Many people out there are feeling frustrated when it comes to their finances. They have been listening to the “wisdom” they have been instructed to follow for so many years. You may have made all the “right decisions” you were told to but are still feeling let down by the results.
When you came across the concept of Bank on Yourself, perhaps you felt skeptical or had many questions arise. We want to share the basic ideas of why Bank on Yourself works and how it can change your financial future!
Why It Works
The first idea at the heart of this concept is the mutually-owned life insurance company. “Mutually-owned” indicates that policyholders actually own part of the company, allowing profits to go to the shareholders. This puts you in a position to boost returns in cash value policies and subsidize the cost of term life insurance policies.
With tax-free dividends paid to policyholders, this means the after-tax returns on policies participating in the profits of the insurance company.
The second reason the Bank on Yourself concept truly works is based on a process called direct recognition. Direct recognition is the strategy for handling the payment of dividends when a policy loan is outstanding.
In this case, however, non-direct recognition is the key to Bank on Yourself success.
Let’s provide an example:
When you borrow money against a life insurance policy, you are not really borrowing your own money. Instead, you borrow from the insurance company’s general fund, using the cash value in your policy to secure the loan.
What Does This Mean for Me?
The benefit here comes from the practice of arbitrage. Arbitrage is essentially taking advantage of the price difference between two or more different markets.
A policy using the non-direct recognition approach allows you to arbitrage the difference between the minimum crediting rate on cash values (including dividends) and the interest rate the insurance company charges on loans–thus creating a very affordable credit.
There are also numerous benefits to whole life insurance. Some of these benefits include:
- Guaranteed tax-free death benefit for your beneficiaries
- Cash value that grows at a guaranteed minimum credit rate, without the risk of market loss
- Tax-free growth
- Tax-free withdrawals
- Tax-free loans
- Annual dividend payments
The Time is Now
So, the Bank on Yourself concept is founded on a life insurance policy that can be used to build savings and allow you to leverage cash values for self-financing. You will be able to grow your money in a predictable and guaranteed way. And although our economy can seem intimidating to navigate right now, there is truly no better time to “bank on yourself.”
We want to help you grow and protect your financial future. A Legacy Today Advisor can help you create a new, successful plan to break the cycle of frustration.
Ready to learn more and take control of your Legacy?
Bank On Yourself® is a registered trademark owned by Hayward-Yellen 100 Ltd Partnership and is being used with permission.