Understanding The Benefits Of...‘Creating Your Own Bank’

Imagine, if every time you needed money, instead of borrowing from a bank, or using a credit card you had your own private bank (of your money) that you could get a loan from, for whatever you need.  Then whenever you take a loan, you would be paying yourself the principal and interest the bank would have received.  Instead of the bank using your money to make money, you would be making all of those profits.

How much better off would you be?  Click here for an Example.

How the Concept Works

The main idea is to sock away as much money as you possibly can, as quickly as you can, into a good participating whole life policy (Dividend paying), for seven to ten  years to create your own private bank.  You over-fund the policy using a Paid-Up Additions Rider.  Then whenever you need to make a big purchase, you can borrow the money from your bank.  (Your Life Insurance Policy)  Now you pay the loan principal and interest back to yourself.  You're now making the big profits on your money that the bank would have made.

Twelve Reasons why you and any money smart person should create their bank

This Concept Isn’t New

It’s a great concept.  However, the concept isn’t exactly new.  Variations of this 'safe money' concept have been used for more than 30 years.  Thirty plus years ago, some of the very best financial advisors were showing their clients that the safe money they put into their participating whole life policy could be used for emergencies, to take advantage of business opportunities, to fund a college education, to buy a car, to buy property and much more.  However, if you take money out prior to age 65 (retirement) you’ll want to pay the loan back, plus the interest, so you will have the tax-free retirement income you planned on.

It Works Better Today

As well as this 'safe money' concept worked 30 years ago, it works much better today because of the 'paid-up additions rider' that was introduced in the late 1980’s.  Today, using a paid-up additions rider, you can dramatically over-fund a participating whole life policy, making it an exceptional wealth accumulation vehicle, while still keeping the unique benefits and safety of cash value life insurance.

Why Participating Whole Life

The reason you use a participating whole life policy is that it offers several unique benefits, that the other investment vehicles don’t offer…

• You can put in as much money as you want... limited only based on the size of the policy, which you can make as large as you need. (Not so, with rrsp plans)

 

• All of the money you put into a cash value life insurance policy builds tax deferred.  You avoid paying income taxes every year, so your money builds faster.

 

• You can borrow the money from the policy tax-free, without contractual withdrawal penalties.  And, there are no early withdrawal penalties from the Government.  (Not so, with RRSP’s or annuities)

 

• You have complete control.  You can take loans from the policy without going through any pre-qualifying process as you would with a bank or credit cards.

 

• Guarantees:  Only life insurance and annuities guarantee your investment principal and offers you minimum growth guarantees for the life of the contract.

 

• Safety: Insurance companies must, by law, cover at least 100 percent of their liabilities with reserves, hence the term "100 percent legal reserve life insurance company."  There are also regulations as to the percentage that can be held in certain forms of assets.  This system has produced a remarkable overall record of solvency and safety.

 

• Cash-value life insurance is generally not attachable by creditors.

 

• You have a disability waiver of premium rider that will continue to deposit money into your account if you ever become disabled.  This makes the plan self-completing.  (Only life insurance offers this unique benefit)

 

• Life insurance provides a death benefit that gives your family the money you intended to save; in the event you can’t be there.

 

• Life insurance cash values don’t count as an asset when applying for college or university financial aid.  And, loans from life insurance aren't a taxable event, so they are not reportable when applying for student loans.

 

• Life insurance can provide a tax-free income during retirement, which you cannot outlive.

 

• You'll have the protection of life insurance in your retirement years to replace a lost pension plan and CPP income at your death, for your spouse and heirs.

 

• Unlike pension plans and RRSP’s, the death benefits and cash values are transferred income tax-free to your beneficiaries.

 

• Cash value life insurance generally bypasses probate (and it is private, so there are no public records).

 

• And best of all, in most participating whole life policies, you will be making money on the money you borrow.  You are NOT borrowing your money directly from the life insurance policy, so you'll continue to earn interest and dividends on ALL of your accumulated cash values.

 

Making The Concept Work

The real beauty of ‘Creating Your Own Bank’ is that with some small modifications to their ideas, almost everyone can use this concept... to take back control of their money and be on the road leading to true financial independence.

As stated earlier, to make this concept really work means putting all the money you possibly can, into a good cash value life insurance policy, over-funding it up to the guidelines.  (Participating Whole Life or Universal Life)  Now, if you want to maximize the exceptional benefits of using these concepts, you must ‘FIND YOUR MONEY’!

• Can you increase your deductibles and delete any unnecessary riders on your existing insurance policies?  Do you have any unneeded insurance policies?  Can you use their dividends to pay up your existing policies and/or funnel those dividends into the new policy?

 

• Can you temporarily stop the contributions to your RRSP and pension plans, except for any amounts that are being matched by your employer?

 

• Can you stop payments into prepaid college plans, etc.?

 

• Can you refinance your home so you can use equity to pay-off all your debts, to free up those payments to funnel into the life insurance policy?

 

• Finally, can you look for other ways to cut your current expenses?  Can you get a better long distance carrier for your phone service, etc.?

You Be the "Bank"? Why?

 

When you are the "Bank", you can take back the control of your money... and your life!

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