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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?