Can You Put a Lump Sum into a Bank On Yourself Plan?

Updated April, 2020

One of the most-asked questions we get is about whether you can pay a larger amount of premium into a Bank On Yourself policy in the early years, to supercharge the growth.

The answer is “yes,” and the big advantage is that it allows you faster access to a higher amount of cash value that you can use for a variety of purposes.

Here are three common situations where people do “lump sum” funding of their plans…

Situation #1: A Better Place for Your “Safe Money”

Some people have relatively large amounts of money they consider their “safe money” or rainy-day money in savings or money market accounts or CD’s, or even bonds, that are currently paying interest rates so low you practically need a magnifying glass to see them.

Moving some of your safe money into a Bank On Yourself policy gives you many advantages, including…

  • Guaranteed, predictable growth that is many times higher over the long term than what conventional safe money vehicles pay
  • Tax-deferred growth
  • Tax-free distributions, under current tax law
  • No market risk or losses
  • Flexibility and Control – you have access to your money with no government restrictions or penalties. (Have you ever noticed how 401(k)’s, IRA’s and other government-sponsored retirement plans have more strings attached to them than a puppet?)
  • Income tax-free death benefit for your loved ones
  • Your policy is guaranteed to grow by a larger dollar amount every single year you have it

Situation #2: Debt Consolidation

The Bank On Yourself Professionals may help you to “front load” a policy in order to help pay off high-interest-rate debt.

This typically involves repositioning other assets you may have into a Bank On Yourself policy, so you can turn around and pay off debt you owe to outside financial institutions.

The benefits of transferring a debt to your Bank On Yourself policy are numerous and include:

  • Swap out high-interest compounded rates for simple, low interest rates
  • Recapture interest into your policy that you would otherwise pay and never see again
  • The money in your plan continues growing as though you never touched a dime of it (if your policy is from one of a handful of life insurance companies that offers this feature)
  • You can pay back your loans on your own schedule, which gives you great flexibility when the proverbial you-know-what hits the fan. You can reduce or skip some loan repayments without having to worry about black marks on your credit report, collection calls or a goon squad showing up to repossess your stuff
  • You can get access to 85-90% of your cash value when you want or need it, for any reason, with no questions asked, no nosey applications to fill out, no pledging your first born and no begging!

To learn more about how this works, check out our Consumers Guide to Bank On Yourself Policy Loans here.

Situation #3: Fund a College Education Without Sacrificing Your Own Retirement Savings

Another reason to “overfund” a Bank On Yourself policy is to pay for a college education. This has many advantages over the conventional approaches to saving for college, such as 529 Plans, UGMA’s and UTMA’s, and student or parent loans.

The advantages of financing a college education through a Bank On Yourself policy include:

  • You control how the money is used
  • You avoid having the money count against you when applying for federal student aid
  • The growth of your money is guaranteed
  • Your college savings program can finish funding itself if you pass away

To see examples of how Bank On Yourself can be used to pay for college without going broke, check out this video and transcript.

These are just a couple examples of why “overfunding” or putting a lump sum into a policy in the early years makes sense.

IMPORTANT: No two Bank On Yourself policies are alike!

Each one is custom tailored to the client’s unique situation and goals. To find out what your numbers and results could be if you added the Bank On Yourself method to your financial plan, request your FREE Analysis and referral to one of the Bank On Yourself Professionals (if you haven’t already done so).

Keep in mind that the only regret most people say they have about Bank On Yourself is that they didn’t start sooner, so don’t dilly-dally! There’s no cost and no obligation and no arm-twisting! You’ll know in advance your bottom-line guaranteed numbers and results before you even decide to move forward with your plan.


  1. I realize that financiers generally are not geared to truly help “customers”, obviously they are in business to make money. So when I generally find the whole Bank On Yourself concept not only to be quite sound financial advice for anyone, especially those who are able to put some money aside regularly, (what appears to be a forgotten method of savings/purchasing), I have come to the conclusion that society has become quite shallow ethically. A sorry lot for the common man. Just shows what credit has done to humanity, greed and avarice every where.

  2. You can put that money into and pda(premuim deposit account) and in turn that pda would annually fund your custom whole life up to 15 consecutive annual payments. To make cash value grow quicker you for example can open a pay 7 custom whole life for a hundred thousand in the tune of 14 thousand a year then you set it and forget it and watch that account grow. Mutual companies add dividends in the mix along with the interest rate makes this a very attractive long term account with liquidity features. A financially conservative tool that will never loose it only gains interest. Non direct recognition is the term used for a company that allows you to partially surrender cash value but continue to credit the account with the same interest as if it was never touched i.e. 100000 cash value gaining 7000 interest annually a surrender of 90000 leaving a balance of 10000 cash value you will continue to recieve that interest of 7000 after the surrender making it 17000.

  3. Is it better to put in $100,000 lump sum and then another $100,000 KIM sum into a second, third and fourth policy or to do $100,000 yearly payments for four years? Which is best for the client?

    • There are a number of different options for someone in their 30s and starting now would put you in an enviable position!

      The best way to find out which option makes the most sense for your situation is to request a free Analysis and a referral to one of the Bank On Yourself Professionals. You can request it here.

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