Tier 1 Capital Blog

When it comes to finances, many of life’s biggest frustrations stem from not having access to cash when you really need it. This is especially true for small business owners who face the daily challenge of managing expenses, payroll, and growth while trying to maintain financial stability. Today, we’re going to talk about why access to capital is crucial for small businesses and how you can take control of your financial future.

As a small business owner, you’re constantly juggling responsibilities—running the business, managing employees, handling finances, and balancing family life. Financial stress doesn’t just exist in your business; it follows you home. The key to overcoming that stress is access to capital. Without it, scaling your business or even achieving personal financial goals can feel impossible.

Cash flow is the lifeblood of any business. You either have your own pool of money, or you have to pay to use someone else’s. If you want your business to grow, survive, and thrive, you need capital. The problem is that most small business owners rely on banks and lenders for funding, putting them in a position where they have to ask for permission to access money—money that comes with interest rates and repayment terms that don’t always work in their favor.

Many business owners believe they are just one big sale or one major contract away from financial freedom. But the reality is, without a plan for access to capital, that big sale won’t solve the problem. If you use those profits to pay off debt, you might relieve some immediate financial pressure, but then you face a new problem—no money left for future growth or emergencies. This cycle of paying off debt without building liquidity leaves many business owners stuck in a constant state of financial uncertainty.

Paying off debt might feel like the responsible choice, but if it leaves you without cash reserves, you’re still financially vulnerable. Instead of focusing solely on eliminating debt, business owners should prioritize creating their own pool of capital. When you have access to capital, opportunities find you. You’re no longer scrambling for funding when a great investment or business opportunity arises—you’re ready to take advantage of it.

The hardest step for many business owners is shifting their mindset. When you finally get a windfall of cash, the natural instinct is to pay off debt and reduce financial stress. But by taking a step back and choosing to keep cash on hand, you create financial security. Having access to money when you need it means you no longer have to prove your worth to banks or lenders—you’re in control of your own financial future.

Building your own pool of capital means no more filling out lengthy loan applications, no more waiting for approvals, and no more uncertainty about whether a lender will support your next move. Instead of asking permission to access money, you are in the position to give orders and make financial decisions on your terms.

One of the biggest benefits of having your own capital is that opportunities will seek you out. When you don’t have cash, you don’t even realize the number of opportunities passing you by. Without access to money, you’re not in a position to seize unexpected deals, invest in your business, or expand when the time is right. But when you have capital available, you become the person who is ready to act when the right moment presents itself.

Opportunities are never lost—they’re just taken by someone else who was better prepared. If you don’t have access to capital, someone else will step in and take advantage of the opportunities you miss. That’s why it’s so important to prioritize liquidity and put yourself in control of your financial destiny.

If you’d like to learn more about how to implement these strategies and take control of your financial future, visit our website at tier1capital.com to book a free strategy session. We’d love to help you develop a plan that ensures you have the capital you need—when you need it and remember, it’s not how much money you make, it’s how much money you keep that really matters.

When it comes to whole life insurance policies designed for cash value accumulation, everyone wants to use their money as efficiently as possible. Many people ask if they can grow their policy by paying back their policy loan, and that’s exactly what we’re going to cover today.

A policy loan is a loan taken against the cash value of your whole life insurance policy. When you build up cash value, the insurance company allows you to borrow against it by placing a lien on the policy. The money itself comes from the general account of the insurance company, not from your policy, meaning your cash value continues to grow uninterrupted while you access tax-free capital. However, the loan will require interest payments.

Using policy loans can be a great way to access funds for business investments or other financial needs, but they do not directly grow your policy. The growth of your cash value is not affected by whether or not you take a loan; rather, it depends on your premium payments and the policy’s structure. That said, with a mutually owned life insurance company, policyholders are part owners of the company. If the company generates a profit, a portion of it may be passed back to you in the form of tax-free dividends.

Policy loans give you guaranteed access to capital, allowing you to take advantage of opportunities in real estate, business investments, or even paying off debt. Having control over your money means you don’t have to depend on banks or lenders when opportunities arise. For small business owners, this kind of access is especially valuable. With a well-structured whole life policy, you can borrow against your cash value to fund business growth, buy equipment, or hire personnel, all while keeping your money working for you.

One important factor to consider is that whole life policies take time to build cash value. It requires foresight and discipline to contribute consistently, but the long-term benefits are worth it. The more premium you pay—whether through base premiums or paid-up additions—the faster your cash value and access to capital will grow. Over time, your policy can reach a point where, for example, you put in $10,000 and your cash value grows by $20,000. This process doesn’t happen overnight, but after several years, you can see significant benefits without taking on additional risk.

Many people view whole life insurance as a poor investment in the early years because they don’t see immediate returns. However, these policies are not investments—they are financial tools designed to provide liquidity and security. The real value becomes evident over time, as your premiums generate steady cash value growth without market risk.

We often tell people that a properly structured whole life policy can be the best financial asset you own when you’re in your 60s. The key is to start in your 30s, 40s, or 50s when you’re not yet thinking about retirement. The earlier you start, the more financial flexibility you will have in the future.

If policy loans don’t grow your policy, what’s the point of paying them back? The answer is access to capital. When you take a loan, it reduces the equity in your policy. Paying it back restores your equity, ensuring that you have more capital available in the future for other opportunities. Using policy loans to avoid high-interest credit card debt, fund business investments, or take advantage of opportunities with a high rate of return can be a smart financial move. However, once you have the money, paying back your loan reduces interest costs and increases future borrowing power.

If you’d like to learn more about how to grow your whole life policy or get started with your first specially designed whole life insurance policy for cash value accumulation, visit our website at tier1capital.com. We’d be happy to hop on a free strategy call with you to show you exactly how to put these policies to work for your specific situation and help you achieve your financial goals. Remember:It’s not how much money you make. It’s how much money you keep that really matters.

Does this sound like you? You’re running your business, reinvesting all your profits back into it, but when you need capital, you find yourself dependent on banks and credit companies. That’s why we made this blogpost. Today, we’re going to talk about how to run and grow your business while maintaining liquidity, because liquidity is key. Having access to your own capital means not being at the mercy of lenders when you need funding the most.

When it comes to owning and expanding your business, you always need money. It takes capital to keep things running, hire employees, purchase equipment, and seize new opportunities. The question is, how can you manage your cash flow in a way that ensures liquidity while reducing dependency on outside lenders? That’s exactly what we’re going to cover today—the case for liquidity in your business and how to position yourself for an advantage when it comes to accessing money when you need it most.

There is nothing more valuable to a business than having full liquidity, use, and control of money. However, most business owners are trained to operate in a way that doesn’t prioritize liquidity. Instead, the typical financial model involves bringing in profits, covering expenses, and then borrowing money when needed. As long as cash flow allows, businesses can take out loans, but that also means giving up more of their profits to debt payments. The problem is, relying on banks and credit institutions leaves you vulnerable. If the economy shifts, interest rates rise, or a recession hits, access to capital can suddenly disappear. Lenders can tighten credit lines or even cut off funding entirely. When that happens, business owners who depend on borrowed money may find themselves in a difficult financial situation.

During economic downturns, the first thing to go is access to money. Credit lines shrink, loan terms become stricter, and banks may no longer approve new financing. This can leave business owners scrambling to stay afloat. That’s why we developed a process to help business owners regain control of their money and ensure they always have access to capital when needed.

The key to financial security in business is keeping money in a place where you have full liquidity, use, and control. Instead of tying up every dollar in business operations and debt repayment, business owners should allocate a portion of their cash flow to build a liquid reserve. There’s an old saying: “When you have access to capital, opportunities will find you.” Unfortunately, many business owners reinvest every penny back into their business, leaving them with no financial flexibility. As debts are paid off, that money is gone—it’s not accessible for future use.

By making small tweaks to how you manage cash flow, you can build a reserve of liquid assets while still operating your business efficiently. It’s not about cutting expenses or increasing sales—it’s about using the same dollars more effectively. When you redirect a portion of your cash flow into a liquid account, you create a safety net that allows you to handle emergencies, seize investment opportunities, and maintain financial stability.

Many business owners believe the best way to gain financial security is to pay off debt as quickly as possible. But in reality, the fastest way to financial security is to build a pool of liquid cash that you control. Business owners lose sleep over financial stress, often worrying about debt. However, the goal shouldn’t be just to eliminate debt—it should be to create financial flexibility. When you prioritize liquidity, you give yourself options. You’re no longer dependent on banks, and you don’t have to panic when unexpected expenses arise.

One major issue business owners face is that most of their net worth is tied up in their business. In fact, 80% of small business owners have the majority of their wealth wrapped up in their business. But here’s the problem: when it’s time to sell, most business owners only realize about 25 cents on the dollar for their business equity. Think about it—you spend years growing your business, reinvesting profits, and building value. But when it’s time to exit, you might only get a fraction of what you expected. This is why proper financial planning is crucial. Without liquidity, a business owner’s only option for retirement may be selling their business.

Business Owner A has a business worth $1 million, but all of his net worth is tied up in that business. Business Owner B also has a business worth $1 million, but he has also built up $1 million in liquid assets. When it’s time to exit the business, Owner B has options. He can sell the business if he wants, but he doesn’t have to. His retirement income isn’t dependent on selling the business, and he has financial security. Owner A, on the other hand, must sell the business to survive because he has no other source of money.

The best part of this financial strategy is that it doesn’t require you to increase revenue or cut costs. It’s about redirecting the cash flow you already have to work in your favor. Instead of reinvesting every dollar into the business, allocating a portion to a liquid asset account ensures financial security. This approach allows you to grow and expand your business with financial confidence, maintain cash flow flexibility even during economic downturns, protect your business and personal financial future, and exit the business on your terms rather than out of necessity.

At Tier 1 Capital, our goal is to help business owners stay in control of their finances instead of having their finances control them. We don’t just focus on interest rates or rates of return—we focus on cash flow, liquidity, and access to money. If you’d like to learn more about how to apply these strategies to your business, visit our website at tier1capital.com to schedule a free strategy session today. Remember, It’s not how much money you make. It’s how much money you keep that really matters.

With inflation at an all-time high, it’s harder than ever to make smart financial moves to secure your future. But that’s exactly what we’re going to discuss today—how to move yourself, your family, and your business forward despite rising prices.

According to the Bureau of Labor Statistics, from 2020 through the end of 2023, inflation has risen by 21.4%. That means something that cost $100 in 2020 now costs $121.40. This is especially alarming because while prices are increasing, incomes aren’t rising at the same pace, and the cost of borrowing money is climbing even higher.

Today, we want to talk about smart financial moves you can make to counteract the effects of inflation. We’ve identified five key strategies that can help.

The first step to offsetting inflation is to perform a spending audit. This is easier said than done, and it’s important to clarify that the goal isn’t necessarily to cut spending but to understand exactly where your money is going. By identifying spending patterns, you might find ways to make the same purchases in a more cost-effective or inflation-friendly way.

What is measured can be managed. Imagine knowing exactly how much you spend on Amazon or streaming services each month. If you could cut those expenses by even 5%, 10%, or 15%, that savings could have a big impact over time. But if you don’t track your spending, you won’t know where you can make adjustments.

The second way to manage inflation is by opting for a longer mortgage term. When inflation rises, the cost of goods and services increases, which puts pressure on your cash flow. Extending your mortgage term lowers your monthly payments, freeing up money for other expenses.

Think about this: before 2021, interest rates were historically low. If you locked in a 30-year mortgage at that time, your monthly payment would be much lower compared to today’s higher interest rates. Not only that, but housing prices were lower then, meaning you would have also built more equity in your home.

Even now, locking in a lower monthly payment for a longer period can provide financial stability. Plus, if you need extra cash, tapping into home equity may be an option to help you manage rising costs.

Another way to improve cash flow during inflation is to contribute to your retirement plan only up to your employer’s match. This strategy allows you to maintain liquidity while still taking advantage of free money from your employer’s contribution.

While retirement savings are important, traditional accounts like 401(k)s and IRAs come with restrictions. You don’t have full control over when or how you can access your money without penalties. Instead of locking away excess funds, keeping cash accessible can provide financial flexibility when you need it most.

Many people assume that paying cash is the best financial decision, especially during times of inflation. The logic is that buying now avoids future price increases. However, there’s a downside: when you use all your cash for a purchase, you eliminate your liquidity.

If an emergency arises or a great financial opportunity comes along, you may have to borrow money at a higher interest rate to cover the expense. That puts additional strain on your cash flow.

Now, if you know you struggle with debt management, this strategy may not be for you. If you’ve had credit card debt in the past and are trying to avoid it, paying cash could be a responsible choice. However, if you have the financial discipline to manage cash flow wisely, it’s better to keep cash reserves and use leverage instead.

By maintaining control over your cash and financing major purchases strategically, you can keep your net worth intact while preserving liquidity. When you have cash on hand, you have greater financial agility and are in a stronger position to handle unexpected expenses or investment opportunities.

The final strategy to combat inflation is to ensure that you are always in control of your cash flow.

This ties directly into the previous point about maintaining liquidity. When you have access to cash, you are in a better position to make financial decisions on your terms. You can negotiate better deals, take advantage of investment opportunities, and avoid the pitfalls of high-interest debt.

At Tier 1 Capital, we emphasize financial control. When you view your finances through the lens of maintaining control, decision-making becomes much easier. Before making any financial move, ask yourself:

• Will this put me in greater control of my money?
• Will this allow me to be more financially agile?

If the answer is no, consider an alternative approach that keeps you in control.

A lot of financial success comes down to perspective. It’s not always about rigid financial rules—it’s also an art, depending on your personal situation and circumstances.

If you’d like to learn more about how to apply these strategies to your specific financial situation, visit our website at tier1capital.com and schedule a free strategy session today.

Remember, It’s not how much money you make. It’s how much money you keep that really matters.

When it comes to whole life insurance, most people know by now that there is a cash value associated with the policy—both guaranteed and non-guaranteed. However, what many don’t realize is that there are ways to accelerate the growth of that cash value, giving you more liquidity, use, and control of your money while you’re still alive. Not to mention, these strategies can also strengthen the death benefit when you pass.

We’ve identified four key strategies to supercharge the growth of your cash value in a whole life policy. Let’s dive in.

Opt for a Limited Pay Policy

Most whole life insurance policies are designed to be paid up at age 100 or even 121, meaning you have a long premium payment period. However, if you want to grow your cash value faster, you can compress that payment period so that you contribute premiums for a limited number of years.

By doing this, you force the cash value to accumulate in a shorter period, which accelerates its growth. The key here is that the insurance company still has to honor its promises:

They must pay out the death benefit.
The cash value must equal the death benefit at the policy’s maturity (age 100 or 121).

If you opt for a policy with a 10-, 15-, or 20-year payment period (or one that’s paid up at age 65), the insurance company calculates on a guaranteed basis how much growth needs to occur within the policy to meet the maturity requirement.

One key distinction here is that when the policy premiums stop, that doesn’t mean the policy has matured. If you have a 10-pay policy, for example, that just means you stop making payments after 10 years, but the death benefit and cash value will continue to grow until age 100 or 121.

Add a Paid-Up Additions (PUA) Rider

Another way to accelerate cash value growth is by adding a Paid-Up Additions (PUA) rider.

A PUA rider allows you to buy additional paid-up death benefit inside the original whole life policy. For example, if you put an extra $1,000 into the policy, that might buy $25,000 in paid-up death benefit. That means that $1,000 has to grow to $25,000 by the policy’s maturity date—offering significant guaranteed growth.

However, it’s important to structure this correctly so that you don’t lose the tax-free benefits of life insurance. You can’t put in an unlimited amount of PUAs because there are limits imposed by the modified endowment contract (MEC) rules. Properly structuring your policy allows you to maintain the tax advantages while maximizing your cash value accumulation.

Whole life policies naturally become more efficient over time, growing on a guaranteed basis. However, in the early years, they tend to have little to no cash value. By adding a PUA rider, you can build cash value much earlier, reducing the delay in accessing your money.

Use a Term Rider

Adding a term rider to your policy might sound counterintuitive, but it actually allows you to accelerate cash value growth even further.

Here’s how it works: a term rider increases your total death benefit, which, in turn, raises the ceiling on how much cash value you can accumulate. The amount of cash value you can build is based on your age and the death benefit amount. Since you can’t control your age, increasing the death benefit allows you to contribute more PUAs, boosting your cash value faster.

Think of it like this:

You start with a $100,000 term rider.
You begin contributing PUAs, which gradually replace the term insurance with paid-up life insurance.
Over time, the term insurance amount decreases, while the paid-up portion increases.
Eventually, you end up with $100,000 in fully paid-up life insurance and zero term insurance—resulting in significant cash value growth.

There are different ways to structure this. Some term riders come with built-in flexibility, allowing you to adjust your contributions over time. Others use a level term structure, where you have a fixed cost for the first 7–10 years, keeping costs low while still allowing for growth.

The key here is working with an experienced advisor who understands your specific needs. They can help you design a policy that aligns with your financial goals.

Execute a 1035 Tax-Free Exchange

A 1035 Exchange allows you to transfer money from one life insurance policy to another without triggering taxes.

This can be beneficial if you have an underfunded policy or a different type of insurance (such as universal life) that isn’t performing as expected. If an in-force ledger analysis shows that your current policy won’t last through maturity, you might want to salvage the cash value and transfer it into a properly structured whole life policy.

In this case, the existing cash value is moved into a single premium paid-up life insurance component within the new policy. This allows you to preserve the value of your old policy while benefiting from the guarantees and cash value accumulation of whole life insurance.

It’s important to understand the differences between universal life and whole life insurance before making this move. Universal life policies often become underfunded over time, meaning they may lapse unless you contribute additional premiums. Whole life, on the other hand, offers guaranteed cash value growth and a guaranteed death benefit.

To determine if a 1035 Exchange makes sense for you, request an in-force ledger statement from your insurer. This document projects how your policy will perform in the future and can help you decide whether it’s best to keep your current policy or make a switch.

Bonus Strategy: Combine All Four for Maximum Growth

If you really want to supercharge your whole life policy’s cash value growth, you can combine all four of these strategies:

Opt for a limited pay policy.
Add a Paid-Up Additions rider.
Use a term rider to expand your capacity for PUAs.
Consider a 1035 Exchange if you have an underperforming policy.

By leveraging these techniques together, you can significantly enhance the liquidity, use, and control of your money—while still enjoying the long-term benefits of whole life insurance.

If you’d like to learn more about how to apply these strategies to your specific situation, visit our website at tier1capital.com and book your free strategy session. Remember, It’s not how much money you make. It’s how much money you keep that really matters.

When it comes to owning a business, there are many complexities that, quite frankly, aren’t talked about enough. One of the biggest challenges business owners face is key employee retention. Did you know that one out of every two employees is actively or passively looking for new opportunities? This is a huge deal because business owners rely heavily on key employees—their skill sets, experience, and institutional knowledge.

For small businesses, the impact is even greater. In many cases, key employees may be the only person in a geographic area who can perform certain duties, or they may be the glue holding the company together. Losing them could be devastating—both operationally and financially.

Key employees often have options. Their skills aren’t just valuable at their current company; they could be in demand at larger companies with better pay, more benefits, or remote work opportunities. As a key employee, someone might ask themselves, “My skills are worth X amount here, but I could earn twice as much elsewhere. What should I do?” or “Am I maximizing my value for myself and my family?”

From a business owner’s perspective, losing a key employee isn’t just about filling a vacant position. The cost of replacing a key employee is typically 200% of their salary. Replacing a key employee involves recruiting and hiring costs, training and onboarding, lost productivity, and lost revenue, especially if the departing employee was in sales. Retaining key employees isn’t just about company culture—it’s a smart financial decision.

One major challenge business owners face is how to incentivize key employees to stay without giving up equity in the company. For family-owned businesses, keeping ownership within the family is a top priority. But without the right incentives, key employees may start looking for opportunities elsewhere.

A specially designed whole life insurance policy with cash value accumulation is one of the most effective solutions. The business funds a whole life insurance policy that builds cash value. The business owns the policy, giving them control while providing an incentive for the employee. The cash value within the policy remains accessible, allowing the business owner to reinvest in operations. This creates a win-win scenario where the business retains key employees, and employees receive meaningful long-term benefits without requiring the owner to give away equity.

To see how this works in practice, let’s look at a real example. One key executive had young children and was worried about the cost of their education. His employer approached him and said, “If you stay with us for the next 10 years, we guarantee that we will provide $40,000 per year for four years for each of your two children.” That’s a total of $320,000—an amount the employee would no longer need to worry about saving. The employee was so overwhelmed with gratitude that he was in tears. And the result? He stayed with the company.

Why? Because no other employer would guarantee that his children’s education would be paid for. This strategy worked because the business owner took the time to understand what truly mattered to the employee.

Many business owners assume they don’t have the cash flow to fund a retention strategy like this. But the truth is, they don’t need extra money—they just need to use their existing cash flow more efficiently.

At Tier 1 Capital, we’ve helped business owners for over 40 years by identifying inefficiencies in cash flow, reallocating existing money to fund retention strategies, and creating solutions that are cash-flow neutral so they don’t hurt the business financially. If a business could retain key employees and grow without increasing expenses, wouldn’t that be the best of both worlds? That’s exactly what we help business owners do.

If you’re a business owner who’s worried about losing key employees, it’s time to take action. Retain your top talent without giving up equity. Make your cash flow more efficient without sacrificing growth. Secure your business’s future without increasing financial stress.

Let’s find a strategy that works for your business. Schedule a free strategy session today. We look forward to helping you protect your business and secure its future.

Remember, it’s not how much money you make—it’s how much you keep that matters. Thank you for reading, and we hope this helps you take control of your cash flow and your future.

When it comes to being a small business owner, everyone knows that cash flow is the lifeblood of any business. Today, we’re discussing how to optimize your cash flow as a small business owner. Most small business owners pursue this path because they want control—control over their destiny and financial freedom. However, with that freedom comes pressure, especially regarding cash flow.

A survey by Intuit revealed that 61% of small business owners globally struggle with chronic or cyclical cash flow issues, and 69% report losing sleep over these concerns. Here’s the truth: most cash flow issues are self-inflicted. This might sound harsh, but it’s good news because it means you can take steps to resolve them.

Many business owners believe they are just one big sale away from financial freedom. They think, “If I can just make this sale, I’ll pay off my debts and finally be free.” But often, this doesn’t bring the relief they hoped for. Instead, they go from one position of no cash to another, creating a cycle that feels impossible to escape. This cycle, often called the “curse of the entrepreneur,” stems from the mindset that one big break will solve everything. But in reality, the key isn’t in making more money—it’s in how you use your existing cash flow.

Many business owners try to get out of debt as quickly as possible, sacrificing monthly cash flow to pay off debt faster. However, there’s always another purchase or opportunity around the corner that requires additional cash or borrowing. This creates a repetitive cycle of paying off debt and acquiring more. The solution? Break the cycle by building a pool of cash that you control completely. By taking small steps and following through with consistent daily disciplines, you can stop giving all your money to the bank and start building financial freedom.

One common question is, “If I could save more money, wouldn’t I?” The challenge is that many business owners don’t think they have room in their cash flow to save. Taking money out of an already tight cash flow seems counterintuitive. But here’s the secret: there are ways you’re using money that seem helpful but are actually holding you back. By optimizing the efficiency and effectiveness of your current cash flow, you can find savings without increasing revenue or cutting expenses.

The idea of “multi-duty dollars” is critical here. Imagine getting one dollar to do multiple jobs—pay off debt, build savings, fund an emergency account, and address larger goals like succession planning or retaining key employees. Instead of feeling squeezed and tackling one problem at a time, you maximize the utility of every dollar.

How do you optimize cash flow? It starts with examining key areas: how you pay taxes, fund retirement, manage debt, make major capital purchases, and reinvest profits. By diving deep into these areas, you can repurpose money already within your cash flow to create a pool of savings. This approach doesn’t require reducing expenses or generating more revenue, which is a game-changer for many small business owners.

Ultimately, it’s all about control—control over your money, your business, and your financial future. If you’d like an analysis of your business’s cash flow, visit tier1capital.com to schedule a free strategy session. There’s no cost or obligation, and it’s an opportunity to relieve financial pressure and sleep better at night.

Remember, it’s not how much money you make—it’s how much you keep that matters. Thank you for reading, and we hope this helps you take control of your cash flow and your future.

When it comes to life insurance, it can feel confusing. There are many myths about who needs it and when. Today, we’re debunking five common myths about life insurance.

The first myth is “I’m young, single, and healthy. I don’t need life insurance.” This couldn’t be further from the truth. When you’re young, single, and healthy, you have the most cash flow, health, and time to lock in the lowest premiums. Life insurance will never cost less than it does today, especially for whole life insurance. Whole life insurance provides more than just a death benefit. It builds cash value, acting like a savings account that you can access with full liquidity. Plus, you pay for life insurance with your money but buy it with your health. Starting young ensures lower premiums and guarantees coverage when you need it most.

Another myth is that life insurance is expensive. The cost of life insurance, especially whole life insurance, can be broken down into gross cost and net cost. Gross cost is the monthly premium, while net cost accounts for the accumulating cash value within the policy. Over time, the net cost is often zero or even positive with a dividend-paying, mutually owned policy. The insurance company makes two promises with a whole life policy: to pay the death benefit whenever the insured passes away and to ensure the cash value equals the death benefit by maturity (age 100 or 121). This contractual guarantee offers long-term value that can make life insurance an affordable financial tool.

There is also the myth that life insurance is unnecessary after retirement. Many believe life insurance is unnecessary after 65, but this is a myth. If you don’t accumulate enough assets, life insurance can ensure a legacy for your family. Even if you’re successful financially, life insurance can cover estate taxes, ensuring your heirs can inherit your assets without financial strain. Life insurance cash value is among the most valuable parts of a retirement portfolio. Unlike other accounts that are taxed upon withdrawal, the cash value from life insurance is accessible tax-free. Many clients in their 60s and 70s don’t want to get rid of their policies—they want more! The best strategy is to purchase life insurance early to have it when you truly need it.

Another misconception is that life insurance is a lousy investment. Comparing life insurance to investments is like comparing apples to racing cars. Investments carry risk, but whole life insurance is a contractual guarantee. It offers stability, liquidity, and control—features that investments often lack. Life insurance can also serve as a financial safety net during emergencies or allow you to seize investment opportunities without liquidating assets. Its stable growth and accessibility make it a valuable financial tool.

Lastly, there is the idea that you should only buy term insurance because it’s cheaper. The idea of “buy term and invest the difference” might sound appealing but comes with risks. Investments are subject to market volatility, taxes, and limited access. While term insurance might seem cost-effective, most people fail to invest the difference as planned. Whole life insurance provides certainty and guaranteed growth, making it a more reliable option for many.

Life insurance is often misunderstood. We’ve tackled five myths today, but if you have more, drop them in the comments—we’d be happy to cover them in a future blog post. You can also visit our website, Tier1capital.com and schedule your free strategy session.Remember, it’s not how much money you make but how much you keep that matters.

When it comes to conventional wisdom, what most people don’t realize when they’re following it is that there are costs associated with the decisions that we’re making every day. These tiny decisions we make make a big impact over time, and that’s exactly why we’re going to dive into those hidden costs of following traditional financial advice today.

So you mean to tell me that free advice isn’t free? It’s funny because the media puts out all of this conventional wisdom of things we should and shouldn’t be doing with our money as if they’re moving us forward and not in their own best interest. There are hidden costs, and that’s such a great topic because conventional wisdom or traditional financial advice is rooted in risk or volatility. Basically, what’s happening is you’re being sold or positioned to expose your money or your wealth to risk and volatility—things, by the way, over which you have very limited, if any, control. That goes totally against what we talk about here. We are always talking about how we could put you in control of your money and how we can make that money as efficient as possible. By exposing that money to risk exclusively, you’re absolutely out of control. We don’t necessarily have control over the efficiency either because there are taxes and laws associated with each different type of account.

In order to make your money more efficient, oftentimes, especially with what we talk about, we step back from the conventional wisdom. We step back from the conventional way of financing, saving, and using our money to put ourselves in control instead of following that conventional wisdom, which leaves the control out of our hands. If I’m doing financial planning and I have a specific goal in mind, I know what the goal is, and I want a surefire way on how to get there. I don’t want to risk my way to that reward or the possibility of that reward because the last thing we want is to put all of this money away for all of this time and not be able to achieve that goal even though we played our part.

The rules can change, or the markets can change. Maybe you don’t want to take risks or expose your money and wealth to volatility. There’s another hidden cost: taxes. Once you’re putting your money away, your goal is to get a high rate of return. Is that really the goal? At the end of the day, the more you make, the more Uncle Sam takes. You’ve got a partner in that account, and that’s something that most people don’t take into consideration. Right away, you’re exposing yourself to risk and taxes that you may not have been exposed to had you not followed conventional wisdom. Not to mention inflation and high-interest rates.

Traditional financing also leaves you out of control with blatant costs like interest rates and hidden costs like not being able to save or access that money again and not feeling financially free. Paying off a mortgage quickly is often seen as wise, but is it actually moving you forward financially? Home equity isn’t necessarily liquid. It’s the bank’s decision to let you access it, not yours. If the rules change, or something happens where you’re unable to qualify, you’re left without options.

Additionally, following conventional advice often exposes you to regulation changes that are beyond your control. Rules made in Washington can directly impact you. We always talk about control, efficiency, and saving in a place you own and control, like a specially designed whole-life insurance policy. This allows for guaranteed growth, opportunities for non-guaranteed growth with dividends, and a framework where the rules are laid out clearly in a contract. Saving conventionally often means strong dollars today are being put away to retrieve weaker dollars in the future, given the effects of inflation.

Not being able to access the money along the way is a major challenge. Financial goals like buying a house, sending kids to college, or starting a business all require money, and inflation makes everything more expensive. Having access to money throughout your financial journey is critical. Putting it in places subject to regulation, taxes, and market risks limits your options.

The answer is to protect yourself from risks: losses, taxes, regulations, and inflation. Various strategies and places can help you do this, and we can guide you to find the best fit for your situation. If you’d like to learn more visit our website Tier1capital.com to book a free strategy session today! And remember, it’s not how much money you make—it’s how much you keep that truly matters.

When it comes to dividends associated with a whole life insurance policy, there are several dividend options available to policyholders. These options allow you to customize how your dividends work for you, and understanding them is key to making the best choice for your financial goals. As owners of a whole life policy with a mutual insurance company, policyholders share in the profits of the company and have the freedom to decide how to use their dividends. The first option is to receive your dividends directly in cash. At the end of the year, mutual insurance companies calculate their profits. Since you’re a policyholder and therefore an owner of the company, you’re entitled to a share of these profits. If you choose this option, the insurance company will issue you a check for your share of the profits. It’s a straightforward way to put cash in your pocket.

The second option is to reduce the premium on your policy. For example, if your annual premium is $1,000 and your dividend is $200, you’ll only need to pay the remaining $800. This method reduces the out-of-pocket cost of maintaining your policy. Both the cash and premium reduction options provide immediate financial relief, which can be appealing for those looking for quick results. The third option involves using dividends to purchase one-year term insurance, which increases your death benefit. While the cost of term insurance rises with age, the additional death benefit remains consistent, providing extra security for your beneficiaries or chosen charity.

Another option is to let your dividends accumulate at interest. Here, dividends are held by the insurance company in a separate account and earn a fixed rate, typically between three and four and a half percent. This allows your dividends to grow without immediate use, providing a layer of steady financial growth. A highly popular option is using dividends to purchase paid-up additions—additional life insurance that increases both the cash value and death benefit of your policy without requiring further premiums. This strategy allows your money to grow and compound uninterrupted. Over time, this creates exponential growth as dividends generate more dividends, which in turn generate even more dividends. It’s a powerful way to build long-term wealth while maintaining liquidity through the policy’s loan provision.

Lastly, if you have taken a loan against your policy, you can use your dividends to pay the loan interest. Any remaining dividends can then be reinvested or applied to purchase paid-up additions, helping you manage debt while still growing your policy’s value. Dividends are essentially a bonus—a return of profit from the insurance company to you. How you utilize them depends on your financial goals and current needs. Whether you prefer immediate cash, long-term growth, or loan management, there’s an option that fits your strategy.

These are the six main dividend options we know of. If you’ve encountered others, feel free to share your insights. Remember, dividends are a powerful tool, and how you use them can make a big difference in achieving your financial objectives.

Visit our website Tier1capital.com to book a free strategy session today! And remember, it’s not how much money you make—it’s how much you keep that truly matters.