illustration in the first place.

In our view, this contributes to an inherently combative—and unnecessary—relationship between the agents and the client. That said, we understand and encourage that members of the public need to do their research to properly evaluate agents and agencies with which they may work in order to acquire life insurance. To facilitate this, our approach at Griggs Capital Strategies is to provide a mountain of low- and no-cost educational material in order to better equip the public to competently and confidently engage with an agent.

Maybe.

In the vast majority of cases, the party that should own a whole life policy built for the IBC is the individual in his or her personal capacity.

We find that there are often two motivations for considering non-personal policy ownership: the desire to pay premiums with pre-tax dollars, and creditor and/or litigation protection. In almost all cases, premiums on whole life insurance policies are not deductible as a business expense (business owners may be familiar with the deductibility of premiums on group term policies). Exceptions include premiums paid to whole life policies held in a tax-qualified Cash Balance plan.

As to creditor and litigation protection, whole life insurance enjoys significant protection by individual state statute. To determine to what degree your state protects the value of your life insurance, you want to search online for your state’s bankruptcy and insurance code or statutes.

For instance, the Texas Insurance Code § 1108.051 states that “benefits, including the cash value and proceeds of an insurance policy” are “fully exempt from garnishment, attachment, execution, or other seizure; seizure, appropriation, or application by any legal or equitable process or by operation of law to pay a debt or other liability of an insured or of a beneficiary, either before or after the benefits are provided; and a demand in bankruptcy proceeding of the insured or beneficiary.”

That is, many of the protections one might seek under normal asset-protection perspectives are already included by state law, and possibly in very strong terms.

There can be situations where trust ownership is appropriate.

For instance, in the event no other competent person is available, an Irrevocable Life Insurance Trust (ILIT) may be the appropriate ownership vehicle in order to accommodate estate tax concerns. This is because the value of death benefit payable under the terms of a life insurance policy where the decedent is both other and insured is counted for estate tax calculation purposes. An ILIT serves the purpose of removing the decedent as policy owner. Even then, the value of one’s estate that is exempt from estate tax is quite high under current law: $13,610,000 in 2024 and $13,990,000 in 2025. This could mean that an ILIT is an appropriate tool in the future.

There are other situations where trust ownership can be appropriate. Griggs Capital Strategies invites individuals in the process of becoming a client to discuss trust, or other entity ownership, if you have questions about whether this would be appropriate for you.

Where trusts often do come into play is as the beneficiary designee. Trusts can be an excellent intergenerational planning tool, especially if the ultimate beneficiary of your life insurance are your children who happen to be, and will continue for a long time to be, minors.

Griggs Capital Strategies is not and does not give legal or tax advice. This information, and all information on this site, is provided for informational purposes only. Always contact a licensed and qualified attorney for legal advice and licensed and qualified accountant for tax advice.

Strictly speaking, no.

If declared in the current calendar year, a dividend will be paid at the conclusion of the individual policy year (the policy year starts and ends on the date that the policy was authorized for issue). Therefore, it would be impractical if the amount of PUA rider premium were regulated by the amount of PUA premium paid to the policy from dividends. We would have to somehow retroactively determine how much PUA rider premium was payable during the preceding policy year based on the dividend amount allocated to PUA premium at the end of the policy year.

No, strictly speaking, dividends return to the policy as PUA premium through their own distinct channel, separate and apart from PUA rider premiums. In that sense, PUA premium from dividends is “extra” PUA premium over and above the amount of PUA rider premium paid by the policy owner throughout the year.

Why do we keep saying “strictly speaking?” Well, you can imagine a situation where the dividend paid on a policy is greater than the amount of dividend originally illustrated when the policy first went in force (e.g. if interest rates throughout the economy rise significantly in the future). Given what happened in 2022-2023, this is certainly within the realm of possibility. If something like this were to occur (again), and if companies paid dividends commensurate with this spike in interest rates, the amount of dividends paid on the policy could be significantly greater than the amount originally assumed when the policy first went in force.

This would result in more than expected PUA premium from dividends relative to what was originally assumed. This unexpected increase in PUA premium from dividends could generate sufficient cash value such that continued, maximum PUA rider premium payment could, on its own, cause the total cash value to get too close to the death benefit and thereby cause the policy to become a Modified Endowment Contract (MEC). Since triggering MEC-status is highly unfavorable in the vast majority of cases, disproportionately high dividends in one policy year may mean that the policy owner could trigger MEC status if insisted on paying maximum PUA premium in the following policy year.

Therefore, while the amount of PUA from dividends does not inherently affect the PUA premium payable under the terms of a PUA rider, it may indirectly affect the desired amount of out-of-pocket PUA premium payment.

We recommend choosing an agent or agency with a reputation for strong on-going client support, like Griggs Capital Strategies, with which to implement IBC to help you manage your PUA rider premiums and retain your preferable, non-MEC tax status in the event something like this were to occur.

A Modified Endowment Contract—the abbreviation for which is MEC and the pronunciation for which is ‘meck’—is a permanent life insurance policy with unfavorable tax treatment. The source of this term is the 1988 Miscellaneous and Technical Revenue Act (TAMRA), which was shaped largely by the US Senate Subcommittee on Taxation and Debt Management. The legislation set forth rules that would cause some permanent life insurance policies to be treated differently from a tax perspective than they otherwise would. A March 25, 1988 hearing on the subject is available on C-SPAN here.

The consequences of “MEC-status” for a whole life insurance policy can be severe. For MECs, once cash value exceeds the cost basis (the cumulative premium paid since the contract first went in force), all distributions concerning the policy during the life of the insured become income taxable, and also trigger additional IRS penalties if taken before age 59.5 (as of this writing). This includes policy loans, dividends taken as cash, and partial surrenders. The only aspect of a MEC whole life insurance policy that does not become income taxable is the death benefit payable to beneficiaries. For specific references to the IRS Code, see chapter two on Modified Endowment Contracts in Ryan’s book How to Buy Whole Life.

In brief, what the government wanted to disincentivize through tax policy was disproportionate accumulation of cash value, relative to death benefit. The technical mechanism they used to articulate this desire is called the “7-pay test.” The rule says that if the permanent death benefit on a policy can be fully paid for (i.e. “paid-up”) in seven policy years, then the policy is a MEC. How the number of years within which one may or may not be able to fully pay for the permanent death benefit affects the pace of cash value growth is not well understood in online marketing pertaining to whole life insurance online.

To understand this, one needs to reflect on the relationship between installment payments and value generation. The essence of it is that the faster you fully pay for something, the faster you generate value. A television paid for in full at the time of purchase has high, immediate value: you could return to the store the following day and get a “full refund” for your purchase. In contrast, if you pay for a television with installments, the refund available on the day after you initiate the installment plan would be limited by the amount you already paid as opposed to the full market price of the television. The longer you take to pay for something, the slower you generate value in that thing.

With a base whole life insurance policy, “the product” is the fixed, guaranteed death benefit. How fast you pay for it is the number of policy years over which base premiums are payable. The shorter the number of policy years over which base premium is payable, the faster you generate cash value in the policy. A traditional whole life insurance policy only becomes “paid-up,” which is to say base premiums (installment payments) are no longer expected, after many years, e.g. the insured’s age 100 or 121. This is many more years than the seven specified under the 7-pay test. The selection of seven years under TAMRA was more or less arbitrary: as you’d see in the C-SPAN video linked above, various industry participants suggested different numbers of years like five or 10.

In practice, a good way to think of a MEC is as a whole life policy where cash value rises too quickly relative to the total death benefit. That is what the government wanted to disincentivize: cash value growth that is too rapid, but “too rapid” compared to what? Compared to the death benefit. The idea was that whole life policies that were “excessively” oriented to cash value growth were not “really” meeting the need for death benefit; they were being purchased for “investment purposes” and so should be taxed accordingly.

The prototypical example, according to the state, was a Single Premium whole life policy, or SP whole life, which is exactly what it sounds like: a whole life policy where only one base premium payment (or one base premium payment collected throughout the first policy year) fully paid for the base death benefit. SP whole life fails the 7-pay test by definition: the policy owner pays for the Initial Death Benefit too quickly (in one policy year) and thereby generates too much (traditionally tax-favored) value too quickly.

Critics of MECs at the time criticized this legislative intrusion as punishing the most efficient form of permanent death benefit acquisition. MEC rules effectively force those who want to purchase permanent death benefit to do so in the most inefficient way: slowly over time. A more jaded view would suggest that the state, in conjunction with colluding business interests who regarded the whole life business as “unfair” competition, wanted to stop individuals from efficiently generating capital under their own contractual control, but this would be speculation.

Today, MEC rules inform much of IBC-style “policy design” including the structuring of the total annual premium outlay across different constituent elements (e.g. the base policy, the PUA rider, and possibly the term rider) and the structure of the policy itself (i.e. the selection of the base premium payment period and the type of term rider).

A major segment of online marketing, likely the majority, accentuates MEC-avoidance and maximum cash value growth in especially the very early years. This approach typically results in what we’ve called the Anti-Base Premium policy design where base premium is pressed as close to zero as the carrier will allow and with the annually-renewing term rider type. Griggs Capital Strategies does not take this approach.

In conformity with Nelson’s rules to Don’t Be Afraid to Capitalize and to Think Long Range, we prefer an approach that remains cognizant of the possibility of a late-life, unexpected MEC trigger and simultaneously provides for long-term, maximum on-going PUA premium payment in order to generate maximum lifetime cash value and death benefit. This approach suggests a more substantial base premium as a percentage of the total annual premium outlay, and long-dated level term riders. A great benefit to this approach is magnification and nurturing of the compounding effect in the exponential growth of dividends and cash values.

For an illustrative contrast on these two approaches, refer to lecture six on Case Studies of the Whole Life Insurance Mechanics series. For further detail on the subject of MECs, we recommend chapter two of How to Buy Whole Life, mentioned above, and lecture three on Modified Endowment Contracts & Term Riders of the Whole Life Insurance Mechanics series.

Articulating precisely what the IBC is has alluded and frustrated members of the public, life insurance company home office staff, and life insurance agents alike ever since Nelson wrote his book Becoming Your Own Banker. Consequently, you’ll encounter many different definitions—or more likely, approximations of definitions and metaphorical allusions—depending on who you ask.

At the core of Griggs Capital Strategies educational value proposition—the lesson we think we’re uniquely positioned to teach and help people implement—is the idea that the IBC is a capitalization strategy.

Ryan first presented this view at the 2019 Nelson Nash Institute annual Think Tank—the last that Nelson would attend (he passed away in March of that year)—in a talk entitled Why Nelson is an Heir to Menger—Reviving Austrian Capital Theory. You can think of a capitalization strategy as the opposite of an investment strategy. Whereas the structure of an investment strategy consists of various proposals to temporarily forfeit access to and control over capital (we send monetary value to others on the expectation of an eventual return or series of returns), the structure of a capitalization strategy consists of proposals to instantiate, maintain, strengthen, and grow control over and access to capital.

Economically speaking, that’s what IBC is: a proposal for how to optimize the individual’s access to and control over capital, and why that would be a good idea. As with anything, a fuller understanding of the content of the IBC will help you understand what it is. The IBC teaches that the locus of control over capital should be situated at the individual level. It teaches that the individual should be situated in the flow of credit as an owner; he should benefit financially from the performance of the loan origination and repayment process. It teaches that capital should be profitably accumulated at the individual level in an ultra-safe and predictable manner.

The most neglected and least understood aspect of the IBC is the relationship between capital and (investment and entrepreneurial) activity. We are awash in Other People’s Money propaganda—one of the greatest feats of Stockholm Syndrome style marketing ever imagined. Entrenched financial interests created a slogan, accepted on the level of religious doctrine, that engenders a mythological level of demand for the products and services provided by major, international financial corporations.

The IBC teaches the opposite: that the most sustainable, profitable, peaceful economic path is paved by reclaiming responsibility to build one’s own capital base.

In technical terms, the quantity and quality of the individual’s capital transforms the economic landscape as he understands it. Ludwig von Mises taught that there are three fundamental requirements for action: dissatisfaction with the status quo (i.e. “felt uneasiness”), an image of a better way, and belief that the individual's intervention can make the better way the reality. In the context of an advanced monetary economy, the basic tool available to individuals to bring about a better way is money. To unlock a growing amount of accessible money, one must acquire property that increases in value over time (accumulated money per se is eventually spent, defeating the strategic goal of increasing it). The monetary value of property is called capital, and the particular property suggested by the IBC as ideal for capitalization purposes is called dividend-paying whole life insurance.

Put differently, the more capital one has available, and the more favorable his control over and access to it, the wider the scope of circumstances in which his intervention may yield superior results. The more money you can get to, the greater the set of “opportunities” that “appear” (opportunities do not exist; there are merely circumstances that we implicitly or explicitly judge as more or less opportune to our intervention).

If the IBC were a mere “sales system,” as many industry players and online marketers understand it, it’s about the most difficult one you could imagine. All you have to do is completely transform the framework and content, much of which is obscure and implicit, of how you understand economics and personal finance. But of course, this is why there are so many attempts to tweak, dilute, and rebrand the IBC. These strawman stand-ins are the true “sales systems.”

This already too lengthy explanation will have to suffice for now.

Robert Nelson Nash (1931-2019) was a Christian, Austrian economist, family man, forester, aviator, and creator of the Infinite Banking Concept. He authored two books: Becoming Your Own Banker—Unlocking the Infinite Banking Concept (2000) and Building Your Warehouse of Wealth: A Grassroots Method of Avoiding Fractional Reserve Banking—Think About It!. He was a titan in the life insurance business with a career spanning over three decades from the 60s to the 90s. He was a key supporter of Foundation for Economic Education and the Ludwig von Mises Institute, receiving the Blinking Lights lifetime achievement award from the former in 2018. He is the inspiration behind the Nelson Nash Institute, presently led by his son-in-law David Stearns, headquartered in Birmingham, AL.

Nelson was a mentor, teacher, and confidant to many in and around the life insurance business.

Of course, the reason he comes up so often is his intellectual legacy. Nelson first laid out his understanding—in writing—of what he would call the Infinite Banking Concept (IBC) in his first book. But for years prior to the book’s publication, and for years after, Nelson was known for his “two-day, ten-hour” seminars held from a Friday evening through the following Saturday afternoon. Becoming Your Own Banker was the text for these seminars. An abridged video and audio recording of Nelson’s seminar is available on infinitebanking.org. A full audio recording of the seminar is available at griggscapitalstrategies.com.

What we especially admire about Nelson is the fact that he had a vision that he communicated the way he saw fit, without reliance on conventional validation or approval. Nelson’s writing has been criticized as insufficiently technical—too “hokey” for instance—all by highly-credentialed individuals whose level of impact does not register by comparison. Nelson’s work is a vibrant force of creativity and originality that is also good in an industry where these forces typically marshal to the detriment of the individual.

His educational insights for the individual integrate deeply in the subjectivist Austrian-American school of economic thought, specifically with respect to capital theory, and improve and build upon it. Great economists like Carl Menger and Frank Fetter understood capital as the monetary value of property, but restricted it unnecessarily to the commercial domain of life. Nelson saw that the monetary concept of capital extended beyond artificially circumscribed “commercial” life, permeating all aspects of the individual’s economic experience. Even further, he hinted—at least in two places in writing, and often in person—at the relationship between capital and (the perception of) opportunity for greater financial gain.

Nelson’s 5 Rules are as follows:

#1 Don’t be Afraid to Capitalize
#2 Think Long Range
#3 Be an Honest Banker
#4 Don’t Steal the Peas
#5 Rethink Your Thinking

These rules serve many purposes, but a significant one is to distinguish the IBC from what we might call “creative life insurance design.” These are guidelines for how one can productively, wisely structure his thoughts around personal economic strategy. They are as much a part of what the IBC is as any approach to the design of a whole life policy.

Don’t be Afraid to Capitalize is an admonition to embrace the illiquidity that comes with starting a new “IBC-style” whole life policy. This illiquidity is much less than that which comes with starting a formally chartered bank, and the resulting infrastructure will serve you and your family profitably and peacefully for years, maybe even generations.

Think Long Range emphasizes the power of what economists will call low time preference thinking, which means to place relatively greater weight on the satisfaction of preferences further into the future. This is another way of stressing the value of foregone gratification, in this case, with respect to financial matters. The long-term view opens the door to the possibility of decades of compounding growth.

Be an Honest Banker means to pay premium in genuine accordance with one income generation. If you make more, spend less, or otherwise find cash accumulating in someone else’s bank, this may be an indication of “expansion time” (to get more life insurance) so you can pay more premium. An honest banker seeks no shortcuts, embraces the limited opportunity to pay premium, and is willing to “pay his dues” to build a peaceful, profitable economic lifestyle.

Don’t Steal the Peas means to repay policy loans. In Becoming Your Own Banker Nelson gives a business example of a grocery store and refers to a particular inventory item: a can of peas. One purpose of the example is to illustrate the hidden cost of theft. What’s lost through theft is not mere nominal value, but all of the time, effort, and resources required to replace what’s been stolen. In life insurance, failure to repay loans creates a compounding loan indebtedness which may eventually eclipse the policy’s cash value, cause it to lapse, and generate possible tax consequences.

Rethink Your Thinking is the most recent addition to the list. It highlights the importance of consistently reflecting on the validity and wisdom of one’s own thought process as the key to the generation (or revelation) of new knowledge. This contrasts with the contemporary view, which suggests that valuable knowledge is to be found “out there,” external to the individual, implying that one has already “arrived” in self-knowledge.

It depends.

This terminology, and variants of it (“banking-style” policy, “banking policy,” etc.) is typically loaded with the user’s own preconceptions about “the best” way to design a whole life insurance policy in terms of its structural elements (e.g. with a PUA rider and/or term rider) or in terms of the allocation of premium dollars across the constituent elements of a policy relative to the total annual outlay (e.g. “40-60” might refer to 40% of total annual premium outlay allocated to base premium and 60% allocated to PUA rider premium). The listener/reader must be attuned to the user’s context whenever terminology like this is employed.

In general, an “IBC-style” policy will most often refer to a dividend-paying whole life insurance policy where at least half of the total premium outlay is allocated to the PUA rider. The policy may or may not have a term rider, and if it does, the term rider type is often not specified.

There are tradeoffs with this sort of terminology. One unfavorable tradeoff is the implication that a “base-only” policy, where there may be no PUA rider or term rider at all, is necessarily not a “banking”-type policy. This is unfortunate. Some base whole life policies with low internal base rates (under a legislative change that took effect with the passing of the Consolidated Appropriations Act passed in 2021 and that took effect for the life insurance industry in 2022) from certain companies feature unexpectedly strong (non-guaranteed) dividends and, therefore, relatively high early cash value growth. With a long payment horizon like on traditional whole life, and without PUA and term riders, the policy owner will not be forced for tax reasons to reduce premium payments (i.e. PUA rider premiums) later in life; consequently, these policies can accept greater premiums over the life of the policy and will illustrate with greater long-term cash values and death benefits.

Therefore, in a broader sense, an “IBC-style policy” is really just a dividend-paying whole life policy from a company that is more or less carefully selected and where the policy and premium design are configured so as to accentuate cash value growth.

Economically speaking, the “banking function” means the origination of credit, the collection of principal repayment, and the collection of interest payments. The “banking function” in the language of the IBC does not refer to other functions performed by commercial banks and credit unions, like the provision of checkable and time-restricted accounts (e.g. checking accounts, savings accounts, and Certificates of Deposit).

To “control” this function means to possess the contractual right to cause money to be lent, and to determine when loans (and loan interest) are repaid. To “own” this function means to receive payment from the profit (or surplus) generated from the performance of it.

A policy owner of dividend-paying whole life “owns and controls the banking function” because he has the contractual authority to borrow against the policy when he wants, to use for what he wants, and to repay if and when he wants (that’s control), and he receives remuneration through the receipt of a dividend payment, the source of which is the surplus generated from the performance of borrowing and repaying loans (that’s ownership).

As in all things, you should first go right to the source and read Nelson Nash’s Becoming Your Own Banker—Unlocking the Infinite Banking Concept (the physical, paperback, fifth edition) and his Building Your Warehouse of Wealth. There is a reading list at the back of Becoming Your Own Banker for further study on topics such as economics, individual liberty, and history. All Griggs Capital Strategies clients are required to at least read Nelson’s first book.

In 2022, Ryan published the Whole Life Insurance Mechanics lecture series on YouTube. As far as we know, it’s the only publicly-available, literally-free online media resource dedicated to exploring the mechanics of a whole life insurance policy and specifically, the philosophy that might guide its design. We’ve heard from several clients that this series has been well-received on social media sites like Reddit and Facebook—all of which is unsolicited.

In 2024, Ryan published How to Buy Whole Life: A Framework for Becoming Your Own Banker, which offers a systematic treatment on the features of whole life insurance, the thought-process behind policy design, and an overview of what it’s like to work with an agent. It’s written for the individual whose read Nelson’s books, wants to implement the IBC, and is seeking more rigor and clarity on exactly how—and why—that works.

James Neathery and Ryan Griggs have cohosted over 100 episodes of the Banking with Life podcast. We maintain an updated YouTube playlist on the main site, up above. Started in 2019, BWL is the longest-running podcast focused on the IBC on the internet. It features loosely-structured, unscripted, in-depth conversation on all aspects of IBC including policy management, interaction with an agent, life insurance companies, policy design, contemporary business practices, and much, much more.

Naturally, we recommend these resources. There are many more. Ryan provides a list of recommended resources for initial and continuing IBC, personal financial, and economic education to all new clients.

No.

One of the biggest misunderstandings online—fueled by clickbait style marketing—is that everyone who uses the letters I, B, and C altogether all do the same thing. This is not the case.

At a very low level of resolution, you can understand where this idea comes from. Most who talk online about “IBC” do refer, at least, to one or more dividend-paying whole life insurance policies with a PUA rider. Even then, there are some who refer to IBC, but profess to “do it better” with things like Universal Life insurance (which Nelson resoundingly, and correctly condemns for IBC purposes in his second book).

This is where the similarities end.

Here is a partial list of things that “IBC Practitioner” agents may disagree over or vary on:

• Company selection

• Traditional long-term pay policies vs. Limited Pay policies

• Premium structure

• Direct vs. non-direct recognition

• Flexibility in PUA rider terms and conditions

• Whether any further nuance beyond “participating whole life insurance and PUA rider” even matters in the first place

• Degree of access/interaction with the primary/principal advisor (i.e. “the guy”—or gal—you see in the marketing material)

• Degree of on-going client support after the initial policy sale

• Educational density of pre-application strategy sessions

• Marketing styles

• Communication reliability

• Non-insurance financial expertise

• Company-specific product and process expertise

• Application and underwriting management expertise

• Experience

• Adherence to Nelson’s original work

• Long- vs. short-term orientation

• Economic expertise

• Integration of economic expertise with strategic financial perspective

• The value of economic expertise and its integration with a strategic financial perspective

The only way to know if a policy is “properly” built “for the IBC” for your circumstances is in direct one-on-one conversation with an advisor.

To many, this will be an unsatisfactory answer. We’re looking to check boxes. We want to know if “the structure” or “the design” or “the company” is “right.” Since whole life insurance as an asset class and the way in which the IBC proposes that we integrate it into our broader financial and economic strategy so anathema—such a distinct contrast—to the conventional financial paradigm, we naturally look for discrete, observable, even quantifiable characteristics that we can more easily apprehend and compare.

Ryan likes to say that Wall Street has run one of the greatest propaganda campaigns of all time with wild success. That is: the promotion of the usually implicit myth that all financial analysis involves is the comparison of the magnitude of two different numbers. If you can tell the difference, e.g. between 5 and 3 or 40-60 and 10-90, then bam! you’ve done your due diligence.

This approach is intoxicating and seductive—in more ways than one. The numerical expression is deeply attractive to our very modern, technological age. But it also invites an obsessiveness and irrationality common to intoxication and seduction. Our attention quietly drifts away from other, less bluntly obvious nuances, like the effect of company selection, premium structure, and policy structure on the long-term contractual rights and growth dynamics of policy values.

So, to know whether a policy is well-engineered for IBC purposes for your circumstances requires knowing something about you.

Is flexibility in the PUA rider important to you? Are you more interested in long-term or short-term policy value growth dynamics? How MEC-resilient do you want your policy to be? What do you think of renting death benefit with term riders? How old are you? How do you feel about dividend reductions in the event that you run policy loan indebtedness at the end of your policy year? Are you interested in securing future system expansion with convertible term? If so, what degree of freedom do you want in the design of the as-yet-to-be converted term policy?

This is just a small sampling of questions, the answers to which are required in conjunction with an analysis of the policy you may own or for which you are considering applying before a proper, professional opinion on the “IBC-quality” of this or that policy can be rendered.

The Nelson Nash Institute (NNI) is a digital educational organization operated out of Birmingham, AL by David Stearns, Nelson Nash’s son-in-law. The NNI website is infinitebanking.org.

The NNI maintains a web store where you can purchase Nelson’s books, books by some IBC practitioners, the Banking with Life documentary DVD, a condensed video recording of Nelson’s seminar from 2018, and more.

Members of the financial industry may enroll in the “Authorized IBC Practitioner” program by successfully interviewing, completing coursework, passing an exam, and paying initial and recurring dues to the NNI. Members of the public who may want to familiarize themselves with the program details can access the IBC Practitioner FAQ here.

The NNI hosts an annual conference—called the Think Tank—for IBC Practitioners. Ryan’s IBC Practitioner profile is here and his past talks at IBC Think Tanks may be found here.

“Austrian Economics” or the “Austrian School of Economics” or the “Austrian School of Austrian Economic Thought” all refers to the same thing: it is a body of economic ideas that share a certain coherence.

There are various “schools” or groupings of economic ideas, of which the “Austrian” is just one. The school is so named because the original proponents of the ideas were literally from the country of Austria—people like Carl Menger, Eugen von Bohm-Bawerk, and Ludwig von Mises. “Austrian economics” has nothing to do with the economy of the country of Austria in particular.

What makes Austrian economics different from other schools of economic thought like the classical school, neoclassical school, Keynesian school, Chicago or Monetarist school, and others is the emphasis on methodological individualism and subjectivism. This means that economists working from “the Austrian perspective” anchor their analysis from the viewpoint of the individual—rather than some collective like the state or society—and in so doing acknowledge that the basis of human action—that is, how we make choices and behave—is subjective. By subjective we mean that individuals choose for themselves, with all sorts of motivations and purposes, rather than according to some external, interpersonally-identifiable, objective standard.

The intellectual headquarters for the Austrian school of economics is the Ludwig von Mises Institute in Auburn, AL, known best for its website mises.org.

“Austrian economists” or economists who specialize in this tradition may be found among the professoriate at traditional colleges and universities, at various non-profit organizations, and occasionally, although perhaps less frequently, in business and finance.

The Austrian school is best and most precisely distinguished by its methodology, or the logic motivating its particular method of analysis. The best resource for exploring Austrian methodology is Hans Hermann-Hoppe’s Economic Science and the Austrian Method available for free on mises.org.

However, “the” Austrian school is not a monolith. Many thinkers who claim the label or choose to associate in some manner with the Austrian school disagree with one another. Still others who bear some affinity for individualism as a social scientific perspective choose not to identify with the Austrian school.

The Austrian school per se is “value-free” meaning that it explores the implications of various hypothetical or historical events. The chain of reasoning of which Austrian economics consist does not inherently suggest which action one should or should not take. It is better understood as a conceptual exploration of the consequences of various potential or historical actions, not an endorsement or rejection of them.

Nelson Nash proudly identified as an Austrian economist and would frequently tell his seminar participants about his personal mentorship under Leonard Read, founder of the Foundation for Economic Education, that lasted over 40 years. He would tell you that “the IBC is Austrian Economics in action” or that “IBC is Austrian Economics at the you-and-me level.”

In technical terms, the IBC is a personal financial strategy grounded in and cohering with the broader (or deeper) Austrian economic perspective. But how so?

One of the principal theoretical achievements of the Austrian school is called “Austrian business cycle theory.” This is a causal explanation of economic booms and busts rooted in money and banking. The broad stroke-style idea is that disproportionate increases in asset prices or prices of production goods (as opposed to prices of consumer goods) is the result of an expansion of the money supply, which consists of perfect substitutes for base money (like checking account balances), by central and commercial banks. The acute decrease in asset prices—or the “bust” or the recession or the depression—is the result of either disinflation (reduction in the rate of growth of the money supply) or deflation (absolute reduction in the money supply).

Austrians identify the culprits behind this process as commercial and central banks, which have the legal right to “create money out of thin air” (we would call this counterfeiting in other contexts) and, likewise, to withdraw “it” (money, and perfect money substitutes) from circulation.

In contrast, life insurance companies cannot inflate or deflate the money supply, because life insurance companies cannot create checkable accounts in the way commercial and central banks can. Life insurance companies can only lend money that they previously received through voluntary exchange. In this sense, “taking over ownership and control of the banking function” through IBC constitutes “opting out” or “seceding” from the conventional monetary system, insofar as we redirect our credit activities away from the inflationary commercial banking system over to the non-inflationary life insurance sector. This is one sense in which the IBC as a personal financial strategy “integrates with” the Austrian school of economics, or at least, one of its main theoretical contributions.

Ryan emphasizes another relationship between IBC and Austrian economics, specifically having to do with capital. The founder of the Austrian school Carl Menger wrote a short treatise on capital in 1888 where he makes the case for a monetary understanding of capital. Frank Fetter, an American economist considered by some to be “Austrian” in his theoretical approach and by others to be at least very friendly to it, expounded upon this idea throughout his career. The view expressed by Menger and Fetter fits hand in glove with the understanding of capital found in Nelson’s books.

But the affinity is deeper. In a few places throughout Nelson’s books, he mentions the idea that “capital attracts opportunity.” As he puts it, “if you have access to a large pool of money, opportunity will hunt you down.” There is social scientific depth in this pithy construction. Capital as accessible monetary value is essentially a proxy for purchasing power. We talk often about the “purchasing power of the money,” but rarely about the purchasing power of the individual. It should be obvious that the more money one can get to, or more precisely, the greater the accessible monetary value of property under the individual’s ownership and control, the greater his power to purchase, or purchasing power, in the literal sense.

Combine this with the insight from Austrian economist Peter Klein that there is no such thing as opportunity in the external, objective sense. “Opportunity” is the label we use to quickly convey the judgement that a set of circumstances appears to be amenable to our intervention, such that, through our intervention in those circumstances, we could create a preferable, improved state of affairs. Mises wrote that one of the three requirements for human action was a belief in his or her ability to bring the vision of an improved state of affairs into reality. The greater in quantity, and the superior in quality, one’s capital, the stronger one’s belief in his or her capacity to bring the improved state of affairs about. In fact, it may even be the case that sets of circumstances (opportunities) that when under-capitalized never even crossed the individual’s radar, suddenly (or not so suddenly) do with sufficient capital under one’s control.

That is, it could be that a prerequisite to the best individual investment (or entrepreneurial) strategy is a sound capitalization strategy—or a successfully implemented strategy to accumulate accessible monetary value. The implications of this chain of reasoning are extreme, not least of which is the idea that the conventional American proposal to rapidly divorce oneself from control over and access to his or her capital—in order to send it off to the financial “experts”—and in so doing decapitalize may be the opposite of the most propitious financial strategy. This, in addition to dramatically expensive dependency on conventional lenders for one’s own routine credit needs, as Nelson argues in Becoming Your Own Banker.

These are just two ways in which Austrian economics integrates with the IBC.

No.

Austrian economics is “value-free,” meaning, in part, it won’t tell you what you should or shouldn’t do. It’s the same with, for instance, human bio-physiology. An understanding of how and why the human body works the way it does will not, on its own, tell you precisely how you should manage your physical condition.

However, it should be obvious that without understanding how the human body works, one will be groping around in the proverbial dark when trying to maximize longevity and (physical) quality of life. The same goes for economics. How people might hope to manage their own personal financial and economic condition without understanding, to some sufficient degree of clarity, much less how to maximize success in those domains without knowing something about how economics works is as mysterious as trying to optimize physical health without knowing something about human biology.

In the context of exploring your options for an agent with whom to implement the IBC, it might be a good idea to work with someone who has some sort of economic grounding so that the individual, personal proposals are properly circumscribed by and account for economic reality. Ultimately what you should do with your money is going to be a product of your own reasoning. We just suggest that that reasoning be informed by economics.

For instance, it may not be such a good idea—as so many financial entertainers online like to suggest—that you immediately and completely leverage your policies, run policy loan balances with only a shadow of an idea about possible future loan repayment right on the eve of a yield curve reversion and money supply tightening cycle.

This is where the “should” part comes in. Austrian economics on its own won’t tell you what you should do, and in fact, you probably shouldn’t be looking for any one or anything to tell you what you should do (as this is just another form of dependency). But an economic perspective, integrated with product and industry expertise, combined with a high resolution understanding of your own financial circumstances, may produce the most realistic, nuanced, coherent map of possibilities, from which you can draw and make informed, strategic decisions. That is how what you “should” do comes about.

The value of learning Austrian Economics will depend on your perspective. Some will have endured some form of “economics” education in high school, college, or graduate school and will remember being annoyed at how unrelatable it seemed with so many mathematical formulas and abstractions. Others may be interested in history and want to more about what really happened, for instance, during the Great Depression or the Great Recession. Still others may be intrigued by the idea of a system of logically interconnected, necessarily true propositions (or theoretical “laws”) that govern human behavior.

Austrian economics can fulfill all of these interests. What originally attracted Ryan to the Austrian school is what’s called the “methodology” behind it. Rather than thinking of human behaviour in terms of heavily stylized, abstract mathematical equations, Austrian theories are grounded in the nature of human beings. Austrians will start their explanations with basic facts, like how humans act, that we act in time, that action in time applies choice of ends, that we care about the means we use to achieve our ends based on how highly we value those ends, and so on. This contrasts with typical “neoclassical” approaches where we talk about economic “agents” with “perfect knowledge” about the future where all goods available for purchase are the same, and so on.

For a hint at how Austrian economics can help you understand history, we recommend Murray Rothbard’s America’s Great Depression. For a short work that clarifies the methodological difference in Austrian economics versus other approaches, see Hans Hoppe’s Economic Science and the Austrian Method. For Austrian-based insight into how the contemporary money and banking systems work, consider Robert Murphy’s Understanding Money Mechanics and Murray Rothbard’s What Has Government Done to Our Money.

Conventional Austrian Capital Theory regards capital as the reproducible, heterogeneous productive factors or the produced means of production. This is primarily relevant in a macroeconomic context, where Austrian economists will suggest that the stuff we use to make other stuff (i.e. productive factors) are “heterogeneous” in that they consist of units of things that are not perfectly substitutable with units of other things.

This view stands in contrast to contemporary views that model productive factors as homogenous, or that all consist of perfectly interchangeable units (e.g. kilowatts of electricity that are interchangeable for acres of land — yes, I know that sounds weird.)

This is not the view that the founder of the Austrian School of economics Carl Menger, or one of the leading American economists of the 1900s Frank Fetter had about capital. Their view falls more closely in line with how Ryan would define capital as the “money value of property.” This is the monetary, or abstract, or financial, or calculational theory of capital.

For a full theoretical and historical definition of capital, see Frank Fetter’s entry in the Encyclopedia of Social Sciences, reprinted on page 143 of this collection.

For Carl Menger’s view, as more fully expounded in his 1888 essay, see Professor Eduard Braun’s article Carl Menger’s Contribution to Capital Theory.

For the purposes of personal finance, the monetary view of capital is much more important. In fact, personal finance may regarded as the strategic approach to capital accumulation and deployment. In other words, it’s all about how we build up and establish access to capital. The best known subcategory of personal financial planning—so-called “retirement planning”—is all about how to provide capital at a certain time in life and for a particular purpose. But there are other needs for capital too, like to pay for cars, take trips, start businesses, buy homes, and so on.

Ryan describes Nelson’s Becoming Your Own Banker as “applied Austrian capital theory” in the literal sense. It’s literally a book about how to best accumulate and deploy capital in the course of your life. Taking over “ownership and control of the ‘banking’ function” is to accumulate and deploy capital in the most optimal fashion from the individual’s perspective.

Ryan explains this claim in greater detail in his 2019 talk at the Nelson Nash Institute in a talk entitled Why Nelson is an Heir to Menger.

As far as we can tell, the IBC is the only “capitalization” strategy out there among a veritable ocean of different “investment” strategies. We note that virtually never does a conventional “investment” strategy address the dramatic and recurring costs associated with accessing capital through conventional sources like banks.

No. To do IBC, the only requirement is to read Nelson’s book Becoming Your Own Banker (and, of course, to acquire appropriately-designed, participating whole life insurance).

But Nelson Nash would have told you, and often did near the start of all of his seminars, about how he himself was an Austrian economist. He liked to tell his students about how he’d fly Leonard Reed, founder of the Foundation for Economic Education (FEE), down from New York to visit with Nelson’s clients in Birmingham, AL.

The connections between Austrian economics and the IBC are too many to name here. But one of the most important has to do with the Austrian diagnosis of the business cycle, and this may be relevant to those who are interested in IBC, but not so interested in Austrian economics.

Austrians in the tradition of Ludwig von Mises and Murray Rothbard argue that central and commercial banks cause the booms and busts that we call the business cycle through their manipulation—the expansion and the contraction—of the money supply. The primary means by which this occurs is through the creation of demand deposits (i.e. checking account balances) whenever one of these banking institutions issues a new loan. Central and commercial banks create money “out of thin air,” a practice we would call counterfeiting in other contexts. Professor Richard Werner demonstrated this empirically, and you can read about it here.

The relationship to life insurance and the IBC is that life insurance companies cannot do this. Life insurance companies do not have the ability to create checkable account balances out of nothing like commercial and central banks can and do.

That is, as you grow into your IBC practice, as you conduct more and more of your credit-related activities through life insurance as opposed to commercial banks, you contribute less and less to the demand for inflationary loans. Knowing that is not essential for implementing the IBC—the benefits of implementing IBC are compelling on individual, financial terms all on its own—but it is nice to know that your financial activity integrates at scale in a morally justifiable way.

There are other aspects of Austrian economics that do apply directly to IBC, but the theoretical development on the economics front has a way to go before this is as clear as it should be. The basic idea, however, is that the Menger-Fetter-Mises view of capital as monetary value of property may affect the potential profitability of your own economic action. This is totally counter-intuitive to the conventional, American, economic and personal financial view.

Specifically, the set of circumstances that are amenable to our intervention (what we call opportunities in the investment and entrepreneurial sense) broadens as we accumulate more and more capital. As Mises pointed out, an essential ingredient to action is belief in our power to bring about a better state of affairs with action, as opposed to without it. In a modern, monetary economy, the primary means by which we exercise authority in the economic world is with money (this should come to no surprise). It’s an easy step from this obvious observation to the observation that if one has more capital available, then one’s capability to affect circumstances is greater too.

In fact, the relationship between capital and opportunity may be multi-dimensional. More capital may mean more opportunity, sure, but it might also mean better opportunity, as in, lower-risk/greater reward types of opportunity. Nelson’s story of buying timberland from a pilot friend of his as told in his second book Building Your Warehouse of Wealth is a great example.

Exactly where the line is between what you “need” to know of Austrian economics and what you might “want” to know in order to improve your financial experience to the greatest extent possible is not always super clear. The point here is that individuals who want to save better and use their life insurance as a means to financing their own purchases do not need to become economics enthusiasts in order to implement the IBC. But it may help structure your thinking and indirectly improve outcomes

The plain truth is that the financial advisory profession in general—both within and outside of IBC—is not very interested in economic theory.

In some sense, who can blame them? Conventional financial economics consists of methodologically flawed, mathematical, model-based conceptions of publicly traded markets. Conventional non-financial economics is concerned primarily with politics and government policy. Even unconventional, so-called “heterodox” schools of economic thought, like the Austrians, are most eager to develop their macroeconomic understanding, e.g. with business cycle theory.

The point is that the primary research interest for orthodox and heterodox economics is typically not concerned with the practical perspective of the individual. Sure, praxeology (the underlying methodological approach in Austrian economics) takes the individual more seriously than any other methodological approach, but even then, the most common theoretical exploration proceeds in terms of abstract economic theory where the primary objective is to articulate theoretical laws regarding the movement of prices.

The application of methodologically-sound economic theory to the practical case of the individual is essentially unexplored territory. The closest Austrian economics comes to relevance for practical decision making may be the work of Peter Klein (and his co-author Niklai Foss) on entrepreneurship and business management, a directory for which is available here.

The best way to learn Austrian economics is to familiarize yourself with the Ludwig von Mises Institute in Auburn, AL. This little non-profit organization makes a mountain of great Austrian economics texts available at zero cost. Consider starting with the following titles:

• What Has Government Done to Our Money by Murray Rothbard

• Economic Science and the Austrian Method by Hans Hoppe

• Economics in One Lesson by Henry Hazlitt

• America’s Great Depression by Murray Rothbard

• Choice by Robert Murphy