UPDATED January 13, 2012: It’s been more than 3 years since I challenged Suze and Dave to a debate, but they haven’t taken me up on it yet. This post sparked some very lively debate and insightful comments, so be sure to read those, too.
If Bank On Yourself is so good, why isn’t everyone already doing it?
Here’s why…
If you browse the personal finance section of any bookstore, turn on the TV or open a magazine on finance, you’ll discover that 99 out of 100 financial “gurus” will insist that whole life insurance is a lousy place to put your money. Most will recommend you buy term life insurance instead and invest the difference in mutual funds.
That’s in spite of the fact that, had you invested in an S&P 500 index fund for the past 12 years, your nest-egg wouldn’t have grown at all. And that doesn’t even factor in 35% inflation during this period!
Suze Orman & Dave Ramsey
But I’m getting a little ahead of myself. Part of the problem is these financial experts know nothing about the specially designed type of dividend-paying whole life policy used for the Bank On Yourself method…
It’s not really their fault. Out of 1,500 major life insurance companies only a handful offer a policy that has all the features required to maximize the power of this concept. That’s one reason it’s not even mentioned in most industry training programs.
And the fact that an advisor who helps a client implement a Bank On Yourself-designed policy takes a 50-70% cut in commission could be another reason why you haven’t heard of this before now.
So how is a Bank On Yourself-policy different from the kind of whole life policies Suze Orman, Dave Ramsey, David Bach, and others talk about?
Here are three key differences:
Key Difference #1: These experts say the money you can have access to in the plan (your “cash value”) grows too slowly in a whole life policy, and say you typically won’t have any cash value at all in the first few years.
A Bank On Yourself-type policy, however, incorporates a special rider or option that turbo-charges the growth of your money in the policy so you have up to 40 times more cash value, especially in the early years of the policy. This allows you to use it as a financial management tool from Day One.
Don’t take our word for it – here’s a statement from a Bank On Yourself-designed dividend-paying whole life policy, at the end of just one year.
And here’s an article that reveals the rate of return of a properly designed Bank On Yourself type policy. It puts traditional investments to shame, and it does that without the risk or volatility of stocks, real estate, gold, commodities and other investments.
Each plan is different, so to find out how much cash value you’ll have each year – guaranteed – request your FREE Analysis here.
Key Difference #2: Most financial experts, including Suze and Dave, write about policies where your death benefit stays level for the life of the policy.
However, in a dividend-paying whole life policy, dividends can be left in the policy to purchase additional coverage, while at the same time growing your cash value in the most efficient way possible. This policy statement shows you how the death benefit keeps growing, and proves these policies are different from the ones Suze and Dave talk about.
Please note that this statement is from a policy I started before I learned about Bank On Yourself, and it has grown much more slowly than a policy designed to maximize the power of the Bank On Yourself concept.
Even so, this policy has left my mutual funds and real estate investments in the dust.
Key Difference #3: The financial experts often rant about how, when the policy owner dies, the insurance company “only” pays you the death benefit and keeps your cash value.
But with a Bank On Yourself policy it’s very different, as you can see on this policy statement. It shows you how, had I died on the date this statement was issued, my family would have received a check for more than the original death benefit AND the cash value in the policy combined!
So I am throwing out the gauntlet to Suze, Dave or any expert who wants to challenge me. Just name the time and place!”
I’m so confident that they’ll come around once they get the facts about Bank On Yourself, that I’ve reserved a special place for their endorsements along with the trusted experts who have already endorsed Bank On Yourself.
And remember, Bank On Yourself will beat anyone’s best financial strategy or we’ll pay you $100,000!
No two policies are alike, because each one is tailored to the clients unique situation. So your results will be different. To find out what your bottom-line numbers could be, and how much your financial picture could improve if you added Bank On Yourself to your financial plan, request a free Bank On Yourself Analysis. There’s no obligation.
Be a fly on the wall and watch as our hidden video camera captured Suze Orman and Dave Ramsey discussing Bank On Yourself!
Thanks for your reply Pamela. I think I am familiar with those funding strategies. I am not familiar with such an extremely shortened premium paying period. That seems awfully short for a whole life. I have seen in done on UL contracts in 3 years. and 5 years for one particular whole life without using PUAs to pay premiums afterwords. I suppose if the insurer has a way to stay compliant with the CVAT or GSP test it would be nice to capitalize a “bank” in 2 years.
I am 70 with 5 years left on term policy.
What would be the average price of obtaining a BOY policy, say, 500,000 to 1,000,000?
What would be the approximate income guarantee and dividends available over the next 5 years?
Is there an mandatory exhaustive medical evaluation needed?
I am not a licensed financial advisor and thus am not allowed to make recommendations. A Bank On Yourself Authorized Advisor can help answer all your questions and would undoubtedly need additional information from you first.
You’ll get a referral to a Bank On Yourself Advisor when you request a free Analysis here.
What’s missing from all of Pamela’s responses is: What is “guaranteed” as long as money has been borrowed from the policy?
The answer is LESS DEATH BENEFIT. The unpaid loan amount and unpaid interest will be recapture from the death benefit before it is paid to a beneficiary.
What else is unsaid is how long it would take to accumulate $25,000 to buy that car (or those four cars) she is so fond of discussing. A 30-year old who buy a $1,000,000 whole life policy today would pay about $10,000 per year in premiums, and would not have $25,000 of loanable cash value for about 6 year. If they borrowed the full $25,000, but did not repay the loan, it would take another 5-6 years to amass another $25,000.
There is no magic here. That $10,000 could go into a shoebox — earning exactly ZERO PERCENT — and in 3 years you’d have the $25,000 to buy the car. And two years later, you would have enough to buy another car.
But you would not have a $1,000,000 death benefit either.
As the old saying goes, You Can’t Eat Your Cake and Have It Too.
The dialogue in this blog is rather different than the marketing hype on the home page. That’s the difference between listening to someone who knows what life insurance is, and someone who sells life insurance AND knows how it works.
The “guarantees” mentioned on the home page quickly fade when you read other parts of the website.
Max, thank you for (once again) confirming my statement that most financial advisors and insurance agents have no clue how dividend-paying whole life insurance works, let alone how the supercharged policies used for Bank On Yourself work.
Clearly, you haven’t taken the time to read this blog post or look at the actual policy statements we posted here to prove our points.
You’ve also missed all the examples of middle-income people who (due to the way Bank On Yourself policies are structured) were able to accumulate enough in their policies to finance a car themselves in a much shorter period of time then you spell out.
You also don’t understand that the death benefit of these policies grows exponentially, just as the cash value does, potentially far offsetting any depletion of your cash values created by policy loans. I give a good personal example of this here.
The saddest part of this is that you actually seem to believe you know it all. Pity for your clients.
Do you have one of her policies? I do. I have banked out of that policy for years, and love it! It is set up different that regular life policies. You need to understand riders before you bag on her plans. I have multiple BOY plans and they are kicking butt. I love being my own bank while the nay sayers continue to get slaughtered. Good luck
I just stumbled across this post and noticed Max’s comment…. Just “for fun” (I work at a company that designs BOY policies), I ran a sample illustration on a 30-year-old male, putting $10,000/year into a policy until retirement age. He was able to take a $25,000 loan in Year 5.
Of course we would never teach our clients to take loans without repaying them, as, for anyone familiar with the concept, we know this is essentially “stealing” from yourself – and your retirement! However, just for the sake of Max’s example, I did not show any loan repayments. The example client in this case would be able to take another $25,000 every three years, until age 59, without making ANY loan payments – he is only paying his annual $10,000 premium.
At Age 65, his death benefit is just shy of $925,000 – this is net of any outstanding loans – so this is what his beneficiaries would receive if he were to pass away at that point.
Remember he has taken out $225,000 ($25,000 x 9 cars), free and clear (about the same as if he saved it in that shoebox Max mentioned). He ALSO has pretty close to a million left in death benefit.
So yes, in this case, with Bank On Yourself, you CAN have your cake and eat it too!
(For you number crunchers, in the illustration I ran, he paid a total of $350,000 in premiums over 35 years. If you add up the loans he took out and never paid back ($225,000), plus the remaining death benefit ($924,984), he comes out ahead by $799,984 – not too shabby, in my humble opinion….)
What I’d like to know is what happens to the death benefit for this example after age 65. In my case, I took out a 30 year level term policy at age 40 with a premium of $558 per year that does not increase, for a death benefit of $500,000 (that does not decrease during the 30 year term) so up to age 70 I have a $500,000 death benefit for a cost of $16,780 in total premiums. The man in the example had nearly double the death benefit for his beneficiaries at age 65, but had to pay $125,000 ($350,000 less $225,000 loaned back to him) for it. It seems to me that I have the better deal here.
At age 70, if you haven’t saved enough, you will need to take out a new policy – at a much higher rate, assuming you even qualify for it at that point. (And most 70 year olds today have managed to save only 25% of what they’ll need for retirement, according to AARP.)
All the premiums you paid into it are gone, too, of course.
There is no comparison between term and dividend-paying whole life, which is a policy you don’t have to die to win.
These policies grow your nest-egg safely and predictably, allow you to become your own source of financing, and much more.
Yes, they have a death benefit, too, but it’s the living advantages that make Bank On Yourself unbeatable.
That’s why the $100,000 cash reward I’ve offered to the first person who has a strategy that can match or beat it remains unclaimed after 3 years.
Hi Pamela,
Is the same strategy available for a defined benefit plan with an insurance component? If so I’d certainly like to hear more.
I made the mistake of putting life insurance into a qualified plan years ago and then they changed the rules and I had to come up with $300K to buy it out of the plan.
Besides, the GOVERNMENT controls the money in qualified plans, NOT you! They can and do change the rules whenever they want. They control how much and when you can access your money. Life insurance puts YOU in the driver’s seat.
Don’t fall for this trap. And compare Bank On Yourself to 401(k)s and other qualified plans here.
I must be missing somthing here in comparing qualified plans to BOY, at my age (72) my whole nest egg(90%) is in qualified plans (there isn’t much choice when you are working except to contribute to a qualified plan or lose big time to taxes). If qualified plans and BOY cannot work together there is no other source to fund BOY.
Depending on the situation, qualified plan monies are often used to fund a Bank On Yourself policy.
At your age, many people are moving the funds from their retirement accounts as a lump sum into a type of whole life policy specifically used for older folks.
I’ll be writing about this more soon, but in the meantime, you can find out how much predictable, guaranteed income the policy would throw off for you when you request a free Bank On Yourself Analysis.
For the record, there IS a better alternative to funding a qualified plan while you are working – fund a Bank On Yourself policy with those dollars instead, even the employer match isn’t worth it for most people – based on actual results over the past two decades.
And Bank On Yourself gives you 18 powerful advantages and guarantees. No other financial product, strategy or vehicle can match it – or even come close.
Rose H has explained this program more clearly in one blog entry than everyone involved with promoting this concept ever has…including the lady that wrote the book…Thank you Rose…More people involved with Bank on yourself should sit down with Rose and have her explain this concept…good for you Rose
Thanks Dan! Just doing my part, when I can, to dispell the many myths out there about Bank On Yourself…. Financially speaking, personally, it’s the best thing I ever did for myself, and if I can help others understand it better, then more people can reap the benefits and in the meantime reduce our country’s reliance on big banking!
Pamela, you have the patience of Job! Explaining a different way of investing can be frustrating and time-consuming, yet your responses are calm, clear and concise. I’m really enjoying your website.
Thank you Catherine! It definitely can be frustrating. Thanks for your kind feedback.
So to Rose’s response,
how is that different than if i just put $10,000 in any other investment for 35 years. At 4% i would have $765,000. Is there another advantage that i am missing here?
thanks, this is really interesting.
Bill
Bill, There are lots of advantages and guarantees the Bank On Yourself method has that no other financial product or strategy can beat. Learn about them here and keep in mind that if you use a strategy that really can match or beat the advantages of Bank On Yourself, we’ll pay you $100,000 cash!
Thanks to Pamela and Rose for their explanation and examples to clarify what “BOY” is and how it works. My question is, do you open just one account to service a college fund and other expenditures as given as examples here?