be your bank

[George Calbert]

I am looking to see what people know or think about beyourbank.com 

They have an elearning about whole life insurance and how that fits into a financial plan. I was wondering if anyone has went down this road and what are peoples opinion on this topic. Thanks in advance.

[Ade Adesuyi]

I wanted to use it so I wouldn't have to use a bank for funds in the future.  Also, you can really make your policy snowball by taking your profits from your real estate, and feeding it right back in to the policy.  All the money I put away for future expenses on my buy and holds, I'll stash into the policy so it's not just sitting in a bank account not getting an appreciable rate of return.  If the banks close or have bank holiday, I'll always have access to cash.  The funds in the policy are pretty liquid; it takes 7-10 days to get the funds disbursed.   Other benefits are that you can use it as a retirement vehicle and pay yourself from the cash value as a policy loan (which is NOT taxable).  So, you can use the cash value and all interest accrued over time tax-free (because your taking it out as a loan).  You can also borrow from it for your kids college fund, wedding, first car, etc.  The idea is you pay yourself back and save part of the interest cost you would have paid by using a bank.  You can pay back the loan on what ever time schedule you want.  It might be 2 yrs before you make a principle payment (you just have to pay accrued interest on the loan annually).  You can use this as a legacy vehicle for the family.  Your policy is not subject to the unpredictability of the stock market; if stock market crashes, your policy will still grow at a conservative rate of return with dividends.  You can start borrowing against your cash value from month 1 of starting your policy, without affecting the rate of return of the entire amount in the policy.  You can transfer over your policy to your kids.  I believe it's not subject to lawsuits or divorce settlements. (I'll have double check).

Some of the downsides are that you have to wait 7-10 years to accumulate enough funds for it to be useful for big loans.  You'll have to educate yourself first, so you have the policy set up in the right way.  You'll have to find the right financial advisor that understands this strategy, because most never heard of it before or not a fan of it because it cuts into their profits.  You have to be relatively healthy to qualify for one of these policies.  You cannot put higher than a specified ratio of money into the cash value because you'd be in danger of reaching what is called MEC (modified endowment contract).  This is where the IRS starts taxing.  Stay below this line and you'll be fine.  The financial advisor will be able to set your maximum amount without crossing the MEC line.