much your account is going to grow over that thirty years because he has no clue. (Wanna try a fun experiment? Ask your broker or money manager if he’ll guarantee that you’ll have a specific amount in your account in ten or thirty years, and if he’ll give you a money-back guarantee if he misses the mark!)
On the other hand, before you even initiate a Bank On Yourself plan, you’ll know the minimum guaranteed value of your plan in any given year.
So let me ask you: Would you rather pay $100,000 to the money manager who has no idea how it will all turn out in the end? Or $8,500 to the Bank On Yourself Advisor who can tell you your guaranteed result? By the way, unlike fees you pay a money manager, all fees and expenses, including the Bank On Yourself Advisor’s commissions and the cost of insurance, have already been deducted from your guaranteed bottom-line numbers
2. Most financial experts and advisors only discuss whole life policies in which the death benefit stays level for the life of the policy. Let’s ignore the fact that we researched over forty life insurance companies and couldn’t find any that still offer that kind of whole life policy. (I’m thinkin’ Suze and Dave just might want to update their talking points.)
In dividend-paying whole life policies (as in Bank On Yourself–type plans), 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. I’ve posted one of my own policy statements on my website that shows you how the death benefit can keep growing. In this case, it increased by more than $8,000, or 3.5 percent, by the end of the first year. (You can see my statement at www.BankOnYourself.com/policy1.)
Over time, the death benefit can increase many times over, as you’ll see in the next chapter.
3. The financial experts often complain that the insurance company “only pays you the death benefit and keeps your cash value” when the policy owner dies.
Really? Then how do you explain this: In another one of my policy statements posted at the link above, you can see that if I’d died on the date the statement was issued, my family would have received a check for $381,776, which is a few thousand dollars more than the original $250,000 death benefit and current total cash value ($128,361) combined.
It’s amazing to me that so many people—and so many experts—hold whole life insurance to a totally different standard than other financial vehicles. For example, if you have $100,000 of equity in your home and you sell it for $250,000, do you expect to end up receiving both amounts, for a total of $350,000? Of course not.
However, as I just demonstrated, a Bank On Yourself–type policy can deliver that advantage!
Whole Life as a Wealth-Building Vehicle
How can I explain the difference between whole life as a wealth-building vehicle and most other products and strategies the financial gurus favor? On the freeway, can you spot the difference between a teenage boy putting daddy’s hot sports car through its paces, and a young suburban mother in her minivan taking two kids to play soccer, with a toddler buckled in a car seat? One driver is trying to get somewhere fast, while the other is getting to her destination while doing everything possible to protect those who are near and dear to her. If you can understand that difference, then maybe you can sense the difference between the Wall Street Casino and the life insurance industry.
As Jesús Huerta de Soto noted in his book Money, Bank Credit and Economic Cycles:
The institution of life insurance … is based on a series of technical, actuarial, financial and juridical [relating to the law and its administration] principles of business behavior which have enabled it to perform its mission perfectly and survive economic crises and recessions which other institutions, especially banking, have been unable to overcome. Therefore the high ‘financial death rate’ of banks, which systematically suspend payments and fail without the support of the central bank, has historically contrasted with the health and technical solvency of life insurance companies. (In the last two hundred years, a negligible number of life insurance companies have disappeared due to financial difficulties.)11
With Bank On Yourself–type policies, you receive a guaranteed and predictable cash value increase every single year—in both good times and bad. In addition, you have the potential to receive dividends. While not guaranteed, the companies preferred by Bank On Yourself Authorized Advisors have paid dividends every year for more than 100 years, including during the Great Depression.
The growth in a whole life insurance policy is not only guaranteed, it’s exponential. It’s designed to become more efficient every single year, simply because you stick with it rather than jumping from one investment to another. This gives you some built-in protection against inflation.
Corporate Accountant Fires Wall Street
Derek Logan is a textbook poster boy for someone who did all the right things financially that we’ve been taught to do. He’s been working since he had a newspaper route at age ten. He diligently set his goals and used a budget system. He maxed out contributions to his 401(k) and had his home paid off by the age of forty-five. As a corporate accountant for more than thirty years, Derek realized he had achieved all of the goals he set for himself—except for the goal of being able to retire at a specific age with a specific amount of money.
As he closed in on his hoped-for retirement age, he became disheartened and frustrated because the value of his retirement account had been slashed several times over the years. After doing his due diligence like any good accountant, Derek started a Bank On Yourself–type policy. And he’s thrilled that he no longer throws his hard-earned dollars down on the tables of the Wall Street Casino!
When the market recently experienced volatility as it so often does, Derek sent me this grateful note: “As the market went down, I smiled. Not at the anguish so many must have been feeling, but at the joy of knowing I wasn’t being affected—this time, or ever again. I printed Thursday’s headline—512 Point Plunge on the Dow!—and included it in my Bank On Yourself portfolio notebook as a reminder of the best financial decision I’ve ever made!” (Read or listen to my interview with Derek at www.BankOnYourself.com/derek.)
For most of us, the whole life insurance scorned by financial pundits actually proves to be a lot safer and smarter—if you pick the right policy. Be warned: Not all cash-value life insurance policies are created equal. In fact, some of them, such as universal and indexed universal life, should be avoided. (See why at the end of this chapter.) Do your own investigation and don’t jump from the frying pan into the fire.
Dentist Achieves Financial Security
“I’ve used the Bank On Yourself method since 2004 and now have several policies. We’ve used them to finance our RV, home renovations, vacations, and unexpected expenses. In the process, we’re growing wealth safely and securely for retirement that we can access when and how we want—no taxes due on it.”
—Thomas Hesch, DDS
By doing your research, you’ll find that Bank On Yourself–type policies build a guaranteed and predictable cash value—and they build it much faster than policies most financial advisors talk about. Both your cash value and your death benefit grow more efficiently every year, and your cash value is guaranteed to equal your death benefit when the policy matures.
This is true wealth creation with none of the volatility and risk associated with the stock and real estate markets. You know the
