Not Your Average Financial Podcast™

Episode 232: Top 10 Episodes! How Do Bank on Yourself® Type Policy Loans Work? (Ep. 32)

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How do Bank on Yourself® Type Whole Life Insurance LOANS work?

In this episode, we ask:

  • What is a life insurance policy loan?
  • If I’m trying to be debt free, why go back into debt with an insurance company?
  • Are life insurance loans just like a credit card or a mortgage?
  • Isn’t a life insurance loan just like a personal loan?
  • How does your cash value collateral continuing growing, even when you have a policy loan outstanding?
  • How is this different from a HELOC?
  • Is your house guaranteed to go up in value?
  • What about contractual guarantees with a life insurance policy loan?
  • What are the limits with a life insurance policy loan?
  • Could the loans lapse the policy?
  • What is the best kind of investment to a life insurance company?
  • Can you be “underwater” in your life insurance policy loan?
  • What are the requirements for this type of life insurance policy to work in a Bank on Yourself design?
    • Is it whole life insurance?
    • Is it a non-direct recognition loan?
    • Is it flexible, so you keep it for your entire life?
    • Are you repaying your loans?
    • Are you working with a knowledgeable, authorized advisor?
    • Do you have trauma from a previous bad experience?
    • Why do so many advisors not know how to design these properly?
    • Does your existing whole life insurance policy penalize you when you take policy loans?
    • Does your advisor know what they’re doing? Do they frantically google in front of you?
    • Why did the Titanic sink?
    • Do you know an advisor who has a skillful knowledge of Life Insurance contracts?
    • Of what red flags should you be aware?
    • With non-direct recognition policy loan, how is the dividend credited on a whole life policy?
    • If you don’t have a non-direct recognition policy loan, what happens?
    • When you take a policy loan, where does the money come from?
      • See The Bank On Yourself Revolution by Pamela Yellen, page 256
      • What is the collateral for that loan?
      • When do life insurance companies get a profit?
      • How do you benefit from the interest you paid on the loan?
      • If the insurance company’s yield is better than their worst case scenario, what happens to your dividends?
      • Who’s allergic to paying interest?
      • What are some financing strategies when buying a car?
      • What interest does an insurance company charge on the loan?
      • Who are the owners of the insurance company?
      • Do you love that you are charged loan interest?
      • What is simple interest, compounded annually in arrears?
      • When is 5% not always 5%?
      • Why would you willingly pay extra for something?
      • What type of interest would you like on a savings account? Simple? Compound?
      • How can you calculate the growth you receive?
      • Is the method of banking on yourself better or worse than paying cash for things?
      • Don’t you wish more people knew about this?
      • How can you make a profit on buying a car?
      • How can you use a life insurance policy with non-direct recognition policy loans for income in retirement?
      • What’s the problem with the direct recognition policy loan design for income in retirement?
      • What design features have a tremendous amount of impact on how long money will last in retirement?
      • How do banks use money in more ways than one (at the same time)?
      • What does the fine print in your contract say?
      • “Ignore what banks tell you to do with money, and instead, watch what they do with their own money.” – John McCarthy
      • How much money do banks keep in life insurance contracts?
      • What’s a tier 1 asset?
      • How can you change your family tree?

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