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Become Your Own Banker

What if you could be your own source of financing when the need arises instead of leaning on banks, finance and credit card companies? What if you could borrow against a life insurance policy and pay it back, instead of the bank? What if you could pay yourself back for a loan instead of paying an institution?

When you become your own banker, you can do just that. You borrow against your life insurance policy and rather than enriching the bank, your payments go to enrich your heirs when the policy pays out.

Benefits of Becoming Your Own Banker

Being your own banker is an option that can be used to improve your financial peace of mind. There are several benefits to banking on yourself, and these include:

• Being able to reduce your debt as you increase your savings
• Building a college fund without sacrificing to do so
• Easily creating an emergency fund
• Recapturing the cost of business and professional expenses
• Recapturing the cost of the interest you currently pay to financial institutions
• Enjoying financial freedom as well as a secure retirement without worrying about market fluctuations
• Having a guaranteed tax-free death benefit
• Having access to tax-free withdrawals, loans and growth

Why Becoming Your Own Banker Works

You must be sure to take out your life insurance policy with a company that is mutually-owned. This means that it isn’t corporate shareholders that own the company, but the policyholders that do. This ownership structure means that profits go to policy holders in the form of dividends. This also means that the returns in cash value policies are boosted.

Keep in mind: When you borrow money against your life insurance policy, you aren’t really borrowing your own money, but instead you borrow from the general “pool” fund of the company and using the cash value of your policy to secure your loan.

You can pay off the loan and take advantage of the opportunity over and over; eventually, you could even draw down your cash values to supplement other retirement income sources. This process is funded with after-tax dollars, but growth and income that are taken from the policy (via a loan) is tax-free, similar to a Roth IRA and how it’s treated by the IRS.

Do keep in mind, however, that becoming your own banker isn’t right for everyone. For more information on whether or not it may be a good option for you, contact us today.

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