What Is a Custom-Tailored Bank On Yourself Policy?

Bank On Yourself-type policies are built on a dividend-paying whole life insurance policy chassis. Whole life insurance comes with more guarantees than any other form of life insurance. In addition, whole life policies designed for the Bank On Yourself strategy are from financially-strong and highly-rated dividend-paying life insurance companies that have been in business—and consistently paying annual dividends—for more than 100 years.

Life insurance policies designed by Bank On Yourself Authorized Advisors are usually custom-designed to include a term insurance rider and a Paid-Up Additions Rider, to convert a rather ordinary whole-life policy into a high early cash value whole life policy that provides greater cash value and a bigger death benefit over time.

Beyond those basic concepts, Bank On Yourself Advisors help their clients customize their policies by taking into account each client’s specific financial situation and goals.

Factors That Affect the Design of Your Bank On Yourself Whole Life Policy

Picture of a teeter-totter demonstrating the relationship between death benefit and cash value in a high early cash value life insurance policy

There can be as many different custom-designed life insurance policies as there are people.

Some variations depend on varying the ratio between death benefit and cash value for the same premium dollar. It’s like a teeter-totter. For a certain amount of premium, you can increase the death benefit and lower the cash value, or vice versa—within limits that your advisor will explain.

Bank On Yourself-type policies are custom-designed

Some of the factors that will be considered by a Bank On Yourself Authorized Advisor when designing your plan include:

1. What size life insurance policy will best meet your needs?

The size of your policy is not limited by any government rule or regulation. It’s based on what you feel you can afford and on your personal financial situation. Based on your income and assets, the upper limit is determined by the insurance company.

Generally speaking, policies funded with $250 per month or more build cash value most efficiently.

2. Who should be the insured on the policy?

Should each spouse have a policy? Are there reasons to consider policies—or a rider on a parent’s policy—to insure the children? Your Authorized Advisor will also explain how the age of the insured will affect the policy design.

3. Is health an issue?

If the health of the person you’re thinking of insuring is an issue, you may consider insuring a different individual, while you continue to own the policy. This way, you control the policy, decide who will receive the death benefit, and enjoy the living benefits, even if you yourself are uninsurable. But do not rule yourself out as the insured—consult a Bank On Yourself Authorized Advisor first.

4. How do you want to pay your life insurance premiums?

You can choose to pay your premiums monthly, quarterly, twice-yearly, or annually. The fewer payments you make in a year, the lower your total cost per year. For example, paying quarterly costs slightly less than paying monthly, and so forth.

5. For how long do you want to pay your life insurance premiums?

Policies can be written that will be fully paid for in one year, or five years, etc.; or they can be written to be fully paid for when you turn a specific age, such as 65. And they can be written so that premiums are paid for life—until your 121st birthday (unless you die before then).

Some policies, such as a Bank On Yourself for Seniors plan, involve only a one-time premium.

No matter over what length of time you arrange to pay premiums, the insurance will protect your family for the rest of your life.

6. What about adding a term rider and a Paid-Up Additions Rider?

Will a term rider and a Paid-Up Addition Rider supercharge the growth of your policy? How much of your premium should go toward each rider, versus how much should go to purchase the “basic” death benefit?

7. Who should own the life insurance policy?

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Often, but not always, the insured person will own the policy. Sometimes a parent or grandparent will insure a child or grandchild and will retain ownership of the policy until the child reaches a certain age, such as 18 or 25.

8. Who will be the beneficiary of the life insurance policy?

Your spouse? A trust? A charitable organization? A business partner (in the case of a buy-sell agreement)? In the case of insurance on a grandchild, you may wish to consider naming the grandchild’s parents as beneficiaries.

9. What about a contingent beneficiary for your life insurance policy?

Should you have a contingent beneficiary, to receive the proceeds of the policy if the beneficiary passes away? The answer is almost always Yes, but if, for example, your beneficiary is a trust or a charitable organization that can’t “die,” a contingent beneficiary may not be necessary.

10. Will you be making one or more lump sum premium payments?

Your Authorized Advisor can design a policy to accommodate one or more lump-sum premiums, as well as your monthly or annual premiums.

For example, if you have an old insurance policy that is not performing well, the government allows you to move the cash value of that policy into a new policy without paying income tax on the accumulated cash value, through something called a 1035 Exchange in the U.S. (the number refers to the IRS code).

You can use this lump sum infusion of cash to purchase additional paid-up additions, which can give a big boost to the growth of your cash value.

A Bank On Yourself Authorized Advisor can help you sort through all these important questions.

To receive a referral to a Bank On Yourself Authorized Advisor ready to offer you free assistance, request a free, no-obligation Analysis here.

A young family can use Bank On Yourself to help meet their unique objectives

Perhaps you and your spouse are just thinking about starting a family. You plan on having three children. Looking ahead, you realize that means financing three college educations. Your Bank On Yourself Authorized Advisor can show you exactly how to do that with one or more Bank On Yourself-style policies, while still allowing you to draw on your policies tax-free during retirement.

Your family may wish to stop paying premiums at age 65, or even sooner. A Bank On Yourself Authorized Advisor may be able to offer you a plan that protects you for the rest of your life, with premiums that stop in 10 years or even less.

If you have significant consumer debt (student loans, credit card balances, and auto loans, for example), your Authorized Advisor may show you how to pay off those debts faster by consolidating them with a lower-interest Bank On Yourself policy loan.

Your advisor will also show you how to use the cash value in your plan to finance major purchases and build an emergency fund.

A couple approaching retirement can use Bank On Yourself to build a guaranteed, tax-advantaged retirement nest egg

A couple starting a Bank On Yourself plan after their children have left home may want to focus on building up cash value relatively quickly to use in retirement. A Bank On Yourself Authorized Advisor can help you do that.

Retired individuals can use a Bank On Yourself-type policy to create an instant legacy

An individual can usually be insured with a new life insurance policy up to age 85. If you are that individual and you take required minimum distributions (RMDs) from a retirement plan, you could use your annual RMDs to pay the annual premiums for your life insurance policy, creating an instant legacy.

You can also fund a special type of Bank On Yourself policy with a single one-time premium, which creates an immediate income-tax-free death benefit for your heirs, plus a greater growth of cash value than CDs and money market accounts—without any market risk.

Business owners and professionals can finance business growth and acquisition through Bank On Yourself policies

Borrowing seems to be a necessity for most businesses, and there’s usually no better way to get the cash you need than by borrowing against your life insurance policy. Bank On Yourself high early cash value life insurance policies can give you cash immediately, even if traditional lenders aren’t interested.

A Bank On Yourself plan can also be a safe, predictable retirement plan alternative for business owners. It can be used as a perk for key employees. Or it can be used to fund a buy-sell agreement, which partners can use to protect each other in case of the death of a partner.

What Will a Bank On Yourself Authorized Advisor Discuss with You, in Order to Customize Your Policy?

Picture showing a Bank On Yourself Authorized Advisor explaining the Bank On Yourself strategy to a young couple

Your Bank On Yourself Authorized Advisor is someone who is genuinely interested in helping clients put their finances on the right path. You’ll find the step-by-step process of working with an Advisor to be pleasant, interesting, and educational.

Memo of Agreement

First, your advisor will present you with a Memorandum of Agreement, in which he or she will formally commit in writing to keep all of the details of your personal situation strictly confidential.

How much life insurance is right for you?

Next your Advisor will have a candid discussion with you about your need for a life insurance death benefit. You’ll want to ask yourself what your family would do if you were to die tonight. What would you want a life insurance policy to provide for them?

Your Advisor will help you assess your present financial situation—your assets and liabilities. Depending on the complexity of your finances, he or she may help you draw up a financial balance sheet.

Your financial dreams and goals

Part of the discussion will be dedicated to helping you clarify and prioritize your financial dreams and goals. What are your short-term and long-term financial goals? Do you dream of purchasing a second home? Getting out of debt? Building a bigger retirement nest egg—one you can be confident will be there when you’re ready to tap into it? Is helping your children or grandchildren through college something that’s important to you?

Everyone’s goals and dreams are different. See how people of all ages and incomes are using Bank On Yourself and why they often say their only regret is that they didn’t start sooner.

Review of health history

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Because the cost of insurance is related to your age and health, your advisor will review your health history and current situation to help you determine who should be insured. Surprisingly, policies designed for insured individuals in their 40s and 50s can grow more efficiently than policies designed for younger people.

Decide who the owner and beneficiary should be

Your Authorized Advisor can help you decide who should own the policy, and offer guidance in selecting your primary and contingent beneficiaries.

How to fund your Bank On Yourself plan

Your Advisor will help you explore the resources you have available to fund your plan. Sometimes an older under-performing policy’s cash value can be poured (tax-free) into your new policy. Sometimes restructuring debt is key.

Occasionally, you may decide to make tweaks to your lifestyle to free up money. Sometimes employees choose to redirect a portion of their retirement fund contributions to their Bank On Yourself policy, where growth of the money is guaranteed.

Your Personalized Solution

After you and your advisor have discussed these and related subjects, your advisor will prepare a comprehensive easy-to-read document for you based on your conversation about your needs, your goals, and your dreams.

A picture of a sample custom-tailored Bank On Yourself Personalized Solution]

This document, called a Personalized Solution, is a valuable and exclusive Bank On Yourself service, designed to bring together in one place, in a simple format, everything pertaining to your financial hopes and dreams, your assets and liabilities, and how a properly-designed dividend-paying whole life insurance policy can help you reach your goals.

Your Personalized Solution will not be exactly like anyone else’s, unless your financial situation and goals happen to match someone else’s exactly—an unbelievably unlikely coincidence.

Your advisor will review your Personalized Solution with you and explain how the minimum growth of your policy is absolutely guaranteed in writing. He or she will show you how using specific riders can significantly increase the growth of your cash value and also increase your death benefit to help keep up with inflation.

For your convenience, most Bank On Yourself Authorized Advisors have “virtual” meetings, using the telephone and sharing their computer screen on your computer screen. It is usually not necessary to travel to an advisor’s office or have someone visit you in your home.

No Two Bank On Yourself Plans Are Alike—They Are Always Customized

No two Bank On Yourself plans are identical, and yours would be custom-tailored to your unique situation, goals, and dreams, just as we’ve discussed.

To find out what your bottom-line numbers and results would be if you added Bank On Yourself to your financial plan, simply request your FREE, no-obligation Analysis here today. You’ll also get a referral to an Authorized Advisor who can answer any questions you have.

You’ll discover how adding Bank On Yourself to your financial strategy can give you a greater sense of security and help erase the fears you may have about not having enough money for a comfortable retirement.