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If you know how to use whole life insurance to build wealth, many benefits and opportunities are unlocked. Whole life insurance can give you far more than just life insurance protection in the form of a death benefit.

The wealthy know how to use whole life insurance to build wealth. Walt Disney, JC Penney, and Ray Kroc are just a few who utilized this strategy to grow their wealth. Even political figures like John F. Kennedy and Franklin D. Roosevelt have used whole life insurance to build wealth.

The Rockefeller family has famously used whole life insurance to build wealth and preserve it for six generations.

Our friend Garrett Gunderson wrote the bestselling book, What Would the Rockefellers Do?. In it, he details how to use whole life insurance to build wealth.

Get your free hardcover now to learn more.

A Brief Overview of How to Use Whole Life Insurance to Build Wealth

By using whole life insurance to grow wealth, you can save, grow, and access your money. Whole life insurance can enable you to finance loans yourself. You can quickly borrow cash for anything you want without the hassle of loan applications or credit checks.

It also allows you to earn a consistent, guaranteed return regardless of the stock market’s performance.

Whole life insurance automatically builds up a cash reserve. You can use it for investing, business needs, emergencies—anything you want. You can also use it to build tax-free retirement income.

Deposits into your whole life insurance policy never lose value. Your account is a private contract. It provides predictable returns and avoids the regulation of government-sponsored retirement plans. This means your money is protected and grows securely.

Using whole life insurance to build wealth offers numerous benefits, including:

  • Finance Your Own Loans: Borrow against your life insurance cash value without credit checks or lengthy applications.
  • Earn Consistent Returns: Your money grows at a guaranteed rate, typically between 2-4%. Potential dividends can boost returns up to 5-6%.
  • Tax Advantages: Your cash value grows tax-deferred. You can also access funds tax-free in retirement.
  • Protection from Lawsuits: Whole life insurance policies are often protected from legal claims and bankruptcy (varying by state).

Traditional banks often work against you, with high-interest loans and market volatility. Using whole life insurance to build wealth rigs the game in your favor. It allows you to benefit from the interest and growth of your funds.

When you use whole life insurance to build wealth, your funds are protected and grow steadily.

Here’s a brief overview of the process:

  1. Properly Structure and Fund Your Policy: To use whole life insurance to build wealth, your policy must be properly structured and optimally funded.
  2. Deposit Money: Add funds to your whole life insurance policy. These deposits are secure and guaranteed to grow.
  3. Earn Interest: Your money earns interest at a steady rate, typically between 2-4%. Non-guaranteed dividends can boost this up to 5-6%.
  4. Borrow Funds: Borrow against your policy without affecting the growth of your account. Your cash remains in your cash value, growing at a guaranteed rate plus dividends. The life insurance lends you money using your cash value as collateral. These loans are private and don’t require credit checks.
  5. Invest Your Funds: You can access your cash value for anything you want. But ideally, you’re using it to invest in things that give you a higher return than your loan interest rate.
  6. Pay Yourself Interest When You Repay Loans: Pay yourself back with interest. Now you’re capturing the interest paid on loans, instead of paying it to banks.

Practical Applications of Using Whole Life Insurance to Build Wealth

Whole life insurance can be used for various purposes, including:

  • Funding Business Ventures: Entrepreneurs can use policy loans to finance business operations, avoiding traditional bank loans.
  • Real Estate Investments: Investors can use policy loans for down payments on properties.
  • Financing Consumer Loans: You can use policy loans to fund cars, homes, or anything you want. When you repay the loan, you’re paying yourself interest, rather than banks.
  • Addressing Personal Expenses: Policy loans can cover unexpected costs or emergencies.

How to Build Wealth with Whole Life Insurance

To use whole life insurance to build wealth, you want a policy that pays dividends.

Permanent life insurance policies, such as whole life insurance, have an internal account called “cash value.” This account grows over time on a tax-deferred basis.

Policyholders can access this cash value through direct withdrawals or policy loans. When the cash value reaches a sufficient amount, policyholders can take out a policy loan.

Instead of borrowing directly from their cash value, they borrow from the insurance company’s general fund. The cash value is used as collateral.

Your money remains in the cash value account earning a fixed rate of return plus dividends.

This allows your money to remain in the cash value account, earning a fixed rate of return and dividends.

To effectively use whole life insurance to build wealth, you need sufficient cash value and a low effective interest rate.

Policy loans against cash value typically have interest rates not exceeding 8%. The borrowed funds come from the insurance company’s general fund. Your cash value continues to earn returns. This reduces your effective interest rate on the loan.

Policy loans don’t require applications or credit checks. They also don’t have a set repayment schedule. However, if not repaid, the loan amount will be deducted from the death benefit.

Using whole life insurance to build wealth, you can use your own money instead of a bank’s money for loans. You use your cash value to access money from the insurance company. You are in control of the payback period.

Whole life insurance to build wealth can be an asset allocation choice. When used properly, it can outperform other fixed-income vehicles like bonds, money markets, or certificates of deposit. It removes the risk of capital depreciation when interest rates fluctuate. This is because your cash values and minimum interest rates are guaranteed.

Using whole life insurance to build wealth gives you access to money during times of distress or economic downturns. Not only does your money have minimum guarantees, but once a dividend is paid, it becomes guaranteed.

Whole Life Insurance is NOT an Investment

Yes, you can use whole life insurance to build wealth. But this does not mean that whole life insurance is an investment.

Using whole life insurance to build wealth is a mid-term strategy to store your money with long-term legacy benefits. It gives you access to many benefits that allow you to protect, grow, and pass on wealth. This includes a death benefit that grows with overfunding and dividends.

However, there is a capitalization period when using whole life insurance to build wealth. For the first few years, you will have less cash value than you would with a savings account.

You have to set it up with the right company, design it properly, and optimally fund it. Otherwise, it could take a decade or longer to break even.

Whole life insurance allows you to retain control of your money rather than hand it over to a bank.

Banks may or may not lend you money and you may or may not like their terms. With whole life insurance, you can access your money any time. This is done through a withdrawal or by taking out a loan from the insurance company.

This allows you to keep your money earning interest while you borrow. It also gives you tax advantages.

Cash value is not likely to provide your highest rate of return. Your best return will come from something you access your cash value to invest in.

This is how to use whole life insurance to build wealth. The policy itself is not an investment. But it enables much more powerful and efficient investing.

Your Insurance Policy Must Be Structured Properly and Optimally Funded

To use whole life insurance to build wealth, you must fund your whole life policy(ies) in the most advantageous way. You want to be able to leverage the living benefits of your policy as quickly as possible.

Using whole life insurance to build wealth is accelerated by adding extra money to your policy than your premiums require. These additional premium dollars are called “paid-up additions.”

This accelerates your internal rate of return in the early years of the policy. This way, you don’t have to wait 10-12 years (or longer) to see a positive return on your money.

With paid-up additions, you can both increase your cash value more quickly, as well as increase your death benefit.

There are limits on how much you can fund your policy. If you pay too much into your whole life insurance policy, it becomes a Modified Endowment Contract (MEC). In this case, the government treats it like an annuity and you lose the tax benefits.

Case Studies for How to Use Whole Life Insurance to Build Wealth

One of my friends wanted to buy a car. He learned that old car models often get significant price drops or incentives when new models come out. He found a deal on an Acura that dropped the lease payment by $250 per month. He took the $250 savings and invested it into a whole life insurance policy.

After 39 months, he had saved enough in the policy from tax savings because he leased instead of purchased. Leasing allowed him to write off the full payment for his business. By comparing the lease savings to a five-year financing plan, he realized he saved significantly.

Knowing how to use whole life insurance to build wealth, he then pulled the cash from the policy. He used it to pay off the car’s residual value. He then continued put what would have been his car payments to a bank back into the policy.

Using whole life insurance to build wealth, he kept financing all his cars himself. He paid interest to his whole life insurance policy instead of a bank. His credit score didn’t matter because they were private loans. His money grew on a tax-favored basis, reducing his tax burden on earnings. Market downturns, lawsuits, or bankruptcy wouldn’t affect his money, which remained protected.

He didn’t need to disclose this private account for student loans if his child went to college. Nor would changes in retirement plan laws impact his funds. By knowing how to use whole life insurance to build wealth, he secured hundreds of thousands of dollars in the future. He was earning interest instead of paying it.

His policy earned 4-5% interest annually. This is compared to less than 1% in a savings account, all without tax implications.

Build Wealth with Whole Life Insurance

Using whole life insurance to build wealth offers a strategic financial advantage that allows you to be in control of your financial future.

By properly structuring and funding your policy, you can ensure a stable and predictable growth of your money. It is insulated from market volatility. You can borrow against your cash value without the constraints of traditional banks. This provides flexibility and security, making whole life insurance a powerful wealth-building tool and strategy.

Using whole life insurance to build wealth protects your assets from potential legal claims and economic downturns. It also provides significant tax advantages, enhancing your overall financial stability.

The key to successfully using whole life insurance to build wealth lies in understanding and implementing the right strategies.

Properly funded policies enable you to leverage the benefits of financing your own loans. They earn consistent returns, and allow you to access funds for various needs.

Many wealthy individuals, families, and institutions know how to use whole life insurance to build wealth. They utilize the strategy to safeguard and grow their wealth over generations.

You, too, can use whole life insurance to build wealth, achieve, financial independence, and create a lasting legacy.

Want more details on how to use whole life insurance to build wealth? Get your FREE hardcover copy of What Would the Rockefellers Do? now.