Banks use of whole life insurance.
I am studying financial independence strategies and the tools used to accomplish it. One of these tools is whole life insurance. I thought of whole life insurance as a more expensive version of term life insurance and always bought term life insurance thinking I was getting more bang for my buck. But I found that I was getting cheap life insurance with high coverage limits. But as I studied the traditional banking system to learn how to get the most advantages I could for myself, I was surprised to find that most, if not all banks keep a large portion of their liquid reserves inside whole life insurance policies on their key executives and other employees. My study of banking reveals that many banks keep their liquid assets in what’s called “BOLI” or bank owned life insurance and these policies are all whole life insurance policies on bank employees. I was surprised, but found out there were many good reasons for this and while I was willing to read multiple books and essays, I was very pleased to find this website and video, which summarized the reasons quite nicely.
Five benefits of Whole Life Insurance Policies
- Growth Rate; much higher interest rates then other low risk investments.
- Tax Deferred Growth; the growth rate seems higher because you don’t pay taxes each year or ever.
- Liquidity : These policies are structured in such a way to provide liquidity at a moments notice.
- Key Person Death Benefit Protection, provides a death benefit to the bank if the key executive dies to offset losses the business may suffer.
- High Contribution limits, much higher contribution cap (limit) then a 401k, IRA or Roth IRA. No restrictions for high income earners like in traditional retirement vehicles.
You can watch the video here.
Conclusion;
This video very clearly explains the financial benefits of bank owned life insurance and concurrently personal whole life insurance. I have been studying this topic since I read the first book on how John D. Rockefeller, perhaps the richest man in the history of United States preserved his fortune for over four generations, with each generation becoming more wealthy using this vehicle. Book review Link. I think whole life insurance is an important vehicle for wealth building and the website for has other videos and articles to educate you about this topic. I am a big believer that you advance in life from learning from people more successful then you, so I watch what the wealthy do, study it and emulate them.
✍🏼 by Shortsegments
References
- Book Review: What would the Rockefeller’s Do? https://www.steemleo.com/realityhubs/@shortsegments/book-review-what-would-the-rockefellers-do-ci7ksbsl
- The 5 Steps to Becoming Your Own Banker with Whole Life Insurance. https://www.steemleo.com/investing/@shortsegments/the-5-steps-to-becoming-your-own-banker-with-whole-life-insurance
- Is Your Thinking Keeping You Poor? 50 Ways the Rich Think Differently,’. https://www.steemleo.com/review/@shortsegments/is-your-thinking-keeping-you-poor-50-ways-the-rich-think-differently