A step by step plan to start decentralizing your banking activities using Whole Life Insurance.
This is the nuts and bolts or just the facts guide to get started once you have educated yourself on this Strategy.
Step 1 –
Buy Whole Life Insurance
You must take out a whole life insurance policy on yourself or, you can take out and control a policy on someone close to you to be your own bank with. This is called STOLI (stranger-owned-life-insurance).
This usually only works in these circumstances:
• Child
• Spouse
• Grandchild
• Business partner
• Key employee
You should buy your policy from a Mutual Life Insurance Company (as opposed to a stock insurance company). This is critical since mutual companies are owned by policyholders and share their profits with Whole Life policyholders in the form of dividends.
Step 2 –
Add riders to increase cash surrender values to useful levels quickly.
You need these to make that sure your Whole Life policy includes there two key riders:
1 Paid-Up Additions (PUA) Rider: this is a vital ingredient to increasing the amount of cash value in the first year.
2 Term Insurance Rider: You need the term rider to bring down the cost of the total death benefit needed to support the amount of cash value you want to build up with in the policy. It also increases the amount of Paid-Up Additions you can buy in the early years, which can also help your cash value grow faster.
Step 3 –
Pay more into the policy then the premiums due.
You pay additional premium above the amount required for the basic coverage to increase the cash value because 90-95% of this “over funding” goes to cash value.
You should pay up to the limit the IRS allows and still allow tax free compounding.
Step 4 –
Borrow money from your insurance company to payoff higher interest debts Your cash value never actually leaves your policy even when you take a loan and “borrow against” it. This means:
A. Your cash value is always earning compound interest.
B. You repay the loan, usually at 5% simple interest or less.
Step 5 –
You pay back the loan at terms favorable to you.
Here are some of your options for repayment:
• Pay principal and interest on a schedule you make.
• Make interest-only payments
• Pay nothing until you can pay the entire balance at once.
• Pay nothing and have the death benefit pay off the loan at death.
✍️ by Shortsegments
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