All Forum Posts by: John Perrings

@Ryan D.

Policy loan "tax traps" are not really an issue anymore, as long as your agent knows how to structure policies with the right riders.

When you say you’d rather “save the money and put it towards a real estate investment,” where will you save the money?

Many people get life insurance confused with investments. Whole Life insurance is an excellent place to store cash. It’s a guaranteed cash asset, not an investment. 

Through the policy loan provision, you can use the cash value of the policy to buy a real estate investment *and* continue to get guaranteed growth in the life insurance policy.

Putting your money in a savings account, stocks, or other investments, you must first liquidate these assets in order to buy the real estate.

With a properly structured cash value whole life insurance contract, you can use the same money for two or more things at the same time.

Any questions, just ask! 👍🏻

JP

Not quite how it works. I can tell you’ve made up your mind but if you’re ever open to learning more, a discussion would probably be better. PM me if you’d like!

@Lingo Lin,

There is a premium payment schedule that does have some commitments, but there is flexibility to lower, increase, or even skip payments. However - you mentioned wanting a "forced savings." So as far as that goes, whole life is good for that.

Term life is like renting an apartment. If you live past the term of the policy, all the premiums paid into that policy, you'll never get back. Every term premium dollar is one less dollar available to go into your "family bank."

Whole life is more like buying a house. The payments are more, but every payment goes toward building your "family bank" *and* provides life insurance.

Getting money out is as easy as picking up the phone and telling the insurance company to send you the money. No questions asked.

Regarding interest rates: it's about 2-20x the interest you'd earn keeping your money in a bank, depending on the bank.

All rates of return in a whole life contract are net of all fees. There aren't "fees" with whole life like you'd see with other types of accounts. So fees cannot "eat away" at the savings. By contract, as long as the policy is inforce, the account will *never* lose money.

It seems like you may be looking to create a complex legal, tax, and accounting structure to attempt to do something that a correctly structured whole life policy already does, and does very well.

With an insurance contract, you do, in fact, retain 100% control over your cash value. And top-tier mutual insurance companies are very safe.

If you set up a "family bank" without using whole life insurance, where will the money be kept? It will still be kept in an an actual bank. As such, your "family bank" is not the bank, the actual bank is.

To have a "family bank" you would want to earn money like the real banks do; by making money with other peoples' money, not your own. The policy loan provision of a whole life insurance contract is one of the most effective ways to do that. Otherwise, you're just an organized family - which is good. But it's not really a "family bank."

Also - *way* easier than setting up a complex corporate entity.

Let me know if I can help you.

John Perrings