Caleb Guilliams, founder of BetterWealth, started working at a bank at 17 and took over its investment department at 19. The job taught him how banks profit from the spread between what they pay and what they earn, and that most clients lacked financial clarity, which became the foundation of The And Asset.
Every bank runs on one piece of arithmetic. It pays depositors a rate, lends or invests those deposits at a higher rate, and keeps the difference. The customer who parks $100,000 in a savings account is supplying the raw material for that spread, usually without asking what the bank earns on it or what the money could be doing instead.
I am Caleb Guilliams, and I learned that arithmetic from the inside. I started working at a bank at 17, and by 19 I had been given the opportunity to take over its investment department. The job was a crash course in four disciplines: wealth management, efficiency, insurance strategy, and tax implications.
The lesson that stayed with me was that the people I served were not short on financial products. They were short on financial clarity. Many of them earned good money and still were not succeeding with it, because nobody had shown them how the pieces connected. Around the same time I came to a personal realization that life is finite, and it turned that observation into a mission.
That mission is what BetterWealth is built on. Our team has since structured more than 2,000 policies across all 50 states, and the framework we use, The And Asset, is the direct result of what I watched from behind a bank desk. This piece covers what the job taught me about how banks make money, why clarity is the real shortage, how The And Asset applies the banking function with discipline, and where that approach does not fit.
- A bank's profit comes from the spread between the rate it pays depositors and the rate it earns lending.
- Most people who struggle financially lack clarity on how their accounts, insurance, and taxes interact, not access to products.
- The And Asset applies a bank's discipline: only borrow against the policy when the deployed return beats the loan rate.
- Policy loan interest goes to the insurance carrier, not back to you, so the deployed capital must earn more than it costs.
- Whole life cash value does not exceed cumulative premiums before year four, and healthy insureds typically break even around year five.
01 / The LessonWhat Did Running a Bank's Investment Department at 19 Actually Teach?
Running the department taught me that money problems are usually information problems. The clients who walked in were often doing everything they had been told to do. They saved, they bought the insurance someone recommended, they filed their taxes on time. The results still disappointed them.
The four disciplines were rarely handled together for the same person. A client's investments sat in one conversation, their insurance in another, and their tax picture with a preparer who saw it once a year. Each decision could be reasonable on its own and still work against the others, and no one was responsible for the combined result.
That gap is where most of the lost value lived. A savings balance earning less than inflation never appears next to the tax bill nobody planned for, so neither one gets fixed.
People are rarely short on financial products. They are short on someone who will show them how the products they already own work together.
02 / The SpreadHow Does a Bank Make Money on Your Money?
A bank makes money by earning more on your deposits than it pays you for them. That spread, net of loan losses and operating costs, is the business. It is the reason a bank can offer free checking, and it is the reason a bank's lending officer asks hard questions before approving a loan.
Consider a simple illustration. If a bank pays 1% on a savings balance and lends that money at 7%, each $100,000 on deposit supports roughly $6,000 a year of gross spread before costs and losses. The depositor earns about $1,000. The bank earns the rest because it controls the lending decision and prices every loan so the return exceeds its cost of funds.
Banks do not care what the borrower does with a car loan. They care that their own spread holds. That is the discipline at the center of banking: a bank prices every dollar it lends so the return beats what that dollar costs the bank.
Most individuals never apply that discipline to their own capital. They hand over the lending function to someone else, accept whatever rate is offered on deposits, and then borrow back at the bank's price when they need money. Nelson Nash built his argument on this point: you either pay interest to an outside lender, or you give up what that money could have earned by paying cash. Either way, there is a cost.
03 / The Clarity GapWhy Do People With Good Incomes Still Lack Financial Clarity?
People with good incomes lack clarity because the system that serves them is organized around products, not around the person. Each professional is paid to solve the piece in front of them, and nobody is paid to connect the pieces.
We see this in client after client. A business owner with healthy revenue might hold a large cash reserve earning very little, a term policy that would expire before the need did, and retirement accounts with access restricted until 59½. Each choice made sense on its own. Together, they left the owner with little usable capital when an opportunity showed up.
Clarity comes before any product.
We are convinced that when people understand how to use financial strategies well, they act on them. That conviction drives how we work at BetterWealth. We would rather explain the math and have a client decide the strategy is not for them than sell a policy they do not understand.
04 / The FrameworkWhat Does The And Asset Take From the Banking Function?
The And Asset takes one thing from the banking function: the discipline of pricing every loan against its cost. Everything else in the framework follows from that rule.
Nelson Nash pioneered the idea of using whole life insurance as a personal banking system in Becoming Your Own Banker. His insight about control of the banking function and lost opportunity cost is the foundation, and we credit it every time. The And Asset shares roots with IBC but operates on different principles.
Where IBC Ends and The And Asset Begins
IBC, as it is commonly marketed, says you can use a whole life policy as a personal bank for any purchase. The And Asset says you only deploy capital from the policy when the borrowed dollars will produce a return greater than the carrier's loan cost, because that is exactly how a bank decides whether to lend. Anything less is an expensive way to spend money.
The second divergence is about who gets the interest. Many IBC marketers say you are paying yourself interest. You are not. The interest on a policy loan goes to the carrier. Your return is what the deployed capital earns elsewhere while the policy keeps compounding on its full cash value, net of mortality and expense charges.
A third difference is the role of the policy itself. IBC content often treats whole life as the destination. We treat the policy as the capital base, and the value is created in what you deploy that capital into. Your policy earns its own return. The asset you deploy into earns its own return. Your dollars do two jobs at once. That is the And.
Marketers have ruined the way this should be explained. You do not pay yourself interest. You pay the carrier, and the strategy only works if what you deploy into earns more than that.
05 / How It WorksHow to Apply the Banking Function With The And Asset
Applying the banking function takes five steps, and the first one has nothing to do with insurance. This is the sequence we use with clients.
- Map where your capital sits. List every account, policy, and loan in one place: what it earns, what it costs, and who controls access to it. This is the clarity step, and most people have never done it.
- Structure the policy for cash value. Minimize the base premium and fund the paid-up additions rider as heavily as the rules allow, while staying under the MEC limit defined by IRC Section 7702A. A base/PUA split such as 30/70 drives early cash value.
- Fund it and let the early years capitalize. Cash value trails cumulative premiums at first. For a healthy insured, it typically catches them around year five or later, and never before year four.
- Underwrite every loan like a bank. Before you borrow, confirm the activity is expected to return more than the carrier's loan rate. If it does not clear that rate, do not borrow.
- Deploy and repay on a schedule. Borrow against the cash value, deploy the capital, and repay on a fixed schedule from the cash flow the activity produces. The discipline of repayment is the whole strategy.
Step four is the one most people skip. It is also the only step that makes the strategy work.
The And Asset Fits a Specific Person Doing Specific Things
It Fits You If
- You already deploy capital into a business, real estate, or deals
- You can name a use for borrowed money that beats the loan cost
- You have a funding horizon of 10 years or more
It Does Not Fit You If
- You are early in building wealth
- You are carrying high-interest debt and need a quick fix
- You want a savings account, not a capital strategy
If you are in the first column, a clarity call will show you whether a policy belongs in your plan. If you are in the second, we will tell you that too. No pressure, no pitch.
Book a Clarity Call06 / The MathDoes the Deployed Capital Beat the Loan Rate?
The deployed capital has to beat the carrier's loan rate, or you should not borrow. That is the same test a bank applies to its own cost of funds, and it is the entire decision.
Policy loan rates vary by carrier and by rate environment. At the time of writing, many carriers fall in the 5 to 6% range, but treat any specific number as a variable to verify with the carrier, not a constant. The structure of the decision does not change. You borrow at the loan rate. The policy keeps compounding on its full cash value, adjusted for the carrier's recognition method. The activity you deploy into earns its own return. When that return is higher than the loan cost, you capture the spread the way a bank does. When it is lower, you have borrowed money to lose money slowly.
If the deal does not clear the loan rate, do not borrow.
A Composite: The Business Owner Who Priced the Loan Like a Bank
Consider a 44-year-old owner of a residential HVAC company, preferred non-tobacco, funding a whole life policy at $36,000 a year on a 30/70 base/PUA design: $10,800 to base premium and $25,200 to paid-up additions. This is a representative composite, not a single named client, and every figure is illustrative.
For the first four years, cash value trails cumulative premiums, as it should on any real policy. At year five, $183,470 of cash value crosses the $180,000 paid in. By year six, with $216,000 contributed, the policy holds about $226,900 of cash value.
In year six the owner has a waiting list of service calls and is one truck short of clearing it. Before borrowing, the owner runs the numbers the way a lending officer would. A second outfitted service truck and technician should add about $41,300 a year of net margin. The owner borrows $118,500 against the policy at an illustrative 6% and repays on a 43-month schedule of about $3,070 a month, funded by the truck's own revenue.
Total loan interest over the schedule comes to roughly $13,510, paid to the carrier. The truck's added margin over the same 43 months is roughly $148,000, which works out to an IRR of about 13% over those 43 months alone, before counting any years of service or resale value left in the truck. Meanwhile the policy, placed with a non-direct recognition carrier, keeps compounding on its full cash value, net of its internal charges, the entire time the loan is outstanding.
Had the truck been projected to earn 4% on the money, the answer would have been no loan. That is the part a bank would never skip.
07 / Where It Goes WrongWhere Do People Get the Banking Idea Wrong?
People get the banking idea wrong when they copy the bank's structure and skip the bank's discipline. The most common version is an agent who pitches whole life as a personal bank for cars, vacations, and tuition, then implies the interest comes back to the policyholder. Neither part survives contact with the math.
A bank that lent money without checking the return would not stay a bank for long. A policyholder who borrows for consumption pays loan interest to the carrier and gets nothing productive in return. The policy still grows, but the owner has paid for the privilege of spending money.
The second mistake is unrealistic timelines. Any illustration showing cash value above cumulative premiums in year one or two is fiction. The early years are expensive by design, and the payoff comes from staying funded long enough for the policy to capitalize.
We are not saying this is for everyone. If you cannot identify a use for borrowed capital that beats the loan cost, the right answer is not to borrow.
08 / The TradeoffsBenefits and Real Tradeoffs
The benefits of a properly structured policy are real, and so are the costs. We state both because that is what clarity requires.
On the benefit side, cash value compounds uninterrupted, net of mortality and expense charges, even while you borrow against it, though under direct recognition (Penn Mutual, for example) the dividend on the loaned portion is adjusted. The loan is collateralized by your cash value rather than approved by a lender who can freeze a line of credit. Policy loans are generally not taxable income while the policy stays in force, for a policy that qualifies under IRC Section 7702 and is not a modified endowment contract under Section 7702A.
On the cost side, early cash value trails what you have paid in for several years. The policy carries internal costs a savings account does not. The loan rate is real money paid to the carrier. If the policy lapses with a loan outstanding, part of the gain can become taxable, which is why funding discipline matters. Tax treatment depends on your specific situation, so confirm it with a tax advisor.
The Frameworks Behind 2,000+ Policies, in One Place
The And Asset Vault holds the calculators and design frameworks we use to decide whether a policy belongs in a client's plan. Free, email-gated, no spam.
Open the Vault09 / Head to HeadWhere Should Idle Capital Sit?
Idle capital should sit where it earns something and stays available when an opportunity appears. The table compares four common places entrepreneurs hold or access capital, using a $100,000 balance and illustrative rates.
| Dimension | Bank Savings | HELOC | Taxable Brokerage | The And Asset Policy |
|---|---|---|---|---|
| What $100,000 Earns | About $1,000 a year at an illustrative 1% | Nothing. It is a credit line, not an asset | Market return, varies year to year | Compounds on full cash value, net of internal costs, including while borrowed against (under direct recognition, such as Penn Mutual, the dividend on the loaned portion is adjusted) |
| Cost to Access $100,000 | No cost, but the balance stops earning | Interest at the lender's rate, which can change | Possible capital gains tax on sale | About $6,000 a year of loan interest at an illustrative 6%, paid to the carrier |
| Who Controls Access | You, though the bank sets the rate | The lender, who can freeze or reduce the line | You | You. Loans are collateralized by cash value, and you set repayment |
| Early-Year Drawback | Earns below inflation in many years | Approval depends on home equity and credit | Selling in a down market locks in losses | Cash value trails premiums until around year five |
Earnings. Bank savings is the bank's raw material, not yours. At an illustrative 1%, $100,000 earns about $1,000 a year while the bank lends it at a far higher rate. A policy keeps compounding on its full cash value, which is the feature that lets one dollar do two jobs.
Cost and control. A HELOC costs nothing until you draw on it, but the lender sets the terms and can reduce the line when conditions tighten. A policy loan costs real interest paid to the carrier, and the carrier cannot call it while the cash value supports it.
Early years. Every option has a weakness. The policy's weakness is time: it needs several years of funding before cash value exceeds what you have paid in, so it only makes sense on a long horizon.
10 / The FitHow Does This Fit a Broader Capital Strategy?
A policy fits a broader capital strategy as the base that other investments draw from, not as a replacement for them. It complements retirement accounts, real estate, and a business. It does not replace any of them.
The work starts the way it does at a bank's investment desk: getting every piece of a person's financial life onto one page, seeing how the pieces interact, and only then deciding whether a policy belongs. For many clients it does. For some it does not, and we say so. The clarity is the point. The policy is one tool that clarity may or may not call for.
An Honest Conversation About Whether This Fits You
We have structured more than 2,000 policies across all 50 states. We have seen this strategy work exactly as designed, and we have seen it fail. On a clarity call, we look at your situation and give you the honest answer either way. No pressure, no pitch. If you would rather learn first, The And Asset and BetterWealth YouTube channels go deep on the math.
Book a Clarity CallFAQQuestions About Caleb Guilliams and the Banking Function
Who is Caleb Guilliams?
Caleb Guilliams is the founder of BetterWealth and the author of The And Asset. He started working at a bank at 17, took over its investment department at 19, and now hosts the BetterWealth and The And Asset YouTube channels. His team has structured more than 2,000 policies across all 50 states.
What did Caleb Guilliams learn running a bank's investment department?
He learned that most people were short on financial clarity, not on financial products. The job was a crash course in wealth management, efficiency, insurance strategy, and tax implications, and it showed him how rarely anyone connects those four for the same client.
How does a bank make money on your deposits?
A bank earns a spread. It pays depositors a lower rate than it earns by lending or investing those deposits, and the gap between the two rates, net of losses and operating costs, is its profit.
What does a bank's investment department do?
A bank's investment department typically helps customers move money beyond basic deposit accounts into investment and insurance products, often through an affiliated brokerage or advisory arm. The work sits where wealth management, insurance, and tax questions meet.
What is The And Asset?
The And Asset is BetterWealth's framework for using a properly structured whole life policy as a capital base. You only borrow against it for an activity that produces a return greater than the carrier's loan cost, so your dollars do two jobs at once: the policy keeps compounding while the deployed capital earns its own return.
How is The And Asset different from infinite banking?
IBC, as it is commonly marketed, frames a whole life policy as a personal bank for any purchase. The And Asset only deploys borrowed capital when the return clears the carrier's loan cost. It shares roots with Nelson Nash's work in Becoming Your Own Banker but operates on different principles.
Do you pay yourself interest on a policy loan?
No. Many IBC marketers say you are paying yourself interest, but the interest on a policy loan goes to the insurance carrier. Your return comes from what the borrowed capital earns elsewhere while the policy keeps compounding net of its charges.
When does whole life cash value catch up to the premiums paid?
For a healthy insured on a well-designed policy, cash value typically catches cumulative premiums around year five or later. It does not exceed total contributions before year four, and any illustration that shows a year-one or year-two break-even should be questioned.
Are policy loans taxable?
A loan against a life insurance policy is generally not taxable income while the policy stays in force and is not a modified endowment contract. If the policy lapses or is surrendered with a loan outstanding, part of it can become taxable, so confirm your situation with a tax advisor.
Is The And Asset right for everyone?
No. It fits entrepreneurs, business owners, real estate investors, and high-income earners who can name a use for borrowed capital that beats the loan cost. It does not fit someone early in building wealth, someone carrying high-interest debt, or someone who wants a savings account.
Why did Caleb Guilliams build BetterWealth around financial clarity?
Because the people he served at the bank were not short on products. They were short on clarity. That observation, and the realization that life is finite, became the mission BetterWealth is built on: explain the math honestly and tell people when a strategy does not fit.
- Nelson Nash, Becoming Your Own Banker: the origin of the infinite banking concept and the idea of controlling the banking function.
- IRC Section 7702 (Cornell Law): the definition of a life insurance contract for federal tax purposes.
- IRC Section 7702A (Cornell Law): the modified endowment contract rules that cap how fast a policy can be funded.
- FDIC: how deposit insurance and bank deposits work in the United States.
- BetterWealth resources: The And Asset book, The And Asset YouTube channel, and the BetterWealth YouTube channel.
I started at a bank at 17 and ran its investment department by 19, which is where I learned how the banking function works and how few people get a clear view of it. I founded BetterWealth to give them that view. Our team has structured more than 2,000 policies across all 50 states. I wrote The And Asset and host the BetterWealth and The And Asset YouTube channels. If you want an honest read on your situation, book a clarity call. We will tell you if it does not fit.