Famous people who use the Bank On Yourself method
June 30, 2010 by Pamela Yellen
There’s one surprising thing Walt Disney, J. C. Penney and the Pampered Chef have in common – they all used the Bank On Yourself method to start, grow and/or finance their businesses!
Walt Disney borrowed from his life insurance in 1953 to help fund Disneyland, his first theme park, when no banker would lend him the money.1
Following the 1929 stock market crash, famous retailer J. C. Penney borrowed from his life insurance policies to help meet the company payroll.2 Had he not had ready access to capital, the company probably would have been forced to close its doors, adding even more people to the unemployment line.
In 2002, Doris Christopher sold her kitchen tool company, the Pampered Chef to Warren Buffett for a reported $900 million. Seven years earlier, she launched the company with a life insurance policy loan.3
Foster Farms was founded in 1939 when Max and Verda Foster borrowed $1,000 against their life insurance policy to buy an 80-acre farm near Modesto, CA.4
Senator John McCain secured initial campaign financing for his presidential bid by using his life insurance policy as collateral.3
So-called “permanent” or cash value life insurance (versus term insurance, which is like renting insurance) builds up cash value that policy owners can use in difficult times as a ready source of money to cover personal or business expenses for emergencies and even to cover insurance costs.
Almost every day, I receive grateful emails and calls from folks who use the Bank On Yourself method about how they used their equity to get them through a job loss, disability or other family emergency.
That’s as important today as it was in America’s Great Depression, when whole life policy loans helped save thousands of homes, businesses and family farms.
Keep in mind that Bank On Yourself-type policies are dividend-paying whole life policies that incorporate little-known riders or options that turbo-charge the growth of the cash value in the policy, especially in the early years of the policy. A properly designed policy could have up to 40 times more cash value in the first years than a traditionally designed whole life policy (the kind Suze Orman, Dave Ramsey and 99% of all financial “gurus” talk about).
It’s a virtual certainty that the policies owned by the famous business owners profiled above were not the super-charged version. But clearly these policies can be lifesavers for the policy owners.
If you haven’t already done so, take advantage of a free Analysis now. It will show you how Bank On Yourself can give you the peace of mind that comes with having a cash cushion to see you through tough times. It will also show you how it can help you take control of your financial future, along with revealing the bottom-line numbers and results you could have if you added Bank On Yourself to your financial plan.
An interesting fact is that there was $116 billion in life insurance loans outstanding at the end of 2007.5
Life insurers have $4.3 trillion invested in the U.S. economy, making them one of the largest sources of capital in the nation.6
And life insurers paid more than $19 billion in federal, state and local government taxes in 2007. That figure doesn’t include taxes paid by all the people the industry employs or business that supply the industry with services.7
In short, the life insurance industry is a key driver of our economy!
While access to credit and capital remains tight for both businesses and consumers, those who use Bank On Yourself have been able to have access to the money in their plans by answering just one question:
How much do you want?
You never know when you’ll have a family emergency or hit a rough spot. Unfortunately, it’s part of life.Unfortunately, most Americans don’t have much of an emergency cash reserve to fall back on in tough times. 71 percent of all workers surveyed recently said they’d have trouble meeting their current financial obligations if their paycheck were delayed by even one week, according to the American Payroll Association.
If you don’t have a liquid cash cushion, you’ll typically have to use credit cards, ask friends and family to help out, or you’ll have to sell some of your investments to raise cash.
None of these options is ideal. And if you do have cash you can get your hands on quickly in a money market or savings account, the moment you withdraw your money, you’re earning ZERO interest on it.
One of the most important lessons about money and finances I’ve learned in recent years that’s not taught in most economic courses is this:
You finance everything you buy!
That’s because you either pay interest to someone else when you use their money… OR you give up the interest and investment income you could have earned, had you kept your money invested instead.
So, even paying cash has its drawbacks.
But Bank On Yourself is a way of managing your money that’s actually “Better than Debt Free.”
Wondering where you’ll find the money to start a Bank On Yourself policy? Bank On Yourself Authorized Advisors are masters at helping you restructure your finances to free up seed money. There are at least eight places they look. Don’t count yourself out. Request a free Analysis to find out what’s possible.
Bank On Yourself beats financing, leasing or even paying cash for things by a long shot. Here are 7 reasons why:
You can access your equity in the policy any time you want and for any reason you want
No nosy credit applications are required, you don’t have to beg for money or pledge your first born to get it.
You can pay back your loan on your own schedule, not someone else’s
If you hit a tight spot, you can reduce or skip some payments, and no collection agencies will call, no goon squad will come to repossess your stuff or foreclose on your house, and you won’t get a black mark on your credit report
While you do pay interest on policy loans (at a rate that’s often less than rates available from financial institutions), the interest you pay ultimately ends up back in your policy, as described on pages 100-102 of my best-selling book
If your policy is issued by one of the handful of companies that meets all the necessary requirements, when you take a policy loan, your policy can continue growing as though you hadn’t touched a penny of it! You’ll continue to earn the same pre-set and guaranteed cash value increase every year AND you’ll receive the same dividends as if you had no loans against your policy
While dividends aren’t guaranteed, Bank On Yourself Authorized Advisors use companies that have paid dividends every single year for over 100 years – including during the Great Depression.
Policy loans are not taxable as long as the policy remains in force
Bank On Yourself: The ultimate financial security blanket?
Let me ask you a question. How long do you think it will take for the Dow – which has dropped below 10,000 yet again – to get above the 13,000 level and STAY there?
Do you think it could be one year? Two years? Five years? Maybe even ten years?
Let’s be honest – none of us really has a clue!
But are you wondering what’s so important about the 13,000 level?
Actually, the Dow will have to reach and stay above 13,127 to get you back to where you were more than 11 years ago!
That’s based on inflation of over 31% over the past 11 years and 2 months.8
What do you have to show for all those years other than sleepless nights and broken retirement dreams?
But it doesn’t have to be that way!
Hundreds of thousands of people use the Bank On Yourself method, and not one of them lost a penny in their plans when the markets crashed.
Their plans have ALL continued growing safely and predictably, just as they have for well over a century.
As Independence Day approaches, consider how Bank On Yourself can give you independence and freedom from…
The stomach-churning ups and downs of stocks, real estate and other investments
The control that banks, credit card companies and other financial institutions have over you
Wondering and worrying if you’ll ever be able to retire and what you’ll have to give up to do so (Bank On Yourself lets you have a guaranteed income stream you can predict and count on, giving you peace of mind for retirement planning
You control your money, not the government (government-sponsored retirement plans have more strings attached to them than a puppet)
So, if you haven’t added Bank On Yourself to your financial plan yet, request a free, no-obligation Analysis now that will show you how you could reach your goals and dreams – without the risk or volatility of traditional methods.
I urge you not to put it off another day. You have nothing to lose and potentially much to gain!
1 www.justdisney.com
2 www.nndb.com/people
3 Courtesy of Barry Dyke, author of The Pirates of Manhattan
4 http://www.fosterfarms.com
5 LIMRA analysis of A. M. Best annual statement data
6 ACLI
7 LIMRA analysis of A. M. Best annual statement data
8 www.inflationdata.com
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I have an life insurance policy that has cash value with a rider that I can put more into the policy. Is back on yourself the same thing?
Thanks Jimmy
If it specifically states “Paid-Up Additions Rider,” not just “Paid-Up Additions,” it probably is one of the riders used to turbo-charge the growth of the policy.
But how you actually USE the policy is the key piece, and what can really turn it into a screamer. Please read chapter 6 of my book for more details.
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Uhhhhh…life insurance dividends are a return of overcharged premium (that is why they are not taxable). The premiums are extremely high – you talk like you get all these benefits for ‘free”, while in reality, the actuaries have it all figured into the premiums, making sure the company makes a healthy profit. And on and on. Many of your claims are “half-truths” that are taken out of context, like your comment that your death benefit does not rise in a term insurance policy. First, your death benefit does not rise in a while life policy, unless it is designed to rise by way of dividends and PUAs. This cost is, again, added in by the actuaries – you don’t get it for “free”. (If dividends were not part of the plan, the premium would simply be less…the insurance company does NOT do you any favors.
Not, if you take a term insurance company with a SIDE fund, and define “death benefit” as the amount of money your beneficiary receives on death, then your death benefit DOES rise! Stated another way, if you take your exorbitant whole life premium, buy term insurance, and put the balance into a side fund each month (like an annuity from the same insurance company), your death benefit DOES rise, using the same money! In fact, your “cash value” is positive the FIRST MONTH! Why? Because all the high mortality fees and sales commissions of whole life are NOT coming out of your term and annuity premium. You are only paying the small mortality fees and commissions of those products, so you will always come out on top.
I am sorry for all this. I have been a “scholar” of life insurance for 35 years, and I get so tired of the half truths. That is why it would be impossible to win your $100,000 challenge…you have your own definitions. For instance, you will claim that your “plan” has increasing death benefit. Then you would say that my “term insurance” does not have an increasing death benefit. specifically, you are right. But, taken as a whole, my plan will not only provide an increasing “death benefit” (as defined by the amount of cash paid to the beneficiaries at death), but it gets a head start on “cash value” because the fees are MUCH lower. And, in my plan, all the cash values are MINE! I will NOT lose my insurance if I decide to take my cash value, unlike your plan. And yes, I will pay taxes on my profits, JUST LIKE YOU WILL! The only reason your will likely NOT pay taxes is because you will likely NOT have a profit (unless you have been building cash value for a very long time!)
I could go on and on, but you will just “tear me apart” with half-truths and out-of-context statements.
Sincerely yours.
Uhhhh… this seems to be the week that 30+ year industry veterans who pride themselves on knowing all about life insurance products reveal the gaping holes in their knowledge.
“Paid-Up Additions” (PUA’s) are NOT the same as a “Paid-Up Additions Rider” (PUAR) incorporated into a dividend-paying whole life policy at the time it’s issued.
There IS cash value in the first month, which grows up to 40 times faster than a traditionally designed policy (the kind you and 99.99% of all insurance agents and advisors talk about).
Read more about what the financial “gurus” think they know about Bank On Yourself policies that just ain’t so. You’ll see actual policy statements that PROVE how these policies are different.
I also dispel the myth there that the insurance company “keeps” your cash value when you die, contrary to your claim. And you obviously don’t have a clue about the tax laws that apply to this and how it’s possible to access your equity and substantial profits with no tax consequences. It’s too bad for your clients.
I also own a couple of annuities. They can be a great product for certain situations. However, my Bank On Yourself policies are kicking the stuffing out of my annuities and my death benefit is already many times greater.
It’s not all your fault – this isn’t taught in any of the standard industry training programs.
But just because you don’t know about or understand it doesn’t mean it doesn’t exist. And it’s no excuse for not opening up your mind and doing a little research to get the facts, rather than assuming I’m making stuff up.
I saw your answer saying “Paid-Up Additions” (PUA’s) are NOT the same as a “Paid-Up Additions Rider” (PUAR). Could you please explain the difference?
Thanks,
Mike
Most or all dividend-paying whole life policies have a “Paid-Up Additions” (“PUA”) feature. You can choose to leave your dividends in the policy to purchase additional coverage, called “paid-up additions.” These are small policies requiring only one premium and then no further premiums are required. They are “fully paid-up” immediately.
These will typically show up on a policy statement under a column labeled “dividend accumulation” or “dividend additions.”
The “Paid-Up Additions RIDER” (“PUAR”), on the other hand is an EXTRA option added on to the policy WHEN IT’S ISSUED, and a portion of your premium is directed into that rider. This is what turbo-charges the policy significantly.
A Bank On Yourself Authorized Advisor will typically structure a policy so that 50-70% of the total premium is going into the PUAR. And approximately 94% of the PUAR premium goes to work building cash value for you immediately. It will typically be shown in a SEPARATE column labeled “Paid-Up Additions Riders” or something similar.
Advisors are paid virtually no commission on the premium going into this rider, which probably accounts for why so few advisors and agents know about it or use it.
I’ve seen you write a few times that you “get back the full purchase price of large purchases”. Can you use a car as an example and explain how someone is actually getting the purchase price of the car back?
Also, is it accurate to say that Bank On Yourself gives you a process or vehicle to pay yourself back the purchase price? It’s not that you are getting a free car, it’s that you are taking a loan from yourself and then paying yourself back for the loan, right?
- Mike
Good questions, Mike!
I explain this in detail with specific examples in my best-selling book in Chapter 2 and on pages 53-57 and 100-104.
I heard Tom Martino on 630 KHOW talk about meetings or seminars. People can talk & ask questions. I was in my car & couldn’t write the phone #. Could I get more info please? Thanx
Consumer Advocate Tom Martino endorses this concept. However, the seminars mentioned on his show are not lead by Bank On Yourself Authorized Advisors and we have no affiliation or connection with them.