What can you tell me about Bank on Yourself?

Answer 1

Bank on Yourself is a strategically structures life insurance policy. The policy owner can borrow from this policy, but must pay it back with interest. It is not a great rich quick scheme. It is a way for the policy owner to avoid financing purchases through a bank. For instance, instead of going to a bank for a car loan for 20k and then paying the 20k back to the bank, plus 5k in interest. You borrow the money from yourself, pay back your 20k plus 5k in interest.

What has happened? Instead of the 25k leaving your hand, you simply used 20k of your own money to build another 5k. Of course, you must first build a nest egg to start with, but once this is complete, you will be able to quite possibly go through life never having to pay interest to an outside lender ever again.

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Or think about it like this...

You have an actual piggy bank that you stuff money into every month. After 5 years, you have enough to buy a car. You take the money out of the piggy bank and pay for the car. Then you figure out what the payments WOULD have been if you had financed it, and you start putting that amount of money back into your piggy bank every month.

The B.O.Y people are trying to tell you that this is some unheard of 3rd way of paying for something (with save up/pay cash as the first and finance/borrow as the second).

Bank On Yourself IS save up/pay cash. It's just that the use clever sleight of mouth by calling the first round of saving up the "capitalization phase".

Whatever.

The strategy works, but the phrase "capitalization phase" distracts a lot of people from the essence of what they're doing.

Now at this point, you might be thinking "Why don't I just put my money into an actual piggy bank. Won't it work the same?"

No.

For starters the piggy bank doesn't have a death benefit attached.

Second, the piggy bank and CD's and the like don't really earn any interest and whatever interest they DO earn is taxed.

A properly structured B.O.Y policy will grow at a rate similar to a bond fund. And they're very safe because (as I understand it) they are only offered by insurance companies that have ROCK SOLID financials.

No Mom&Pop Life Ins Co. here.

Answer 2

Bank On Yourself is a financial strategy that involves using specially designed whole life insurance policies to create a source of funding for large purchases or investments instead of traditional loans or financing options. The strategy involves borrowing against the cash value of the policy, allowing the policy owner to receive tax-free loans that can be used for various purposes. Proponents of Bank On Yourself believe it offers advantages like flexibility, control, and potential growth of cash value over time.