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In this episode, we ask:
- Is the policy correctly structured?
- How about a case study?
- Does the policy with the most cash value always win?
- What is the difference between a direct recognition and a non-direct recognition whole life insurance policy loan?
- What did the footnotes say?
- What are some possible outcomes?
- What happened to the dividends with an outstanding direct recognition loan balance?
- What happens to the dividends with an outstanding non-direct recognition loan balance?
- What’s the difference?
- How much loan interest?
- What’s the big takeaway here?
- Why would this policy become a modified endowment contract (MEC)?
- How about another example?
- What happened with the dividends?
- What about the policy loan interest?
- What are the takeaways?
- Why do Bank on Yourself® type whole life insurance policy loans use non-direct recognition policy loans?
Would you like to avoid direct recognition loans and loss of dividends?
Is my policy a Bank on Yourself® type whole life insurance policy?
Agent
- Is my agent captive or independent? (Can he/she work with multiple companies or just show me one company’s product line?)
- Is my agent trained to confidently and competently answer all of my questions? (Am I having to educate him/her?)
- What is the agent’s training and stability? How long will the advisor be around to help me?
- Is my agent among the ~200 Bank on Yourself® Professionals in good standing with the Bank on Yourself® organization?
Insurance Company
- Does the company offer whole life insurance? (Do I have Whole Life or a Universal Life, Variable Life, Indexed Universal Life or Term policy?)
- Is the insurance company mutually owned or stock owned?
- Is the insurer’s customer service department educated enough to help me with policy loans?
- Does this company have a high Comdex Rating and solid financial strength? Will they have the stability to be in business for the next 100 years at least?
Tax considerations
- Will this policy become a modified endowment contract (MEC)?
- Will both principal and gains be accessible tax-free under current law?
Riders
- Are paid-up additions (PUAs) offered through premiums or just through dividends?
- What is the Insurance Company’s PUA load cost? How does it compare to other whole life products?
- What are the PUA limits (and any other gotchas)? When and why must we reduce our PUAs, even if we don’t want to?
- Were any other riders available to help accelerate my cash value growth, like term riders?
- If I miss a premium payment, are there protections? What will happen to the policy?
- Is there a Chronic Illness Rider or similar available? What are the fees for this rider?
- What are the limits on Chronic Illness, Long Term Care and Accelerated Death Benefit riders?
Dividends
- Does the insurer who issued my whole life insurance policy pay dividends?
- Does the whole life product I purchased receive dividends?
- Is the dividend based on company performance, with me participating as an owner, or is it merely “interest sensitive” based on industry performance?
- Has the insurance company paid dividends at least 100 years straight?
- Was there significant dividend variability over the last 12 years, suggesting risk to future cash value growth?
Loans
- If I take a loan, how will it affect the policy, short-term and long-term?
- Do I have non-direct recognition loans or direct recognition loans?
- When will I pay policy loan interest (at the end of year or immediately)?
- What limits are at work for policy loans? Is there a maximum amount per loan
- What will they allow me to borrow out at a time?
- What is my loan interest rate on this policy? Is it above or below the industry average?
- Is the loan simple interest or compound interest?
- At what time interval is the loan interest being accrued (annually, daily, etc.)?
Would you like a second set of eyes to review an existing policy, or would you like to discuss your specific situation? Reach out to meet with Mark or one of Mark’s associates.
Ben Berry is a financial strategist dedicated to empowering individuals and businesses to achieve financial control and stability. Recognizing the limitations and volatility of traditional investment and retirement planning, Ben and his wife, Erica, embarked on a decade-long exploration of more ethical, rational, and reliable wealth-building methods. This pursuit led him to develop strategies focused on predictable, long-term growth, independent of market fluctuations.
Bryan Powers has been an entrepreneur since 2000, owning a recording studio, a live music venue and a couple of restaurant franchises to include Lenny’s Sub Shops and McDonald’s. In 2013, Bryan started Family Home Solutions, a Real Estate Investment Company that expanded into a Local Property Management Company, Realty Brokerage and a Real Estate Acquisitions and Dispositions company. Powers currently shares ownership in over 200 single family rental units and AirBnb properties in 3 states as well as a 356-bed student housing apartment syndication. In 2018, Powers co-created the Angler Aid Brand, a fishing first aid and safety company that is now widely distributed online and through Bass Pro Shops.
Jon Thiele is a W-2 employee, who is passionate about the company he works for, not just for their mission, but for the opportunities that the company has allowed for his career to expand to include fields outside of what he went to school for (which was Architecture). Although he is an Architect, licensed in California and Florida where he and his wife and two kids currently live, he has spent the last couple of years in the Financial Planning & Analysis side of business and has most recently taken on the role of Chief of Staff to one of the Finance VPs. Jon met Mark just before the COVID pandemic began in 2020, and started his journey with Bank on Yourself®. He 