Alex Hormozi did not abandon infinite banking or whole life insurance: he deleted a video calling it a near-certain scam, kept his own high cash value policy, and kept his warning that agent pay rewards base-heavy designs. The lesson is structural: a policy built on paid-up additions pays the agent less and builds cash value faster.
Every whole life policy carries two sets of economics. One belongs to the policyholder: how fast cash value builds, what it costs to access, how long until the premiums are recovered. The other belongs to the person who sold it: a commission paid mostly in year one and calculated almost entirely on one part of the premium. When those two sets of economics point in different directions, the buyer usually loses, and rarely knows it.
Alex Hormozi put that conflict in front of millions of viewers. He posted two short videos about whole life insurance. The first described the high cash value policy he owns and told viewers to watch the agents. The second went much further, saying the likelihood of getting scammed was almost 100 percent. He later deleted the second, saying it omitted important nuances, and reaffirmed that he still owns a well-structured policy.
Hormozi did not really change his mind about whole life insurance. He took back the scam framing, and his warning about agent pay is correct. The commission schedule proves it, and the fix is a design choice any buyer can ask for.
At BetterWealth, we have structured more than 2,000 policies across all 50 states. This analysis covers what Hormozi said in both videos, how agents are actually paid, what the lapse data shows against his 80 percent claim, where his view lines up with The And Asset and where it does not, and a six-step way to vet a policy before you sign.
- Hormozi deleted his "almost 100 percent scammed" video but still owns a whole life policy he calls well structured.
- Agents earn roughly 55% of year-one base premium in commission, and 70% to 90% with carrier expense allowances.
- Paid-up additions typically pay the agent 2% to 3%, so cash value designs cut agent pay sharply.
- LIMRA puts average annual whole life lapse near 2.9%, far from the 80% abandonment figure Hormozi cited.
- The And Asset treats the policy as a capital base: borrow only when deployed dollars beat the loan rate.
Our team plays both of Hormozi's clips, including the one he deleted, and reacts to each claim on camera. It also shows the type of policy he describes, which is worth seeing before you read an illustration of your own.
01 / The First VideoWhat Did Alex Hormozi Actually Say About Whole Life Insurance?
In his first video, Hormozi endorsed whole life insurance designed for high cash value and warned that agents are paid to design it badly. He described owning a policy with high cash value up front and said the commission structure on standard policies "destroys the cash value that you earn from these things."
His practical advice ran in three parts. Use one of the four large mutual carriers he named: Guardian, New York Life, Northwestern Mutual, and MassMutual. Treat the policy as a place to park capital that will "likely grow at about four percent yearly," which he framed as better than cash in a bank account losing ground to inflation. Borrow against the cash value when an opportunity appears. He pointed to corporate-owned and bank-owned life insurance (COLI and BOLI) as evidence that large institutions use the same tool.
He also said a properly designed policy should break even "by year three to five at most." Year three is optimistic. For a healthy insured on a cash value design, we expect cash value to catch total premiums around year 5 or later, and no earlier than year 4.
Where We Agree and Where We Would Add
The big four are a reasonable starting list, not a complete one. Other mutual carriers with a century of dividend history and strong ratings belong in the conversation. The carrier matters less than the design: we would rather see a properly structured policy with a strong mutual outside that list than a base-heavy policy from one of the four.
His focus on the policy's internal rate of return is fair, and it is also narrow. A pure rate-of-return lens misses what the policy does alongside other assets: the death benefit, the access to capital without a lender's approval, and the ability to deploy the same dollars elsewhere while the policy keeps compounding. If the highest internal rate of return is your only goal, whole life is hard to justify.
The policy is not the whole return.
02 / The Deleted VideoWhy Did Hormozi Delete the Second Video?
Hormozi deleted the second video because, in his words, "important nuances were omitted," and it did not reflect his views on his own whole life policy. The second video called life insurance one of the most profitable enterprises in existence, claimed about 80 percent of "those products" are abandoned before they come to fruition, and concluded that "the likelihood of getting scammed is almost 100 percent."
The contradiction was obvious. A man who owns a whole life policy told viewers they would almost certainly be scammed buying one. He also drew a straight line from policy lapse to deliberate fraud by carriers, instead of to the more common causes: policies designed poorly for the buyer, or premiums the buyer could not keep paying.
His follow-up statement kept the parts that hold up. He repeated that the salesperson's incentive runs against the consumer. He said the difference in agent commission between a standard design and his well-structured one was stark: about $800,000 on the standard version, and about $100,000 on the policy he actually bought. He said his policy breaks even in year four. His closing advice was the best line in either video:
"If you can't explain your policy to me in a way that I understand, don't buy it."
Hormozi was right about the incentive. The fix is the design, not avoiding the product.
03 / The IncentiveHow Are Life Insurance Agents Paid?
Life insurance agents are paid mainly as a percentage of the policy's base premium, and most of that pay arrives in year one. The industry average base commission runs around 55% of year-one base premium. Many carriers pay expense allowances on top of that, bringing total compensation on a typical contract to 70% to 90% of year-one base premium, depending on the company. After year one, the rate falls to low single digits for the rest of the policy, paid to the agent who services it.
Paid-up additions are compensated very differently. PUAs and base premium both buy death benefit, but PUA dollars add cash value far faster than base dollars do. PUA premium typically pays the agent about 2% to 3% in year one, often less afterward.
Put those two rates side by side and the incentive is plain. The more premium sits in base, the more the agent earns. The table in section 09 runs the same $20,000 premium through three designs. Moving from an all-base policy to a 10/90 design cuts illustrative year-one agent pay by more than 80 percent.
Why You Usually Have to Ask for a Cash Value Design
Because agents are paid less to blend base and paid-up additions, you will often have to request that design yourself. Many agents have never built a high cash value policy. Some who know how would still rather sell a base-heavy one. This is how the industry's pay structure works, and it is exactly the risk Hormozi flagged.
A PUA-heavy design has one technical guardrail. Pushing 90% of premium into paid-up additions usually requires a term rider to keep the policy under the modified endowment contract (MEC) limit set by IRC Section 7702A. Cross that limit and policy loans lose their favorable tax treatment. A competent design stays under it on purpose.
Ask for the split in dollars.
Base-Heavy Is Not Always Wrong
The right split depends on what you want the policy to do. We have placed 100% base policies for clients whose goal was permanent death benefit for estate tax planning, where that design was the best option. For maximum cash value growth, we build with base near 10% of premium. Others have chosen roughly 50% base so they keep room to add more PUAs each year. The problem is not base premium. The problem is a split chosen for the agent instead of the buyer.
04 / The Lapse ClaimDo 80 Percent of Whole Life Policies Lapse?
No. LIMRA data puts the average annual lapse rate for whole life at about 2.9%, which counts policies ended by nonpayment, surrender, or transfer to another product. Hormozi's claim that 80 percent or so of "those products" get abandoned does not match that figure.
Some plain arithmetic shows the gap. At 2.9% a year, about 25% of policies would end over ten years, not 80%. Averages can hide higher lapse in early policy years, but a 2.9% annual rate does not describe a product where four in five buyers walk away.
He may have been thinking of indexed universal life (IUL), which has a much worse record. Industry persistency research found IUL lapse rates rose across all policy years from the 2015-2018 study period to the 2019-2020 period, and IUL stood out for higher lapse during the pandemic than before it. Most IUL contracts also carry surrender charges for roughly the first ten years, which keep much of the buyer's money if they cancel. Sales of IUL have grown quickly over the last decade, often by agents who understand the product less well than they sell it.
A 2.9 percent average annual lapse rate does not describe a product where four in five buyers walk away.
Why the Policies That Do Lapse Fail
When a whole life policy lapses, the cause is usually a mismatch between the design and the buyer. The value was never explained, the buyer expected something the policy was not built to do, or the premium was larger than the buyer could sustain. None of those require a scam. All of them are preventable before the application is signed.
A Cash Value Policy Fits a Specific Person Doing Specific Things
It Fits You If
- You already deploy capital into a business or real estate
- You can fund the premium consistently for 10+ years
- You can name a use for capital that beats the loan cost
- You want access to capital without a lender's approval
It Does Not Fit You If
- You need the highest possible internal rate of return
- You are carrying high-interest debt
- You want a savings account, not a capital strategy
- You expect to break even in year one or two
If you are in the first column, a 30-minute conversation will tell you whether a policy belongs in your plan and how it should be split. If you are in the second, we will tell you that too.
Book a Discovery Call05 / The FrameworkWhere Hormozi's View Meets The And Asset
Hormozi's instinct to park capital in a policy and borrow against it when opportunity appears is close to how we use whole life, with one rule he never states: the opportunity has to earn more than the loan costs. That rule is the center of The And Asset.
Nelson Nash pioneered the idea of using whole life insurance as a personal banking system in Becoming Your Own Banker. His insight holds: you either lose money paying interest to outside lenders, or you lose it to the opportunity cost of capital sitting idle. We credit that foundation. The And Asset shares roots with IBC but operates on different principles.
IBC Says, The And Asset Says
IBC says you can use a whole life policy as a personal banking system 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 anything less is an expensive way to spend money. Many IBC marketers also claim you are paying yourself interest. You are not. The interest goes to the carrier. Your return is what the deployed capital earns elsewhere while the policy keeps compounding, net of mortality and expense charges.
One detail changes that compounding on borrowed dollars. On a non-direct recognition carrier, the dividend on cash value you have borrowed against is generally unaffected by the loan. On a direct recognition carrier such as Penn Mutual, the borrowed portion can be credited a different dividend rate. Know which one you own before you plan around it.
Not a Savings Account, Not a Bond
Hormozi calls whole life "a great savings vehicle" and says he treats it as a bond equivalent in his portfolio. We frame it differently. IBC content often frames whole life as the destination. The And Asset frames the policy as the capital base, and the value is created in what you deploy that capital into. A savings account does nothing while you use the money. A properly structured policy keeps compounding while you do.
Whole life is not a savings account and not a bond. It is a capital base, and it earns its keep only when the borrowed dollars beat the loan rate.
06 / The MathDoes the Borrowed Dollar Beat the Loan Rate?
The return on whatever you deploy must exceed the carrier's loan rate, or you should not borrow. That single test decides whether the strategy creates value. Policy loan rates vary by carrier and rate environment. At the time of writing, many carriers fall in the 5 to 6% range, but treat any number as a variable to verify with your carrier.
The structure of the decision is simple. You borrow at the carrier's loan rate, with the policy's cash value as collateral. The policy keeps compounding, subject to the recognition detail in section 05. The deployed capital earns its own return. If that return beats the loan cost, the same dollar has done two jobs. If it does not, you have borrowed money to lose money slowly.
The loan also carries a real constraint. There is no lender to call it, but interest accrues, and if the loan plus accrued interest grows past the cash value, the policy lapses. A lapse with loans outstanding can create a tax bill. The discipline of repayment is the whole strategy.
If the deal does not clear the loan rate, do not borrow.
A Composite: The HVAC Owner Who Asked for the Split
Consider a 46-year-old HVAC company owner, preferred non-tobacco, funding $40,000 a year. This is a representative composite, not a named client, and the cash values are illustrative: they vary by carrier, age, health, and design. The first agent he met proposed putting the full $40,000 into base. At 70% to 90% of base premium, that design would pay the agent $28,000 to $36,000 in year one.
He asked for a 10/90 design instead: $4,000 of base premium and $36,000 of paid-up additions, with a term rider to keep the policy under the MEC limit. Year-one agent pay on that design comes to about $3,520 to $4,680.
Cash value trails premiums through year four, $153,870 against $160,000 paid, exactly as a real policy should. It crosses in year five. In year six, with about $251,660 of cash value against $240,000 paid, he borrows $113,700 to add a second install crew and truck.
The crew adds about $33,470 a year in net margin over seven years, an IRR of about 22%. He repays the loan over 49 months at an illustrative 5.5%: about $2,596 a month, or $31,152 a year, which the crew's margin covers. First-year interest on the amortizing balance is about $5,616, and total interest over the schedule comes to about $13,504. The policy keeps compounding throughout, subject to the recognition detail in section 05.
The borrowed dollar cleared the loan rate by a wide margin. That is the And.
07 / Step by StepHow to Vet a Policy and an Agent Before You Sign
You vet a whole life policy by checking the design and the incentives behind it, in this order. Hormozi's closing advice was to find someone who can explain the policy plainly. These six steps turn that advice into questions with checkable answers.
- Start with the carrier. Choose a mutual carrier with a century-long record of paying dividends, strong AM Best ratings and a high COMDEX score. The carrier is the floor, not the decision.
- Get the base/PUA split in writing. Ask for the exact dollars going to base premium and to the paid-up additions rider. A design built for cash value puts most of the premium into PUAs, often near 10/90.
- Ask how the agent is paid on that design. Base premium typically pays about 55% in year-one commission, and 70% to 90% with expense allowances. PUA premium typically pays 2% to 3%. Knowing this tells you why a design was recommended.
- Confirm it stays under the MEC limit. A PUA-heavy design usually needs a term rider to stay under the modified endowment contract limit. Policy loans keep their favorable tax treatment only if the policy is not a MEC.
- Find the break-even year on the illustration. Locate the year cash value first exceeds total premiums paid. For a healthy insured on a well-designed policy, expect year 5 or later. Treat any year-two or year-three break-even as a red flag.
- Name the use for borrowed capital. Before you fund, identify an activity that can return more than the carrier's loan rate. If you cannot name one, do not plan to borrow.
For a broader look at whether the product itself fits you, see our honest answer to whether whole life insurance is worth it.
The Frameworks Behind 2,000+ Policies, in One Place
The And Asset Vault holds the calculators, design frameworks, and structuring decisions we use when we choose a base/PUA split and test whether a use of capital clears the loan rate. Free, email-gated, no spam.
Open the Vault08 / The TradeoffsBenefits and the Real Tradeoffs
A well-designed whole life policy gives you access to capital and uninterrupted compounding, and it costs you early liquidity, patience, and discipline. Both sides are real.
On the benefit side, the policy's cash value compounds net of mortality and expense charges, you can borrow against it without a credit application, and the death benefit protects your family or business while it grows. Hormozi mentioned liking the idea of tax-free income in retirement. Policy loans are generally not taxable income as long as the policy stays in force and is not a MEC. Those loans still accrue interest and reduce the death benefit while they are outstanding, so retirement income from a policy needs the same discipline as any other loan.
On the cost side, the early years are slow. Cash value will not exceed what you have paid until around year 5 for most healthy insureds. If you stop funding in the first few years, you lose money. The loan rate is real, and unrepaid loans can grow into a lapse. The design also depends on an agent willing to be paid less, which is why the questions in section 07 matter.
Hormozi said it plainly in his follow-up: learning this takes time, and the cost of not understanding is higher.
If you are judging this by whether it beats the market, you are asking the wrong question. Ask what the capital can do while the policy keeps compounding.
09 / Head to HeadThree Whole Life Designs, Same $20,000 Premium
The same $20,000 annual premium produces very different policies, and very different agent pay, depending on the base/PUA split. The figures below apply the commission ranges from section 03 and are illustrative. Actual rates vary by carrier.
| Dimension | 100% Base | 40/60 | 10/90 Cash Value Design |
|---|---|---|---|
| Premium split | $20,000 base, $0 PUA | $8,000 base, $12,000 PUA | $2,000 base, $18,000 PUA |
| Year-one agent pay | $14,000 to $18,000 | $5,840 to $7,560 | $1,760 to $2,340 |
| Early cash value | Lowest of the three | Moderate | Highest early cash value of the three designs; break-even around year 5 for a healthy insured |
| Death benefit per dollar | Highest | Middle | Lowest; usually paired with a term rider to stay under the MEC limit |
| Best fit | Permanent death benefit, such as estate tax planning | Buyers who want room to add PUAs each year | Maximum cash value to borrow against for capital deployment |
Agent pay. The all-base design pays the agent roughly eight times what the 10/90 design pays on the same premium. That gap is the conflict Hormozi described, reduced to dollars.
Cash value. Paid-up additions add cash value far faster than base premium, so the 10/90 design has the most capital available in the early years. It is the design we use when the goal is to borrow against the policy and deploy the capital.
Fit. None of the three is wrong in every case. A client planning for estate taxes may want all base. A client who wants flexibility may want 40/60 or 50/50. The wrong design is the one chosen for the agent's pay instead of the buyer's goal. For a side-by-side look at the broader choice, see whole life vs term insurance.
An Honest 30 Minutes on Whether This Fits You
We have structured more than 2,000 policies. We have seen this strategy work exactly as designed, and we have seen it fail. On a discovery call, we look at your situation and tell you whether a policy belongs in your capital structure, how it should be split, or whether it does not belong at all. No pressure, no pitch. If you would rather learn first, The And Asset and BetterWealth YouTube channels go deep on the math.
Book a Discovery CallFAQAlex Hormozi, Whole Life, and Infinite Banking Questions
Did Alex Hormozi change his mind about infinite banking?
Alex Hormozi took back one claim, not his position. He deleted a video saying the likelihood of getting scammed on whole life was almost 100 percent, said it omitted important nuances, and confirmed he still owns a well-structured whole life policy that breaks even in year four.
Does Alex Hormozi own a whole life insurance policy?
Yes. Hormozi has said publicly that he owns a whole life policy designed for high cash value, that it breaks even in year four, and that he treats it as a place to park long-term cash he can borrow against.
How much commission does a life insurance agent make on whole life?
Agents are paid mainly on base premium: roughly 55% of year-one base premium, and 70% to 90% once carrier expense allowances are included, then low single digits in later years. Paid-up additions typically pay 2% to 3%. On a $20,000 all-base premium, that is about $14,000 to $18,000 in year one.
Do most whole life policies lapse?
No. LIMRA data puts the average annual lapse rate for whole life at about 2.9%, covering policies ended by nonpayment, surrender, or transfer to another product. Indexed universal life has shown much higher lapse and surrender, which may be the product behind the high abandonment figures quoted online.
What is a base/PUA split?
A base/PUA split is how a whole life premium divides between the base policy and the paid-up additions rider. A 10/90 split puts 10% of premium into base and 90% into PUAs, which builds cash value faster and pays the agent far less than an all-base design.
When does a well-designed whole life policy break even?
For a healthy insured on a policy designed for cash value, cash value typically catches total premiums paid around year 5, with year four at the fast end. Hormozi reports year four on his own policy. Any illustration showing break-even in year two or three deserves scrutiny.
Is whole life insurance a savings account or a bond substitute?
It is neither. Hormozi calls it a savings vehicle and a bond equivalent in his portfolio. The And Asset treats a properly structured policy as a capital base whose cash value compounds net of mortality and expense charges and can be borrowed against when the borrowed dollars can beat the loan rate.
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?
Infinite banking, as Nelson Nash taught it, frames a whole life policy as a personal banking system for any purchase. The And Asset shares those roots but operates on different principles: you only deploy borrowed capital when the return clears the carrier's loan cost, and the policy is the capital base, not the destination.
Are policy loans tax-free?
Policy loans are generally not taxable income as long as the policy stays in force and is not a modified endowment contract. Loans accrue interest, reduce the death benefit while outstanding, and can cause a lapse with tax consequences if the loan balance grows past the cash value.
What should I ask an agent before buying whole life?
Ask for the base/PUA split in dollars, how the agent is paid on that design, whether a term rider keeps it under the MEC limit, and which year cash value first exceeds total premiums. If the agent cannot explain the policy in plain terms, do not buy it.
- Nelson Nash, Becoming Your Own Banker: the origin of the infinite banking concept.
- IRC Section 7702 (Cornell Law): the definition of life insurance behind the tax treatment of cash value.
- IRC Section 7702A (Cornell Law): the modified endowment contract rules that PUA-heavy designs must stay under.
- LIMRA research: whole life lapse and persistency data, including the roughly 2.9% average annual whole life lapse rate, and the LIMRA and Society of Actuaries individual life persistency studies covering IUL lapse trends.
- AM Best: carrier financial strength ratings.
- BetterWealth: life insurance agents react to Alex Hormozi's whole life videos: the source clips and our on-camera review.
- BetterWealth resources: The And Asset book, the The And Asset YouTube channel, and the BetterWealth YouTube channel.
I founded BetterWealth to treat life insurance as the capital tool it actually is, not the product most people get sold. 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 whether a policy fits your plan, and how it should be designed, book a discovery call. We will tell you if it does not.