The Honest Banker Principle
Pay yourself back at market rates or higher. The 62-cent can principle is what makes the whole system work.
From Becoming Your Own Banker, Chapters 6–7; Building Your Warehouse of Wealth, Chapter 5
The most critical discipline in IBC is also the most counterintuitive: when you borrow from your policy, you must pay yourself back at the same rate — or higher — than you'd pay a commercial bank. This is what Nash called the honest banker principle.
The contractual interest rate on a policy loan is wholesale — what the insurance company charges. But Nash insisted you should repay at the retail rate — what a bank would charge you for the same loan. The difference between wholesale and retail is your profit as the banker.
Think back to the grocery store. The wholesale cost of a can is 60 cents. You sell it for 62 cents. Those extra 2 cents per can are what fund the growth of your store. The same logic applies to every policy loan repayment. Every dollar above the contractual rate flows back into your system as additional capital.
This isn't optional or aspirational — it's the engine of the whole concept. Without disciplined repayment at market rates, you're not banking. You're just borrowing. The difference between the two is the difference between building a financial empire and slowly draining a life insurance policy.
Nash was emphatic: set up a repayment schedule for every policy loan. Treat it with the same seriousness you'd treat a bank loan. The only difference is that the interest payments build your wealth instead of someone else's.