DEBT DIAGNOSIS

30 Ben­e­fits of Own­ing a Per­sonal Bank­ing System

1. Flex­i­ble – Get mul­ti­ple uses from each dol­lar! Typ­i­cally, we allo­cate dol­lars into indi­vid­ual buck­ets that meet spe­cific needs or wants. We have our sav­ings bucket, our retire­ment bucket, our invest­ment bucket and our insur­ance buck­ets. A dol­lar placed in any one of these buck­ets serves one spe­cific need. How­ever, a bank­ing sys­tem can per­form simul­ta­ne­ous jobs such as life insur­ance pro­tec­tion, per­sonal sav­ings, financ­ing, a ware­house for invest­ment dol­lars, retire­ment & estate plan­ning. Your options are infi­nite and inter­change­able. With this sys­tem you can truly stretch a dollar.

2. Safe – Life insur­ance com­pa­nies are non-transactional unlike banks and finan­cial insti­tu­tions. Their invest­ment port­fo­lios are struc­tured, con­ser­v­a­tive and reg­u­lated accord­ing to the state. Plus, life insur­ance com­pa­nies have a long-term track record of over 100 years and some over 150 years.

3. Reg­u­lated Pro­tec­tion – The State Insur­ance Com­mis­sioner man­dates reserve pools, as well as guar­anty asso­ci­a­tions to pro­tect pol­i­cy­hold­ers against a com­pany default. Reg­u­la­tion at the state level has proven to be much more effec­tive in pro­tect­ing the inter­est of indi­vid­u­als over cor­po­ra­tions. Life insur­ance com­pa­nies are state reg­u­lated, whereas fed­er­ally char­tered banks and finan­cial insti­tu­tions are reg­u­lated at the fed­eral level.

4. Unreg­u­lated Pro­tec­tion – Another way that your bank­ing sys­tem is pro­tected is through re-insurance. Life insur­ance com­pa­nies will­ingly pur­chase insur­ance from re-insurance com­pa­nies to spread the over­all risk amongst even more con­sumers and pro­vide more safety to the indi­vid­ual pol­icy holders.

5. Death ben­e­fit – Not only do you get the use and ben­e­fit of your cash val­ues when you’re alive, but when you pass away your ben­e­fi­ciary will receive the cur­rent death benefit.

6. Tax ben­e­fits – There is no annual tax­a­tion on cash value increases and there is no tax­a­tion on div­i­dends. The death ben­e­fit pro­ceeds pass to your heirs income tax-free.

7. Estate Tax Free – With proper plan­ning, life insur­ance pro­ceeds can be received free of estate taxes.

8. Guar­an­tees – Pol­icy hold­ers receive a guar­an­teed inter­nal rate of return that never adjusts over time. Pre­mi­ums in a whole life con­tract are guar­an­teed to remain the same through­out the life of the pol­icy. Your ben­e­fi­cia­ries are guar­an­teed to receive the death ben­e­fit when you pass. Once div­i­dends are declared they can not be taken away.

9. Pol­icy Loans – It wouldn’t be a bank­ing sys­tem if you couldn’t make loans! By mak­ing and repay­ing loans you are able to recap­ture the prin­ci­pal, inter­est and lost oppor­tu­nity cost of the dol­lars that you used to send to other finan­cial insti­tu­tions. The aver­age Amer­i­can spends 35% of every dol­lar earned on inter­est expense. Hav­ing a per­sonal bank­ing sys­tem can elim­i­nate your depen­dence on third party financiers for credit approval and financ­ing. Hav­ing instant access to funds improves your nego­ti­at­ing posi­tion and gives you more confidence/self-reliance. Since you own the bank­ing sys­tem you have full con­trol of rates, pay­ment pro­grams and schedules.

10. The LUCK Fac­tor – Liq­uid­ity, Use & Con­trol and Knowl­edge. You own the con­tract and you con­trol it. You get first right to the funds in your pol­icy. They are not locked up in a straight jacket while the insti­tu­tion uses them…like qual­i­fied retire­ment plans are. There are no fees or penal­ties for using the cash val­ues that you’ve accu­mu­lated inside the pol­icy. Since the funds are com­pletely liq­uid you can do with them as you choose. There are no rules per­tain­ing to what you are allowed to use the cash val­ues for. Self-dealing is encour­aged not prohibited.

11. Cred­i­tor & Asset Pro­tec­tion – 100% of cash val­ues inside life insur­ance poli­cies are pro­tected from cred­i­tors and judg­ments in the state of Ari­zona. Lev­els of pro­tec­tion vary by state.

12. Vir­tu­ally Unlim­ited Con­tri­bu­tions – Your bank­ing sys­tem is not capped by the gov­ern­ment or restricted by your Adjusted Gross Income as is the case with Roth IRAs. Insur­ance com­pa­nies do use a HLV scale to deter­mine the high­est death ben­e­fit one can be insured for though.

13. Decreas­ing Mar­ginal Costs – The pre­mium and death ben­e­fits have a decreas­ing mar­ginal cost. Thanks to guar­an­teed pre­mi­ums, com­pound­ing after-tax rate of returns and infla­tion, every pre­mium paid is cheaper than the pre­vi­ous one.

14. Infla­tion fighter – The guar­an­teed growth within a whole life con­tract cush­ions a fam­ily from uncertainty.

15. Supe­rior strength – Life insur­ance com­pa­nies have supe­rior finan­cial strength and track records than banks and finan­cial institutions.

16. 100% Reserve base – Pol­icy loans are based on 1:1 reserves, mean­ing that for every dol­lar loaned there is a dol­lar held in reserve to back that loan. This pol­icy does not lead to infla­tion like the Fed­eral Reserve’s pol­icy of frac­tional lend­ing. Fol­low­ing this pol­icy allows a bank to lend out $10 for every $1 that is kept in reserve. There­fore, money can be cre­ated out of thin air for every dol­lar that is deposited with a bank. This puts bank deposits at much greater risk in the event of a finan­cial cat­a­stro­phe. It also rein­forces the over­all strength and pru­dence of life insur­ance com­pa­nies. This is one of the rea­sons why cash val­ues remained 99.9% safe dur­ing the Great Depres­sion while over 10,000 banks failed dur­ing the same period.

17. Long-Term Plan­ning and Invest­ing – The pro­fes­sional money man­agers work­ing for life insur­ance com­pa­nies do not chase short term per­for­mance like most hedge fund and mutual fund man­agers. They are look­ing out 10, 20 even 70 years down the road. They also diver­sify by indus­try, matu­rity & geog­ra­phy. This keeps costs and risks very low.

18. No Lost Oppor­tu­nity Cost – Upon reach­ing par­ity, where accu­mu­lated cash val­ues equal total pre­mi­ums deposited, there is no lost oppor­tu­nity cost. Cash val­ues con­tinue to earn the guar­an­teed rate of return and div­i­dends whether the funds are inside the pol­icy or at work via a pol­icy loan. Tax defer­ral of growth, the income tax free dis­tri­b­u­tion and the death ben­e­fit itself can eas­ily make up any other oppor­tu­nity cost that was lost prior to reach­ing parity.

19. Pri­vate Capital/Line of Credit – This bank­ing sys­tem allows one to build pri­vate cap­i­tal via cash val­ues and can be used as an instant line of credit. Many peo­ple pre­fer to build equity out­side of their homes rather than pay­ing them off. Why? It offers them liq­uid­ity in case of emer­gency and max­i­mizes their tax­able mort­gage inter­est deduc­tion. Have you ever thought about where you would get money in the event of a per­ma­nent dis­abil­ity, ill­ness, mar­ket decline and loss of job or a nat­ural dis­as­ter like Hur­ri­cane Kat­rina that wipes out your home? In events like these it is very hard to pull equity out of your home. After all, you have to qual­ify for the loan…which you may be unable to do in an emer­gency such as these.

20. Wash Loan – When a pol­icy loan is requested the inter­est on that loan is deducted off the top. How­ever, the pol­icy con­tin­ues to earn inter­est and div­i­dends as if the money was never taken. In addi­tion, when you take a pol­icy loan the inter­est charged is based on a daily rate not an annual rate. There­fore, prin­ci­pal pay­ments made dur­ing the year receive a reim­burse­ment of the pro­rated inter­est charged. So, if you are charged 5.75% inter­est for the money but your account con­tin­ues to earn 6%…the cost of the loan is a wash. Add in the pro­rated inter­est and you’re com­ing out ahead.

21. Accel­er­ated Death Ben­e­fits – In the event that you are diag­nosed with a ter­mi­nal ill­ness, you can receive a large por­tion of your death ben­e­fit while you are alive.

22. Waiver of Pre­mium – In the event that you become per­ma­nently dis­abled the waiver of pre­mium rider main­tains that your base insur­ance pre­mium con­tin­ues to be paid by the life insur­ance com­pany, if you so choose.

23. Long-Term Care Rid­ers – This rider pro­vides for pay­ment of long-term care.

24. Annu­iti­za­tion of Cash Val­ues – You can turn your cash val­ues into an annu­ity that will guar­an­tee a life­time stream of income.

25. A Will Unto Itself – With a life insur­ance con­tract you can sim­ply and eas­ily change ben­e­fi­cia­ries and divide pro­ceeds with­out going to a lawyer.

26. No Pro­bate – Life insur­ance bypasses the pro­bate process because it’s a legal con­tract and will unto itself. It is not included in the gross estate when it is being pro­bated. This means that the enor­mous pro­bate costs and fees can be avoided.

27. 1035 Tax Free Exchanges – Increased life expectan­cies, improved under­writ­ing and pre­ferred dis­counts mean that in some cases newer poli­cies may be bet­ter than the exist­ing pol­icy. If this course is ben­e­fi­cial, you can exchange poli­cies tax-free. Or, if you wish to own a pol­icy designed specif­i­cally for bank­ing pur­poses with a com­pany that embraces the con­cept, you can take advan­tage of a 1035 exchange also.

28. Asset Allo­ca­tion – You can spend down your other assets that can place a bur­den to your heirs if left to them. While you spend down these assets the cash val­ues, div­i­dends and death ben­e­fit will con­tinue to grow tax free. Plus, the liq­uid­ity and income tax free char­ac­ter­is­tics of life insur­ance are great ben­e­fits for heirs, whereas qual­i­fied retire­ment plans can be a tax night­mare for them.

29. Pen­sion Max­i­miza­tion – Pen­sion ben­e­fits are fully tax­able as ordi­nary income. Life insur­ance pro­ceeds are income tax free mean­ing that income derived from a life insur­ance pol­icy will be larger every month than under the tra­di­tional pen­sion. Plus, pen­sion ben­e­fits don’t pass to heirs if both retiree and spouse die simultaneously.

30. Inde­pen­dence – Life insur­ance poli­cies allow for own­ers & ben­e­fi­cia­ries to be less depen­dent upon gov­ern­ment relief.

Click for an Asset Safety and Ben­e­fits Com­par­i­son Here. You can com­pare your cur­rent assets with our Per­sonal Bank­ing Sys­tem option.

Click Here to see an exam­ple of bank­ing with your own bank­ing system.

I can­not imag­ine any argu­ment that would hold up against the fact that bank­ing this way, in your own pri­vate bank­ing sys­tem, is the only way to bank. There are just too many ben­e­fits with too few dis­ad­van­tages.

Call me now, Jen­nifer Bhala Hansen, @ 845 – 649-7487 so you can start the process of Becom­ing Your Own Banker. You can also email me at jen­nifer @debtdiagnosis.com

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   April 3, 2011 at 10:16 pm

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