Infinite banking is a great way to act as your own bank by borrowing against a permanent life insurance policy. Here's everything you need to know.

Infinite banking only works when policyholders overfund the cash value. For a 40-year-old man in good health, that means contributing money beyond the $7,028 paid in annual premiums.

My answer is typically no – but there’s a better strategy most people (even experienced infinite bankers) don’t know about.

Infinite banking only works when policyholders overfund the cash value. For a 40-year-old man in good health, that means contributing money beyond the $7,028 paid in annual premiums.

Under infinite banking, the cash value is collateral for the loan and the life insurance policy is tied to it. This means you risk losing your coverage if you don’t watch the cash value closely.