So I have been doing a lot of reading lately around the concept of becoming your own banker by using whole life or universal life insurance policy's. Permanent life insurance which has cash value, pays dividends, etc.
The idea is you can take a loan against the cash value you have in a policy to use it for whatever... and you 'pay yourself' principal+interest back into the policy.
My understanding is these policy's have a guaranteed minimum growth rate and can also pay dividends. Most companies have the disclaimer that the dividends are not guaranteed, but over the 100 years or whatever they have been in business they have always paid dividends.
My question is how do you use this for early retirement? It seems the concept is largely based on you taking loans and still needing to earn an income to pay back those loans plus interest into the policy...
Can you simply save up enough "cash value" within these policy's and live off of the dividends?
IE: if the 4% rule says that I need $800,000 in principal to live off of the interest created...will these policy's pay out similar to a vanguard account with $800,000 in it?
Probably a loaded question but I am debating on using this vessel.. it seems powerful from what I have read and watched on Youtube.
This video does a good job showing the power of it within the real estate world.
https://www.youtube.com/watch?v=MKWleNEtuM0&t=871sI am almost done reading "Becoming your own banker" by R Nelson Nash