A lot of times when we’re designing a whole life policy designed for cash accumulations, people will get hung up on the break even point, the time where the cash value is greater than the premiums paid.
But today, we’re going to talk about how you could use your policy before that break even point so you could get financially ahead, even before you break even.
You’ve heard us say it before and you’ll hear us say it again.
It’s not all about the internal rate of return of your policy. It’s how you can put this policy to work for you to achieve your financial goals.
And putting the policy to work for you is critical in helping you to achieve financial independence. And the reason why is really simple.
Every time you take a loan from the insurance company, you are creating financial freedom in your life. Those loans are unstructured. What does that mean? It means you don’t get a coupon booklet, you don’t get a monthly invoice. You actually are in charge of structuring the loan repayment process, and that is complete control.
So what are some ways you can put this policy to work for you before the break even point within those first ten policy years? Well, initially, any small debts that you have, whether it’s credit cards or the you know, the last remaining year or two on a car payment, you can borrow against your cash value, pay off that loan. And instead of having that payment going away from you, you now have that money, that payment, flowing back towards you, into your policy.
You’re going to make the same payment you were making to Ford Motor Credit, back to your policy. The only difference is this you don’t own Ford Motor Credit, you own your policy. So when you make the monthly payment back to the policy, you can use that money again somewhere down the line.
That’s right. You’re going to be rebuilding that cash value by repaying your loan and you’re going to be building that cash value from within by paying that monthly or annual premium.
So now you have two payments per month working for you. You have the loan repayment, which you can access again through the loan feature, and you have your premium which is building and growing your cash value.
You see every single purchase we make and this life is financed, whether we finance traditional through a bank and pay interest to them, or we pay cash and give up the earning potential or growth potential on that money. This is simple finance 101. We’re either going to pay up, by financing, or give up, by paying cash. There are no exceptions.
So the question becomes, how do we put this law of nature to work for us? And the answer is with a specially designed, whole life insurance policy designed for cash accumulation. Why? Because we have guaranteed access to that money, and it doesn’t interrupt the continuous compound of interest within that policy. As long as you place it with the right company.
So keep this in mind. Even though you’re using the money to pay off some debt or to make a purchase, your money is still earning interest for you. Uninterrupted compound interest is working for you.
A lot of times we meet with people who didn’t buy life insurance policies for cash accumulation. They weren’t designed for the infinite banking process, but they have a policy that might be ten, 12, 15, 20 years old, even, and they have a lot of cash in there and they can access that cash through the loan feature. They never considered it because they were never told that they can do it.
The point is they have access to money that they can get on their terms and they can utilize that money to make the rest of their money more efficient and make their cash flow more efficient, where they can borrow against their policy, pay off an outside debt, and have that monthly payment now coming back to them by redirecting the payment back to their policy.
Now, if you have a whole life insurance policy, you have a policy loan provision and if you’ve had that policy for a long time, chances are there are some cash value built up within that policy. Not as much as it would have been with a specially designed life insurance policy designed for cash accumulation. But because of the second promise that insurance company makes to have the cash value equal to the death benefit at the age of maturity, there has to be cash accumulation within that policy. And this is key to this whole process.
You could access that cash through a collateralized loan. So your money is still in your policy. You get a separate loan from the insurance company. The insurance company puts a lean against the cash value. And now you can utilize this money that you get through the loan to pay off outside debts or to make purchases. It’s almost as if your money is in two places at once because, quite literally, it is. It’s always in your policy working and you can access that equity through a loan feature.
Now we’ve seen our clients use their policy loans for all sorts of things because, quite frankly, there’s no limits. There’s no qualifications for obtaining these loans as long as there’s cash value in the policy, you have access to the loan. You can make major capital purchases like a wedding, cars, vacation. You could pay off debt, you could send your kids to college using these policies.
The only limitations are in your imagination on how you want to put this policy to work for you.
There are many examples of famous people who have access to cash value in their life insurance to start their now famous business. One great example is Walt Disney. No bank would loan him money to buy swampland in Central Florida, but he had a vision. He also had a sizable life insurance policy that he was able to borrow against the cash value to start purchasing land in central Florida. And we all know how that ended up. He created the happiest place on earth, Disney World.
If you’d like to get started with a specially designed, whole life insurance policy designed for cash accumulation and some ideas on how to put the policy to work for you, even before it breaks even. Check out our website at Tier1Capital.com to get started with a free strategy session today.
Or if you’d like to learn more about how we put this process to work for our clients, check out our free webinar, The Four Steps to Financial Freedom.
And remember, it’s not how much money you make. It’s how much money you keep that really matters.