Are There Fees With Infinite Banking Policies?

Yes. And if someone tells you there are “no costs,” they either don’t understand how insurance works… or they’re hoping you won’t ask.

The better question is: What are the costs, why are they there, and how do you design around them so the system actually works? Let’s break it down in plain English.

1) The Upfront Reality: It Costs Money to Build a Bank

Premiums are higher than term, on purpose

An IBC policy is a whole life policy designed for cash value, not just a death benefit. That means you’re intentionally putting meaningful dollars into a contract that can compound and be accessed later.

If you’re used to term insurance pricing, whole life will feel expensive. But that’s because term is pure protection. IBC is protection + an asset.

Underwriting / medical exam

Most policies require underwriting and often a medical exam. In many cases the carrier covers the exam cost, but either way, it’s part of the approval process.

2) The Ongoing Costs: What You’re Actually Paying For

Cost of insurance + policy administration

A portion of every premium pays for the death benefit (the insurance part) and the carrier’s admin/maintenance. This is normal. You’re buying a long-term contract that has guarantees and needs to be serviced.

If you borrow, there’s interest

Policy loans aren’t free money. You’re borrowing against your cash value, so the carrier charges interest. That’s your control cost, similar to what a bank charges you when you use their money.

Important note: if you don’t manage loans well and let interest stack up, it can reduce cash value and death benefit over time. This system rewards people who treat loans with a plan.

3) “Add-Ons” That Increase Cost (But Also Increase Performance)

Paid-Up Additions (PUAs)

Most well-built IBC policies use PUAs because they help drive cash value growth. If you choose to add PUAs, that’s additional premium, but it’s also usually the fastest path to building cash value efficiently.

Riders

Some policies include optional riders (extra features). Riders can increase cost, but sometimes they’re worth it depending on your goals and structure.

4) Fees You Only Feel If You Make Certain Moves

Surrender charges if you quit early

Whole life is a long-term contract. If you cancel in the early years, surrender charges can reduce what you get back. This is one of the reasons I tell people: don’t start IBC unless you plan to commit.

Policy changes

Major changes (adjusting structure, adding certain riders, etc.) can come with added cost. Not always, but it’s something you should know up front.

Tax issues if you blow it up

Policy loans are generally not taxable. But if you let a policy lapse with loans outstanding, or you pull money the wrong way, you can trigger taxes. The system works best when it’s managed intentionally.

5) The Right Way to Think About Cost

IBC is not a “cheap hack.” It’s a system.

You’re trading some early friction for long-term benefits: control, liquidity, stable compounding, and a private capital pool you can use. The costs matter, but so does what you’re getting in exchange.

And the biggest variable is this: design and management. A well-structured policy with a clear funding plan and smart loan management is a completely different experience than a policy that’s slapped together.

Bottom Line

Yes, there are costs: premiums, insurance/admin costs, loan interest, and sometimes riders/PUAs and surrender charges if you exit early. The key is not pretending those costs don’t exist. The key is building the policy correctly so the system does what you need it to do.

If you want, I can help you understand what the costs would look like in your situation and whether it makes sense for your goals.