What is Bank On Yourself®?

What is Bank On Yourself?

Bank on Yourself®  is the creation of Pam Yellen and is a process of using whole life insurance as a means to finance major purchases.  The claims made by Bank on Yourself® suggest that following the program will unlock hidden wealth secrets employed by savvy investors and business people. But does it work? We get …

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Indexed Universal Life: Market Neutral?

Indexed Universal Life Insurance Market Neutral

The other day I was part of a conversation with another agent about Indexed Universal Life.  The conversation was more of a challenge to my position that, like whole life insurance and current assumption universal life insurance, indexed universal life deserves just as much credit for being market neutral and falling into the alternative investment category …

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2015 Operational Cash Flow Growth for Whole Life Focused Life Insurers

We’ve reported on operational cash flow among life insurers in the past and note that we hold this metric in high regard for a multitude of reasons.

Our philosophy is that operational cash flow shows us true profitability of a life insurance company, especially among whole life focused insurers. Why is that? Well, it's primarily because life insurers have a unique income reducing option at their disposal with policyholder dividends.

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Life Insurance as an Income Producing Asset with the Power of Leverage

 

We’ve talked a lot about using life insurance as an income producing asset. Many people stumble a bit when they first attempt to wrap their head around the notion of using “insurance” either as a place to save money or as an asset from which they can generate income. 

I raised an eyebrow or two when first presented with the idea. Today’s discussion is not an introduction to the concept of using life insurance as an income source, but rather a somewhat advanced look at why it can work so well.

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An Indexed Universal Life Insurance Success Story

I was recently reviewing an indexed universal life policy issued seven years ago. We do a lot of reviews for life insurance policies (especially the ones we ourselves put in force for people) and such reviews look at performance to date as well as a comparison to the original policy projection to review how things have unfolded.

For a lot of policies, there’s little variance from the original projection. This is especially true on the whole life insurance side of things since dividends don’t tend to vary all that much (a few exceptions exist for policies we’ve been asked to review we didn’t have a hand in putting in force).

Not all that surprisingly the indexed universal life insurance policies have tended to do better than the original projections.

For the policies we’ve put in force, this is commonly due largely to our insistence on assuming a 6 to 6.5% annual index credit (a lot of less honest agents/brokers like to use numbers in the mid 7 to 8% range, though recent legislation is changing that).

The market has enjoyed a pretty good run since 2008 and indexed insurance products have certainly benefited. As a result, I often get asked what happens if the policy performs better than the 6% number I assume, to which I always point out, you’ll simply have more money.

This is great in theory, but a lot of people have a hard time grasping what that means in a more concrete sense. So today we’ll review publicly a policy that has been in existence for almost a decade and see how it has performed.

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Life Insurance Has Weathered the Opinion Storm

Life insurance is a pretty unique financial tool. It’s no secret around here that we’re fans. Our admiration comes from personal observations and a lot of number crunching we’ve done to arrive at the opinion we have.

But not everyone shares in our high opinion of life insurance and the life insurance industry.

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Do Life Insurance Guarantees Matter?

Do Life Insurance Guarantees Matter

Life insurance guarantees are sometimes heralded as a key benefit. Many whole life insurance contracts are sold with a focus on the fact that the policy boasts various guarantees that—while admittedly impressive in a relative sense to all other financial products—are often overplayed.

But do these guarantees actually matter? And what does the guarantee represent—I mean in a practical application—for life insurance contracts as they relate to cash accumulation strategies? Today we’ll explore this consideration.

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Why Life Insurance Policy Loans Help You Save Money

Why Life Insurance Policy Loans Help You Save Money

Life insurance policy loans are a long standing feature of cash value life insurance. And this feature can be a very powerful financial tool at your disposal when used correctly. I would even argue that this feature should be the focus of such books as Bank on Yourself® and Be Your Own Banker®.

Having a grasp of policy loans and the mechanics therein goes much further to make the case for life insurance as a viable financial tool.

Today, I want to walk through a few examples (with math to back them up) that highlight my point about life insurance loans potentially being the superior method of financing purchases.

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