30 Benefits of Owning a Personal Banking System

30 Benefits of Owning a Personal Banking System

Who wouldn’t want to own their own personal banking system knowing all the benefits it provides? I mean where else can you receive all these benefits in a simple financial system. Click on image to learn more about each benefit.

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. Pay and Earn Interest – When a loan is requested, the interest on that loan is deducted off the top. However, the policy continues to earn guaranteed interest and slightly lower non-guaranteed dividends because the money borrowed did not come our of your cash value account. It came from the insurance company general fund. 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.

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. However, this is not an either or situation. This is have it all situation. Both go hand in hand and compliment each other having each dollar be more protected and doing more than one task.

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

February 25, 2011 · Jennifer · One Comment
Tags: , , , , , , , , , , , ,  · Posted in: 30 Benefits of Private Banking, BANKING with INSURANCE

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