Author Topic: Becoming Your Own Banker - Life Insurance  (Read 1066 times)

mrbinary

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Becoming Your Own Banker - Life Insurance
« on: October 25, 2017, 09:10:57 AM »
https://goo.gl/9uFYbe

I discovered Fi on 03/2017 and since then have paid a little over $20K to student loans and as of Nov. 1st will be completely Std Loan Free after over 10 years! However now I am consuming books like crazy and a friend recommended this book, because his dad read it and started loaning himself money from his life insurance a little over 10 years ago for rental properties. I was wondering if...
  • Has anyone read this?
  • Is it really worth doing?
I have mixed feelings about it, because like most of my searches on this forums, life insurance is just that, insurance if you dont have the money. Since I am now on my way to Fi, I was more thinking that I should just cover the term before I am independent and then just drop it. But part of my plan is to buy rentals, I am in a area where the rental game is bananas, and people are buying $50K houses dumping $10K into them and then renting them for $1,200. I have two relatives that now have over 9 house combine that pretty much have just set them up.

So... what do you think about becoming your own banker?

mrbinary

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Re: Becoming Your Own Banker - Life Insurance
« Reply #1 on: November 01, 2017, 08:27:12 AM »
Well I guess I am alone on this, I think I am going to give it a try, will report back as time goes on, but it does sound very interesting for someone that can keep track of things and has a steady source of income.

Sidenote: Does anyone else feel like all this stuff is like an RPG, if you invest in one skill that brings higher rates of success? or am I just playing too many video games?

jamaicaspanish

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Re: Becoming Your Own Banker - Life Insurance
« Reply #2 on: November 01, 2017, 08:39:00 AM »
BYOB is a fancy name for Whole Life Insurance.

Ask a question on the boards with Whole Life Insurance in the subject, and you'll get a ton of responses.

My initial response: find out the commission you're paying to set up and keep funding your own "Bank". (btw, that's probably good advice for almost all financial decisions--Follow the Money).

My experience was that  BYOB / Whole Life was a great deal --- for the Mass Mutual Rep who was trying to sell me the policy. YMMV (but probably not)

Good luck

Proud Foot

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Re: Becoming Your Own Banker - Life Insurance
« Reply #3 on: November 01, 2017, 09:42:00 AM »
Typically whole life works best for the person who sells it to you.

With this strategy there are a lot of thing to find out first:
How long until your cash balance actually starts growing?
What are the fees? (commissions, ER's on investments, etc)
What is the rate of the dividends you receive?
How does taking cash out effect the payout in the event you die?

A better option would be to get term life to cover until you are FI and then invest the difference. You're building an investment account where you can access it later on while also most likely receiving a higher return than through the insurance product (and without all the excessive fees)

Catbert

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Re: Becoming Your Own Banker - Life Insurance
« Reply #4 on: November 01, 2017, 03:38:05 PM »
The only time whole life insurance works for the insured is if:

*there is a permanent or long term need for life insurance
*long term hold (20+ years)
*ability to put in lots of money for a long time (20+ years)
*very high tax bracket
*Already maxing out 401k/TSP/IRA and any other tax advantaged acounts available

If all of these aren't true the one benefiting the most is the insurance agent.

dandarc

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Re: Becoming Your Own Banker - Life Insurance
« Reply #5 on: November 01, 2017, 03:52:40 PM »
Well I guess I am alone on this, I think I am going to give it a try, will report back as time goes on, but it does sound very interesting for someone that can keep track of things and has a steady source of income.

Sidenote: Does anyone else feel like all this stuff is like an RPG, if you invest in one skill that brings higher rates of success? or am I just playing too many video games?
I'm sure your insurance agent is very happy to hear this.  If you took more than 10 years to pay off $20K of student loan debt, it is unlikely that you meet all of Catbert's listed requirements for a reasonable customer of whole life insurance.  There is far more whole life sold than there are people for whom it makes any sense at all.  This "Bank on Yourself" bullshit is just one of the marketing techniques they use to rip people off who shouldn't even be considering the product.