SMART BANKING

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The two biggest drains on your wealth are taxes (income, capital gains, property etc..) and interest/finance charges. Americans, including the affluent, will spend 34.5% or $34.5 cents of every after tax dollar on interest and finance charges, regardless of their net worth. That's a staggering number when you consider the amount of money leaving your pocket each year. Even those who pay cash for their purchases, while not giving money to the financing companies, have forfeited the opportunity cost of allowing the money to work/grow. So the truth is, you finance everything in your life by:

paying interest to a bank or finance company or
by giving up the interest you could have earned otherwise when you pay cash.

"Smart Banking" is a proven strategy that allows you to recapture these "lost" dollars by becoming your own "bank." "Smart Banking" is primarily a financing strategy, not an investing strategy (however, if managed correctly, it can greatly contribute to your retirement income). Smart Banking requires a long-term plan and discipline to manage your "bank" but it has the power to transform your financial future.

THE TOOL

Creating your own personal "bank" requires the use of a specially designed "dual purpose" Whole Life Insurance policy issued by a dividend paying mutual insurance carrier. These policies have specific riders and borrowing provisions that make it the only tool appropriate for "Smart Banking" under U.S. tax law. When designed correctly, these policies have extremely high cash value in the earlier years which translates into a more "institutional" priced policy with lower fees. The dual purposes of this type of policy are:

Your principal ("deposits") grow tax free, earning a guaranteed interest rate AND an additional dividend paid annually from the insurance carrier
You can borrow against the principal (tax-free) while your entire principal continues to work for you and earn interest and dividends.

The key to this type of policy is that when you borrow against your policy, you are borrowing from the insurance carrier's general fund. Your entire cash value in the policy continues to earn tax-free interest and dividends. Your borrowing from the policy does not decrease your cash value. Rather, your cash value is simply used as "collateral" for your loan from the carrier. So, if you have $100,000 in cash value in your policy and borrow $50,000, you continue to earn interest and dividends based on your full $100,000.

When designing the policy, the objective is not to purchase death benefit, although that’s an added advantage, but rather we seek to maximize the "living benefits" and take advantage of the tax benefits that have been in the tax code for over 100 years. Below are the characteristics of a specially designed "dual purpose" whole life policy:

Unlimited After Tax Contributions
Tax Free Interest and Dividends
Tax Free Access to Principal and Growth (when structured properly)
Borrow from the carrier without restriction or limitation (up to deposit amount)
No Principal Risk
Non Correlated to Stock Market
Asset Protection by Statute (depends on state of residence)
Tax Free Retirement Income Available