How to Use Life Insurance as a Source of Business FinancingSubmitted by MacDev Financial Group on June 17th, 2016
Why pay interest on a business loan through your bank when you can recapture interest using the cash value of a life insurance policy as a source of business financing and save for retirement at the same time.
Business owners and entrepreneurs are a self-reliant bunch opting to bank on themselves financially instead of relying on an employer to make a living. Self-reliant is great but it can also carry risk. One of those risks is trying to find ways to generate enough capital to start your business and then have enough monthly cash flow to grow and keep your business going. Capital and cash flow are therefore the life blood of any business, whether just starting out or already established.
Most entrepreneurs starting out however struggle to come up with financing and rely on traditional routes such as bank loans, tapping into their own personal savings such as a home equity line of credit or money from a government sponsored retirement savings plans, or charging expenses on high interest rate credit cards. This can leave any entrepreneur or business owner financially vulnerable, especially in the tough times when they to pay a large volume of interest and fees back to banks, financing and lending institutions or credit card companies. Imagine if they had been able to actually redirect all that loss revenue back in to their business if they had known a way of self-financing that was not so costly.
Some of the most savviest and prudent business men of our time knew something most business people don’t ever consider or even know; that you can actually use the cash value accrued in a certain type of life insurance policy as business financing. The cash value of a participating whole life insurance or dividend-paying life insurance, as it called, builds a cash value, similar to the equity you build up in your home by paying a mortgage. The policy holder can borrow against this cash value and then repay themselves back on their own terms (at a lower interest). Here are just a few examples of some well-known business men who have used the cash value of a life insurance policy as a source of business financing.
Disneyland – The world’s most famous theme park might not even exist today if Walt Disney had not decided to borrow against the cash value of his life insurance back in 1955 when he wanted to first open a theme park but was turned down by the banks. Money became a big obstacle. It took about $17 million to open but he realized his dream, opening the Disneyland theme park in 1955, attracting 3.5 million visitors in its first year.
McDonalds – In 1961 Ray Kroc decided his future was hamburgers and partnered with the McDonald brothers. By 1951 he opened his first McDonalds, eventually buying out both brothers in 1961. Ray Kroc struggled for the first 8 years of business, not even paying himself a salary. To overcome his cash flow problems he borrowed from his bank and money from two cash value life insurance policies to cover salaries of some of his key employees as well as to help create an advertising campaign with the restaurant’s soon-to-be famous mascot, Ronald McDonald.
J.C. Penney – James Cash Penney, the founder of the U.S. based retail chain J.C. Penney got his start in 1898 working in a small chain of dry goods store. Hard-working, he eventually bought out his business partners in 1907 after they dissolved their partnership. By 1913 he incorporated his business as J.C. Penney Company. By 1929, he was operating 1,400 across stores across the country. However, the Great Depression and the 1929 stock market crash devastated the store chain and Penney’s personal wealth. Miraculously, he borrowed against the cash value of his life insurance policies to meet the company’s payroll and day-to-day operations, keeping the company afloat until it eventually rebounded.
Jimmy Pattison – One of BC’s richest men, Jimmy Pattison, also knows the value of using the cash value of a life insurance policy to get a business off the ground. In fact, he used the cash value of one of his life insurance policies as borrowing collateral to finance his very first General Motors automobile dealership franchise in Vancouver, BC. He believed in this source of financing so much, he has personally endorsed it in a letter on behalf of MacDev Financial Group Jim Pattison letter.pdf
“If it wasn’t for cash values of my life insurance policies the bank may have decided against granting me the necessary capital to begin my first business endeavour. I am certainly an advocate of life insurance as a vehicle to help a young person take advantage of business opportunities that may present themselves in the future. It happened to me, it can happen to others.”
So how is this achievable? At MacDev Financial Group, we specialize in using a Bank on Yourself™ plan. The idea is pretty simple if you imagine the whole life insurance policy as the savings vehicle used to hold your money and make it grow and Bank on Yourself™ as the financial concept used to properly structure the policy to achieve maximum results.
Founded by Pamela Yellen in 2002, Bank on Yourself™ uses little known variations of a participating whole life insurance policy coupled with powerful financial principles to grow your wealth. This video below explains how the plan works and the process involved.
The cash value is basically like a “liquid cash reserve” in your own “personal bank” that can be accessed whenever and however you want to meet a range of business needs.
- Start-up funds for a new business
- Financing new equipment, vehicles, office space and buildings
- Business expansion
- Paying for new technology solutions that give you a competitive edge
- Marketing and advertising costs to build brand awareness, secure new leads and drive conversion
- Hiring and paying for employees so you can spend more of your time where it counts
- Funding other investment opportunities that may help to grow your business
Basically, Bank on Yourself™ supercharges your whole life insurance policy to make your cash grow much faster than policies most financial experts talk about and promote. It’s a time-tested financial strategy with a 160-year track record that lets you grow your money safely and predictably, even when the stock markets, and real estate and other types of investments tumble due to volatile market conditions.
You can borrow multiple times from the cash reserve in your policy and repay it back on your own terms, while your equity keeps growing and growing, as if you didn’t borrow anything at all.
Again, this plan allows you to recapture perhaps hundreds or thousands of dollars in interest potentially paid out to banks or other financing and leasing companies. With Bank on Yourself, this recaptured money is money you put back in your own pocket that can be used for further business expenses as well as growing a retirement fund. With Bank on Yourself™ you are generating a living income, growing a retirement nest eg, and protecting your future legacy all in one. That’s truly the benefit of banking on yourself.
Our Bank on Yourself™ Authorized Agents have gone through extensive training and understand how to structure your Bank on Yourself™ plan in the right way that is the most advantageous to you and your needs. We have helped many businesses across Canada use this safe and secure wealth-building strategy to grow their businesses too. Here is one of our long-term clients had to say about using a Bank on Yourself™ plan as a source of business financing.
If you’d like to learn more about self-financing and how to start a Bank on Yourself™ plan, you can start by doing a free online analysis. You can also call us at 1.877.534.7266 or email email@example.com to set up a client consultation.
Disclaimer: This information is given for educational purposes only. All financial endeavors should be vetted through a financial professional; example, life insurance broker, financial planner, accountant, and/or lawyer, as the reader sees fit. MacDev Financial Group Corp, including but not limited to its agents, staff, associates and/or partners will not assume any liability for any information printed in this article; indirectly, or assumed.