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Bank on Yourself (BOY) was developed and trademarked by Pamela Yellen in 2008. Pamela Yellen’s influence for Bank on Yourself was a book she read in 2001 called Becoming Your Own Banker, which was written by R. Nelson Nash, and described The Infinite Banking Concept.
Bank on Yourself capitalizes on the idea, “If you buy with credit, you pay interest; if you pay with cash, you lose interest.”
Bankers are profitable because they keep their own money tucked away, where it earns a low but steady rate of return, and they lend other people’s money out, earning a profit when they do so. By being your own bank you can get the best of both worlds.
Jerry is a farmer and needs to buy a new tractor for his farm. Looking around, Jerry sees he can buy the tractor he needs for $30,000. Looking at his bank account, Jerry realizes that he has the $30,000 available.
Using the Bank on Yourself strategy, Jerry buys the tractor and begins paying himself back with 5% interest. Essentially, Jerry “borrowed from himself”, becoming his own banker. Once Jerry has finished paying himself back (over a 5 year period), he finds he now has an extra $3,968.22 in his bank account from the interest which he paid to himself.
A common misconception about Bank on Yourself is that you need a Whole Life Insurance Policy to get started. This is incorrect, you do not have to use a Whole Life Insurance Policy.
Another common misconception is that, “Purchasing a Life insurance policy is like opening a bank.” This is incorrect! In order to start your own bank,
A Whole Life Insurance Policy is a great savings vehicle which provides financial security to its policyholders. When a policyholder takes a loan against their whole life policy, the interest on the loan is all the insurance company demands the policyholder to pay.
This interest is paid to the insurance company by the policyholder while a loan is outstanding. The policyholder, being a mutual owner of the insurance company, will benefit from the interest being paid to the insurance company.
 | Tools of the Trade - How to Use the Cash Value in Your Life Insurance A quick reference guide on how policy loans work, how to make loan repayments and how to track your loans. |
Furthermore, if the interest is paid out of pocket by the policyholder, the loan can last the lifetime of the insured without destroying the growth in the policy contractual guarantees. This gives the policyholder the freedom to manage and control cash flow more economically, and generate more money, which the policyholder keeps, just like a banker.
As Bank on Yourself caught on, more and more people began to want dividend-paying Whole Life insurance policies. Some life insurance agents understood the principles of Bank on Yourself and taught them to clients all around the country. Other life insurance agents were greedy and saw Bank on Yourself simply as a way to sell policies.
To design a good policy that works well for Bank on Yourself you have to minimize the base insurance in the policy and increase the paid-up insurance rider. It’s not hard to do, but commissions are paid directly in relation to how much base insurance is in the policy. So, cutting down the base policy also cuts an agent’s commission.
Good agents are willing to cut their commission for the benefit of their clients. Unfortunately, greedy agents told clients they were selling them a policy that would work for Bank on Yourself but ended up writing them a poorly designed Whole Life insurance policy, or even some type of Universal Life insurance policy. The unhappy clients, who were sold these policies, were left with a sour taste in their mouth and associated it with Bank on Yourself.
Another threat to the strategy came because some life insurance agents started calling life insurance policies “banks”. Whether the agents didn’t understand, or whether they purposefully deceived clients, this language caught the attention of some state regulators and restrictions around terminology ensued.
Originally inspired from the Infinite Banking Concept, here are the names of a few strategies similar to Bank on Yourself:
These strategies can be good, only if the person teaching them knows how they work and is truly working for the best interest of their clients.
Individuals, families, and businesses, can benefit from the Bank on Yourself concept today. Although not essential to the Bank on Yourself concept, a whole life insurance policy can produce greater benefits, when designed to maximize cash value and minimize death benefit, and is still readily available today. The challenge is finding the right agent who is willing to put your interests first.
Here are two ways to make sure you buy a good policy
If you are looking to get a good life insurance policy that will work for concepts like Bank on Yourself, we can help you. McFie Insuranceis family owned and operated since 2007. Here at McFie Insurance we help individuals, business owners and families, in all 50 states, to use dividend-paying Whole Life insurance to create exponential wealth. Call us at 702-660-7000.
If you already have policies, or you are currently working with another agent, we offer an independent insurance review free of charge. We are here to help you succeed!
by Jordan McFie
Time is the one thing we are all limited by in this life. When writing content, I make sure it is accurate, to the point, and easy to read. Accurate information, that is easy to digest, saves the reader time and allows them to make important financial decisions quickly. (Yes this is an old picture - need to get an updated one.)
To learn more about the principles of Bank on Yourself, which essentially uses the same principles of the Infinite Banking Concept, we highly recommend reading this 31-page ebook.
 | Understanding the Infinite Banking Concept and How It Works In Our Modern Environment 31-page eBook from McFie Insurance Order here> |
