BankOnYourself - Recipe for success?
The recent financial debacle over the last few years made us take a harder look at our assets. Yes, we have a financial planner and we have been following his advice and have slowly prospered. However, there was one part of the plan we were not too enamored with and that was the variable life insurance.
We had whole life insurance policies on the both of us that we had paid for years. They had some cash value, but for the most part were policies that were there if either of us passed. We never thought of them as a savings and inheritance vehicle.
When we both moved onto other work, we decided we did not need them so we rolled them into universal life term plans and watched as the market gained then lossed repeatedly for 10 years.
The illustration provided for these plans were so optimistic and should have exceeded all expectations for wealth accumulation but after 10 years, their cash value was in the negative.
But, as long as we paid the premiums, our term policies would stay in force and gain cash value, but only if the market did increase.
Well, given the current socialistic tendencies of the Obama administration, this small piece of our portfolio was looking more like a third world country than the thriving economy it started in.
And, as statistics have showed, only approximately 1% of all policies ever get paid because the policies either reach the end of their life expectancy (that’s why they call them “term” policies) or people leave a job, get fired, or look at ways to save cash. However, these were part of our total financial plan.
We had heard about Pamela Yellen and her bankonyourself strategy and was intrigued by the concept.
Hmm.... having whole life insurance with paid up additions as part of growing assets so that when the policy terms out (all the money we have put into it aside from buying the insurance was ours and it grows consistently as opposed to depending on how the market does) never heard of that before.
We did some research on bankonyourself and found that you build cash value because you use your policy as a bank allowing you to pay back a loan with interest, thus funding your policy and building cash value plus, it pays dividends!
The policy is written by well-established mutual (not stock) insurance companies that pay dividends, even if you have outstanding loans.
Paid up addition riders let you add to the death benefit and further increase your cash value, and there is payment flexibility on loans.
While we still did not understand all the concepts with the bankonyourself strategy, the financial planner they recommended explained it in great detail. Yeah, he sells life insurance, but not once did he attempt to get us to hand over a check.
What he did do was help us determine if we should have two planners instead of one and was life insurance something we should try again to build some cash value?
We can honestly say two planners are better than one, just like the big financial experts tout diversify, diversify diversify!
Our outlook for having life insurance as a savings vehicle is brighter.
When you look at the securities industry, they are making billions in profit! Now don't get me wrong, there is nothing wrong with profit. That is how a free capital society works.
But in order for us to have a savings plan that will grow with us, bankonyourself is something that if we had known about it when we were younger, we would have started then even when we had more debt than a small third world country.
Those in the financial services industry are aware that most people want big gains in a short amount of time which is why they say invest in the stock market.
When we first started a 401k savings plan financial institutions showed us the value of compounding and after 20 years, the illustrations were astounding.
As laypersons, and at our age, should either of us pass the other will get a death benefit which is greater than the term policy we were paying for that lost money as an investment vehicle.
Many people think, this is a scam. Not so. Any trained CFP, CPA, ChFP who works in the financial industry has to get paid. It is a matter of HOW MUCH THEY GET PAID, what type of investment you purchase and its cost.
If the CFP, CPA, ChFP is reputable, they will put your needs first. They will analyze your entire financial picture and make recommendations. It is what you do with those recommendations that determines your financial security or fate.
We were not blessed with a trust fund. We worked and started from the ground up.
We had nothing handed to us except opportunity and many times we did not recognize it because we were not focused on the big picture.
As we have always phrased it we were always “a day late and a dollar short.”
When we inquired about bankonyourself with our CFP, he ignored the cue.
We asked again, and again he did not think there was much to what we were asking, so we researched then took a leap of faith (not really), was assigned a bankonyourself representative and began the discussion.
Now we have three certified financial planners working for us.
Why three? Good question! When our initial CFP said he was retiring he had already sold his business to 2 other financial planners. But this is not how we got three. Again we had asked for information outside their realm and got nothing, so we moved what we could from them and put it with another CFP with whom we had worked with as our tax accountant for over 30 years.
Yes we are paying them all a tidy sum, but if you are not a finance wizard my advice is to find people with whom others have put their trust in and would recommend in a heart beat.
Also, not everything ever goes as planned either, so the best way is to be informed.
Read, read then read again, but don't delay!
Your best offense is a good defense and that is why sports teams have coaches.
But hey, your not a sports team! You are the only person who must take care of you!
And, don't think YOUR government administration is going to take care of you! That's YOUR JOB!
In addition, any 401k plan you may have with a company the government already has hooks to grab your money.
(Nice huh? The government who says they need to get bigger to protect you better is only looking out for those in the government!)
Your financial person or persons can and should guide you the best way they know how. If they do not respond in the way you need them to, then fire them or find someone who has your best interest first then fire the first one.
They can be specialists in different areas and finding those who have been trained in BankOnYourself planning is the best way to go for this type of savings with insurance.
In a nut shell, you cannot entirely remove risk when investing or saving. Too many variables.
The best way to minimize your financial risk is to analyze what is best for you at a given moment in time, make a decision, then review.
We do this all the time.
Now we have three financial saving vehicles using two different strategies, one that removes most of the risk and one that involves considerably more risk.
We like the bankonyourself philosophy, but we are also ingrained with the other.
Hopefully we're minimizing our risks while not leaving any money on the table.
While we could continue this discussion on saving and investing, your best bet is to ask your financial planner about bank on yourself.
If you get no response, investigate further by visiting the bank on yourself website and take their free analysis.
There is no time like the present for having a recipe for financial success.
Your financial future depends on YOU!
Best in your success. John and Chris
Update on our Bank On Yourself.
We recently paid off one of our cars with a BOY loan from our accounts.
Now we have the title to our car and are paying ourselves back with a smaller loan. Basically, we became the bank and can pay it back or not.
It is to our advantage to pay it back because we get more insurance out of it as well as more cash value.