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.
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
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.
While something like life insurance might not seem that romantic at first, purchasing a policy is all about those special people in your life. When you buy life insurance, you’re telling your spouse, children and loved ones that you care about their future. If something were to happen to you … Continue reading Show Them You Care with Life Insurance for Valentine’s DayRead More
Many people who are just starting out with a family know that it can be tough to make ends meet. From buying a home to raising children, there are endless responsibilities that come into play. One of the most important, and often overlooked responsibilities, is making sure your family will … Continue reading Myths about Life Insurance that Could Hurt Your FamilyRead More
Your spouse doesn’t even want to think about you passing away, let alone have to sit down and actually discuss it. It’s never easy to talk about death, especially the death of someone you love. That’s why discussing life insurance with your spouse can be so difficult. But since the … Continue reading How to Talk About Life Insurance With Your SpouseRead More