Several concepts exist that promote how one can use a cash value life insurance policy “as your own bank.” This does not involve starting an actual bank. Instead, it is a concept that allows you to use a cash value life insurance policy instead of a bank. You can use your cash value life insurance policy as a financing tool for purchases and investments. 

*Cash values may be accessed tax-free. However, the cash value in a life insurance policy may be taxable in certain situations. We recommend that you consult with an agent or your tax advisor for more information. 

You can set your minimum and/or maximum contribution to your policy at just about whatever figure you’d like. When you set up a policy, your money will be going into insurance and into cash. The insurance cost is fairly flexible. If you are above the age of 60, the minimum premium amount might not be able to drop below around $1,000 per year, but for the most part, the insurance cost is easy to customize. For your maximum limit, there are some rules to be aware of…​

You can set your minimum and/or maximum contribution to your policy at just about
whatever figure you’d like. When you set up a policy, your money will be going into insurance
and into cash. The insurance cost is fairly flexible. If you are above the age of 60, the minimum
premium amount might not be able to drop below around $1,000 per year, but for the most part,
the insurance cost is easy to customize. For your maximum limit, there are some rules to be
aware of…​

This does depend on whatever you are currently doing! Everyone has a unique financial situation, and when we educate people on this concept and how to implement it, we always have the clients’ best interests in mind. Simply put, this will not be the absolute best financial vehicle for everyone to use. There is no one thing that will work perfectly for all people. However, we do believe that using cash value life insurance policies is safe, convenient, and very beneficial as a whole.​

A Non-Direct Recognition company (like Mass Mutual and New York Life) does not “recognize” when a loan is taken out of a policy. They will credit the same dividends to unborrowed and borrowed funds. A Direct Recognition company (like Guardian and Northwestern Mutual) does recognize when a loan is taken out of a policy and actually credits a higher dividend rate on any borrowed funds. This way, the policyholder does not feel like they are being “punished” or penalized for taking out a loan.​

A Non-Direct Recognition company (like Mass Mutual and New York Life) does not “recognize” when a loan is taken out of a policy. They will credit the same dividends to unborrowed and borrowed funds.
A Direct Recognition company (like Guardian and Northwestern Mutual) does recognize when a loan is taken out of a policy and actually credits a higher dividend rate on any borrowed funds. This way, the policyholder does not feel like they are being “punished” or penalized for taking out a loan.​

When: You can withdraw funds for a loan any time you’d like, even within the first week of starting your policy!

How Much: Technically, all the cash in your policy is available to you. However, about 95% of the funds you have in cash at any given time is a more reasonable amount. Leaving about 5% in your policy can be useful if you do not wish to pay the loan back and/or circumstances arise where you are unable to pay the interest or your premium – that little bit left in the policy can cover those costs and prevent a lapse in your policy. ​

More in-depth info on whole life insurance, free consultation and anytime access to one of our Innovative Life Insurance Specialists, sample policies, answers to all your questions, analysis of your current policy(ies), videos, tips on getting started, and more!