We recently published a 3-article blog post series inspired by an article that financial planner and investment advisor Michael Kitces wrote about the problems with “banking on yourself” with life insurance policy loans.
Then we invited our readers to tell us what their biggest take-away from these articles was, and to share their personal experience with Bank On Yourself policy loans versus other sources of financing.
The many comments left on these three blog posts demonstrated once again how insightful and articulate our readers are! We’ve published excerpts from some of the comments we received below, where you’ll find 21 reasons why using a Bank On Yourself-type policy loan to access cash beats any other way of accessing capital!
In the first article, we discuss four things Mr. Kitces got right about the Bank On Yourself concept, and then reveal what he got wrong, including five fundamental concepts.
In Kitces’ review of the Bank On Yourself concept, he redefined my trademarked phrase, “Bank On Yourself,” to fit his interpretation of how the concept works! So in Part 2 of What Michael Kitces Missed in His Bank On Yourself Review, we had to school Mr. Kitces on the five critical requirements you need to meet to truly be “banking on yourself.”
And in our third article in this series, we covered Michael Kitces’ Big Blind Spot on Bank On Yourself Policy Loans.
You see, Mr. Kitces points out over and over again that a growing loan could cause a life insurance policy to lapse and result in tax consequences. But he missed the critical point that you finance everything you buy – even when you pay cash!
In this article, we explain why that’s the case … and why borrowing against a properly-structured life insurance policy beats every other financing source available to you.
Now Read On for Reviews of Bank On Yourself Life Insurance Policy Loans from People Who’ve Actually Used Them…
Here are excerpts from 21 Bank On Yourself policy owners who’ve discovered first-hand the advantages of life insurance policy loans … and never looked back. (Comments have been edited for spelling, grammar, clarity and space restrictions.)
“I used a policy loan to pay off my home equity loan, then I borrowed again to buy a car – and I got the money in three days, with no questions asked!” – Sarah Sellars
I took out a conventional home equity loan and paid interest on it for three years. Then my Bank On Yourself Authorized Advisor said, “You could take out a life insurance loan and pay off that home equity loan.” So I did. I’m now paying myself back instead of paying some bank. Since then, I’ve taken a second loan to buy a car. It took about three days to get the money, and with no questions asked.
The people I bought the car from wanted me to finance the car. I told them, “I’m paying you cash!” I’m so happy I heard about this on the radio. It’s the best thing that could have happened to me.
“Bank On Yourself is the most dynamic financing strategy going!” – Stan Cox
This strategy of becoming your own “banker” with dividend-paying whole life insurance, as you outlined, is undoubtedly the most dynamic financing strategy going!
Unfortunately I never learned about this until a couple years ago. But now that my wife and I are educated, we used a policy loan to buy new furniture, financing it ourselves with our “private, personal bank.”
And our cash value growth gave us an additional $400 “profit,” even after paying the interest on our policy loan! But more like $800, if you count the 25% interest we did not pay by financing through the furniture store! I only wish I had started this when I was in my 20s, or even my 30s!
“You’ve got to look at the big picture!” – Philip Wahl
To diversify your financial picture, you must look beyond your investments to your entire financial landscape including how you save, invest, borrow, and spend money. A properly structured whole life insurance policy is an essential component to truly bring diversity and safety to your financial ecosystem.
“Bank On Yourself is not a get rich quick scheme!” – Ryan Lorenzen
As Paul Harvey often stated on his radio broadcasts: “Self-government won’t work without self-discipline.” Finances are no different. Bank On Yourself is not a “get rich quick with no effort” set up. You need financial self-discipline to know that loans you take from your policy need to be paid back.
The beautiful part about Bank On Yourself, however, is you have a say on the schedule to repay your loans. The empowerment that provides is truly beyond description – at least beyond the description you will ever get from any financial or banking advisor. Making our own payment schedule has made sleeping at night much easier for my wife and me!
“We like paying ourselves more than paying some bank!” – Harvey
We’ve had our policies for only a few years and we’ve been able to take loans to pay for part of our wedding, to do some light remodeling work on our townhouse, and to make a down payment on our car.
Our next loan will be to pay off one of my wife’s small student loans! We would rather make payments back to our policies than give the money away for someone else to make a profit on it.
“I borrowed from my policy to pay the premiums on that same policy!” – Rich Tiedermann
When I divorced, I had difficulty paying my whole life premium so I took a loan from the cash value and the premiums were paid. Eventually I was able to pay back most of the loan but the good thing is my policy has increased in cash value due to dividends.
What’s more helpful is the loan interest is low and there are no forms to fill out or financial papers to provide. One of the benefits I like most is the peace of mind I have knowing that if I die, my beneficiaries will receive the face value of my whole life policy, minus the loan of course.
“They couldn’t believe we insisted on paying cash!” – Jane Stubbs
My husband and I used our first policy loan to put in our HVAC system. It was so easy to get the loan, and the knowledge that we were helping our finances instead of the bank’s made it so much nicer.
You should have seen the look on the guy’s face when he was trying to explain his company’s financing programs, and I kept saying, “No thank you; we will be paying in full with a check.”
After the third try, he finally heard what I said, and he stopped mid-sentence and asked, “The whole $9,000?” I said yes, and he took another minute to let that sink in – like he didn’t want to break the spell. We wrote up the paperwork and scheduled the installation.
“I love being in control!” – Cheryl Martin
I have two participating (dividend-paying) whole life policies with non direct recognition and am applying for a third! The reason is simple. I get to control when I take money out and when I put money back in, so this is my BEST source of financing and it’s extremely flexible.
All the while, the underlying cash value just keeps growing and compounding whether or not I have a policy loan out. How amazing is that?
“No banker reviews my finances!” – Dennis Strong
I like the fact that I don’t have any banker or loan officer going over my finances and telling me if I can or can’t take out a loan. I don’t have to jump through hoops to get the loan. With no questions asked, I merely request my loan within the amount I have available and no one judges me for what I use the money. My credit rating isn’t affected because the credit bureaus don’t know what I owe. Only I do. And I determine how quickly to repay that loan.
“My first policy loan tided me over when I was unemployed – now I’m using a loan to help put my daughter through college!” – Jeff Hastings
After I had my Bank On Yourself policy for a few years, I was laid off. To make things easier on me, I took out a loan on my policy to pay off my car and a small loan I had, even though I didn’t have a job or income. Try that at a regular bank!
Now, years later, I’m using a policy loan to help put my daughter through college. No hassles or problems.
“Not having to depend on banks while negotiating is a huge advantage!” – Chester Hull
We’ve used our Bank on Yourself policies for buying RVs, appliances, and more! We are getting ready to buy the seventh RV we’ve owned in 10 years, thanks to our Bank On Yourself plan.
Knowing that my money is still working for me, even while using it for major expenses, is great. And being able to negotiate deals without depending on financing from a bank is a huge advantage.
“We’ve all been taught to think like consumers, not like bankers!” – Mike Smela
The biggest challenge and biggest opportunity most people have with the Bank On Yourself concept is we have never been taught to think like a bank. We’ve been taught to think like consumers and investors.
Banking as a lifetime financial strategy focuses on safety, security, control, and maximum profitability – just what most people so desperately want.
I’ve had my properly structured “banking” policy since 2011, and it performs brilliantly. Every dollar I put into my “bank” continues to grow and will create compounding growth for the rest of my life.
I have borrowed money from my “bank” many times, which I pay back on my own schedule. Do I pay interest to the insurance company? Yes. Do I care? No, because I know that the money I borrow continues to grow as if it never left.
Plus, as an “owner” of the mutual life insurance company, when I help them generate profitability, my “bank” grows by receiving tax-free dividends. As I pay the money back into my “bank,” the value of my “bank” increases, expanding the money I have access to, whenever I want it, for whatever I want.
The money grows without taxes. And when I access the funds properly, I do so income tax-free. I like that! Thank you, Internal Revenue Service! (I never thought those words would ever come out of my mouth, LOL!)
To those still looking, my advice is to learn to think like a bank and realize the lifetime results that kind of thinking produces.
To those financial professionals doing the same, it’s not just about insurance! It’s about living a life of control, growth and results. A properly structured whole life policy from the right company, with the right components, designed for your situation and goals, provides better results than any other financial vehicle available.
Find Out How a Properly Structured Bank On Yourself Plan Can Help You Reach Your Financial Goals and Dreams – Without Taking Any Unnecessary Risks
No two plans are alike – yours would be tailored to your unique situation. When you request a FREE Analysis, you’ll discover the guaranteed minimum value of your plan on the day you want to tap into it – and at every point along the way.
And you’ll see how much your financial picture could improve when you fire banks and credit card companies and become your own source of financing.
So request your free, no-obligation Analysis here NOW while it’s fresh on your mind:
“Bank On Yourself sure beats term insurance!” – Jon
Years ago, I bought a 20-year level term life insurance policy with a $2,000 annual premium. Twenty years later, after paying $40,000, the policy has expired, and I am left with no life insurance. I’m glad I am still alive and now own a Bank On Yourself policy on my son’s life.
In the course of my research, I learned that if I had acquired a Bank On Yourself policy 20 years ago instead of the term policy, I would now have both a substantial cash value and a death benefit.
“I used a policy loan to pay back credit card debt from a bad marriage!” – Zelda Zuniga
I have a Bank On Yourself policy I bought at age 52, and I used it first to pay back credit card debt from a bad marriage and to consolidate loans. Then I used a policy loan to purchase a truck. The process is simple and fast, and my only regret is not knowing about this earlier in life.
“My mom bought a policy for each of her eight children!” – Kevin Ashdown
I am 61 years old and we just got our fourth policy. It all started two years ago, when my 90-year-old mother started eight policies for my seven siblings and me. She was the owner of these policies, totaling $960,000 in death benefits. The distribution was set up that each policy was to receive a $20,000 annual premium, over a period of six years.
We’ve started an additional three policies since then, because of our lack of faith in the stock market. We are taking money out of our 401(k) to create own Bank On Yourself plans. Our cash values now exceed $120,000, and we are presently loaning money to two of our eight kids. They both pay 6% loans, so the pot (our cash value) is getting larger.
A third family member is looking for a loan of 8% over six years to purchase a car, which will add an additional $5,000 to our cash value. I’m even hoping to do mortgages with some of our other kids next year.
We are totally happy with our new policies, but I think the true measure is seeing the cash values after the seventh year, because that is usually the time these policies start to take off. Thanks, Mom!
“What other lender will let you set the terms for paying back a loan?” – Dave Lowe
Recently my wife and I decided to do major landscaping around our house. We could have taken out a home equity line of credit to fund the work. But that would just give another creditor an opportunity to take my home if something happened and I were not able to pay the loan back.
Or we could have gotten a cash advance on our credit card. We know the disadvantages of that strategy. Instead, we borrowed against our life insurance policy. The process was incredibly easy. There were no long forms to fill out and no invasive questions about what we were going to do with the money. Within a few days, the money was there, in our bank account, ready to use.
We’re currently paying back this loan at our own pace, with comfortable terms we set up ourselves, so that it doesn’t adversely affect our budget. What other lender will let you set the terms for paying back a loan? The simple answer is: nobody.
Mr. Kitces, borrowing against your Bank On Yourself policy could not be any more different from borrowing against your credit card. Yes, they are both loans, but the difference is in the details. To equate them as somehow being the same is like saying there’s no difference between football and baseball because they are both sports that you can play or watch on TV.
“I’ll be buying a policy when my new grandchild is born – to finance that child’s retirement!” – Don K
My only regret is that I learned how to do this at age 58 instead of 28. We have a grandchild due in July. I will be buying a policy on that baby that will not only pay for the child’s first car, it will pay for the child’s retirement and leave a death benefit for his or her posterity.
“Our policy loans paid off bills and bought my wife a luxury SUV!” – Brian Freeze
We’ve had our Bank On Yourself plan for five years. We’ve taken out two loans to pay off other bills and buy my wife a nice Volvo SUV. It was a wonderful feeling to pay cash for a vehicle. It’s also satisfying to see our cash value and dividends grow! I look forward to teaching my two kids how to utilize this great tool for their financial futures.
“I had no idea about all the fees in my 401(k) plan – until I closed it out!” – Christine Peace
After several conversations [with a Bank On Yourself advisor] and reading your book, The Bank On Yourself Revolution, I was convinced. I moved my savings to a Bank On Yourself policy and closed out my 401(k). I didn’t know about the many fees that came with that retirement plan. I guess my company conveniently forgot to mention that part.
I feel secure with my finances and retirement, now that my policy is in force. I am planning a lot of traveling in the near future, and I can’t wait to use my policy for that!
“With our four policies, we’ve bought two vehicles and property in Hawaii!” – Larry Smith
I love Bank On Yourself! That’s why we have four policies! We have borrowed against our policies to pay cash for an Infinity QX56, a BMW 750LI, and to purchase property in Maui. We pay it back at our own pace or just pay interest.
In other words, we decide what we want to do! It’s like owning your own bank! How can you get a better program than this?
And on top of all that, we have a life insurance policy in place if, God forbid, something happens! So why in the world wouldn’t everybody have Bank On Yourself policies in their portfolio?
“Your book changed and saved my life!” – Annette Kam
My only regret? I waited until I was 57 to get started. Had I known about it earlier, I would have diverted my whole 401(k) into it. But better late than never.
I am truly reaping the rewards, and in a few years, I get to collect “retirement” income of over $2,000 per month tax-free. How about dem apples? Thank you, Pamela. Your book changed and saved my life!
Don’t Envy Them! Join Them!
Did you notice how many of these folks say their only regret is that they didn’t start their Bank On Yourself plans sooner? I hope that’s one regret you don’t have. But you have to take the first step TODAY, by requesting your FREE, no-obligation Analysis. You’ll be glad you did!