What hap­pened when James Stew­art (George Bai­ley) went to the bank to ask for a loan?

He was first asked by the banker (Lionel Bar­ry­more as Mr. Pot­ter) , “What col­lat­eral do you have?” His Answer,

Click here to view George’s answer on video

Next ques­tion asked by Mr. Pot­ter was, ““How much equity do you have in it?”

Our grand­par­ents and great grand par­ents gen­er­a­tions knew the value of  Whole life insur­ance.  They did not have Term Insur­ance with zero equity and that runs out or cost too much when they needed it most.

Term insur­ance has its place but should not replace prop­erly designed per­ma­nent life insurance.

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WALT DISNEY USED FUNDS FROM HIS

LIFE INSURANCE POLICY

TO BEGIN MANIFESTING HIS DREAM.

This Pri­va­tized Bank­ing Strat­egy is not about Rate of Return within the pol­icy as much as it is about access to cap­i­tal and what you do with that, out­side the policy.

Walt Dis­ney col­lat­er­al­ized money from his life insur­ance pol­icy and so was able to take a loan after the bank refused to lend him money to start a theme park, which is now the world famous Dis­ney Land.

What do you think his inter­nal pol­icy rate of return was com­pared to his exter­nal rate of return. How much profit has Dis­ney­land gen­er­ated for him?

A num­ber of years ago, pres­i­den­tial can­di­date John McCain secured ini­tial cam­paign financ­ing by using his $3 mil­lion life insur­ance pol­icy as collateral.

In 1980, Doris Christo­pher used a life insur­ance loan to launch her strug­gling kitchen gad­get com­pany. In 2002, she sold that com­pany — the Pam­pered Chef — to War­ren Buf­fett for a reported $900 million.

Even in the midst of the Great Depres­sion, J.C. Pen­ney used a loan against his $3 mil­lion life insur­ance pol­icy to resus­ci­tate his retail stores after the 1929 crash.

George Bai­ley of It’s A Won­der­ful Life wanted to use his life insur­ance as col­lat­eral also…but Pot­ter wouldn’t do it.

Cash Value Life Insur­ance helps tide over left handed pitcher and Wiffle-Ball Cre­ator, David N Mul­lany in 1953

Stan­ford University

Pacific Mutual Life (now Pacific Life) cer­e­mo­ni­ously issued its first pol­icy to Leland Stan­ford, the company’s first pres­i­dent, in 1868. After his son, Leland Jr., died of Typhoid Fever in 1884 at the age of 15, the for­mer Cal­i­for­nia gov­er­nor and U.S. sen­a­tor and his wife, Jane L. Stan­ford, deter­mined that because they could no longer do any­thing for their own child, they would use their wealth to do some­thing for other people’s chil­dren. With a strong belief in the impor­tance of a prac­ti­cal edu­ca­tion for men and women that would pre­pare them to be pro­duc­tive and suc­cess­ful, six years of plan­ning led them to estab­lish Leland Stan­ford Jr. Uni­ver­sity in Palo Alto in 1891, with a pio­neer class of 555 stu­dents (includ­ing Her­bert Hoover).

Fol­low­ing Leland’s death in 1893, the fledg­ling university’s finan­cial sup­port became uncer­tain, to the point where Jane tried unsuc­cess­fully to sell her trea­sured jewel col­lec­tion in 1897. Intent on pre­serv­ing the uni­ver­sity and avoid­ing a “tem­po­rary” clo­sure, she used her husband’s life insur­ance pol­icy pro­ceeds to help fund oper­a­tions and pay fac­ulty, allow­ing Stan­ford Uni­ver­sity to weather a dan­ger­ous six-year period of finan­cial distress.

McDonald’s

Work­ing as a milk­shake machine dis­trib­u­tor in 1954, Ray Kroc (1902 – 1984) took notice of a suc­cess­ful ham­burger stand in San Bernardino, Calif., which he called on, intend­ing to sell broth­ers Dick and Mac McDon­ald more Mul­ti­m­ix­ers. He learned they were inter­ested in a nation­wide fran­chis­ing agent. Kroc, 52 at the time, decided his future was in ham­burg­ers and part­nered with the broth­ers. He opened his first McDonald’s in Des Plaines, Ill., in 1955 and bought out the McDon­ald broth­ers in 1961.

Kroc did not take a salary dur­ing his first 8 years, and to over­come con­stant cash-flow prob­lems, Kroc bor­rowed money from two cash value life insur­ance poli­cies (and also his bank) to help cover the salaries of key employ­ees. He also used some of the money to cre­ate an adver­tis­ing cam­paign around emerg­ing mas­cot Ronald McDonald.

Using a pro­gres­sive fran­chis­ing arrange­ment and striv­ing for con­sis­tency and stan­dard­iza­tion through­out the chain, McDonald’s grew to more than 700 restau­rants within 10 years. Today, McDonald’s serves more than 50 mil­lion peo­ple each day through more than 30,000 loca­tions in 119 countries.

Fos­ter Farms

In 1939, a young cou­ple named Max and Verda Fos­ter started Fos­ter Farms by bor­row­ing $1,000 against a life insur­ance pol­icy. They invested in an 80-acre farm near Modesto, Calif., and began rais­ing turkeys and, even­tu­ally, chickens.

By the 1960s, the com­pany had out­grown the orig­i­nal farm and moved its cor­po­rate head­quar­ters to the small Cal­i­for­nia Cen­tral Val­ley town of Liv­ingston, where it still resides. Today Max and Verda’s grand­son, Ron Fos­ter, is the CEO of the fam­ily run busi­ness. Fos­ter Farms is now more than 10,000 employ­ees strong, with oper­a­tions in Cal­i­for­nia, Ore­gon, Wash­ing­ton, Col­orado, Arkansas and Alabama, and has a line of prod­ucts that are sold globally.

Fos­ter Farms spe­cial­izes in fresh, all-natural chicken prod­ucts free of preser­v­a­tives, addi­tives or injected sodium enhancers.