Do you want to accumulate reserves and investible capital where it’s safe and liquid, so you have the cash to invest in the widest range of circumstances? Come behind the scenes as we talk about our Marshall Family Bank in real-time. 

https://www.youtube.com/watch?v=wmDrsECWJ8Y

Today, we’re talking about our recent whole life insurance policy conversion with a 1035 exchange. We’ll discuss the original policy and what prompted the conversion. We also cover how we structured the new policy, what riders we added and why, and our updated cash value, dividend, and death benefit performance.

So, if you want to see exactly how we’re growing our family bank to continue today… tune in now!

Table of contentsHow We Started the Marshall Family BankThe First PolicyWhy the 1035 Exchange?What is Demutualization?How Does a 1035 Work?The Old vs. New Marshall PolicySo Why a 1035? Execute TodayBook A Strategy Call

How We Started the Marshall Family Bank

The Marshall Family bank had to start somewhere, so we want to start by sharing our beginnings with you. Originally, we gravitated toward whole life insurance because we were between opportunities. We were also seeking a safe place to store our cash. This was about 9 years ago.

Liquidity was one of our top priorities because we were saving almost 50% of our W-2 income in precious metals, which lacked the liquidity we needed. We still have precious metals in our portfolio today. However, after saving such a significant portion of our income, it was clear that better liquidity would be beneficial. This compounded with the realization that we needed some diversity in our assets since precious metals rise and fall in value. 

It was about this time when infinite banking crossed our radar. We were searching for more liquidity and safety. The idea was appealing because we recognized the long-term benefits of a cash flow system.

[2:55] “This was when we really sunk in our teeth to the idea that whole life insurance can be a place to store cash, it can be specially designed as infinite banking to have the capital reserves, grow cash value, pay dividends because it’s a mutual policy, and also have a death benefit that transfers your legacy. And we’ve had an evolution, over the course of our life, of recognizing we also need to have human life value, which means having as much death benefit as we can have.”

The First Policy

With our first policy, we didn’t yet have the long-term vision we have now. Sometimes we didn’t pay the full premiums, and we added PUAs where we could. However, we are thankful we got started at all, rather than waiting. It still helped us to be in a better position than we would be without it. In fact, we used the policy frequently while we had it.

This policy was a $10,000 annual premium, insuring Lucas. We used it for several loans over the years, including our business and real estate investing. We’ve paid these loans back, and it’s been a great storage tank for the capital we have. 

In the time since we started this policy, we’ve learned a significant amount about policy design and structure. It’s because of our knowledge that we decided to do a 1035 exchange of our first policy into a new life insurance policy. 

Why the 1035 Exchange?

One reason that whole life insurance can be a great tool for wealth storage and building is that it’s flexible. If your income increases, you can get another life insurance policy and keep your others intact, effectively building a portfolio of policies. This is one reason we thought it would be interesting to have this conversation since we did a 1035 exchange instead of simply starting a new policy.

[8:40] Bruce: “Very rarely should a person 1035 a whole life policy to another whole life policy—unless they have specific reasons for doing it.” 

Some of the reasons people 1035 whole life insurance into other whole life insurance are: 

To receive better service from a new life insurance c...