In my last post, I spoke about the advantages of whole life insurance – what we refer to here as Cash Flow Insurance. But it’s not the only vehicle you can use to save money and borrow from with your cash as collateral, although no savings vehicle has the same benefits as Cash Flow Insurance.
Retirement plans could work, because you can borrow from them—but there is no guarantee of principal without moving to a money market at a very low interest rate. There’s also no death benefit. There are strict limits on how much you borrow and on the schedule for paying the loan back, plus no ability to fund extra above the loan amount and thereby capture interest for yourself.
Savings accounts at a bank could work, but these accounts currently pay less than 1% interest. Certificates of Deposit and certain types of bonds offer better returns and are fairly well guaranteed, but would create penalties if you were to liquidate. There are some cases where you can get a line of credit or loan against a CD, but this still lacks key advantages since it will still be a lower interest rate.
We also don’t like leaving money in a CD or a money market account because it’s subject to taxes, to creditors, and to low interest rates. Cash Flow Insurance offers a consistent, guaranteed return, along with powerful tax advantages and significant liquidity. With Cash Flow Insurance, it doesn’t matter if interest rates go up or down, because when you have your cash value and your dividends have been paid, you are guaranteed a minimum interest rate. That means you won’t have capital depreciation (you won’t lose principal). You’ll have stability and predictability.
Moreover, if an insurance company goes out of business, your money is much more likely to be secure over other institutions. When Executive Life went out of business in the 1980s, no policyholder lost money because another insurance company acquired all the accounts without having to pay commissions to build that book of business. And even if an insurance company goes out of business and another company doesn’t buy it out, every state in the country has guarantees on death benefits and the cash value in policies. Mutual life insurance companies with A-type ratings are much more stable and predictable than any other financial institution.
A Cash Flow Insurance contract should be established once you have at least three months of expenses set aside in your Wealth Capture Account. At that point, you would funnel money from your Wealth Capture Account into your Cash Flow Insurance policy, which is set up carefully and strategically to maximize the benefits.
Meanwhile, you keep a portion of your Wealth Capture Account in savings as your emergency fund. You want this account to hold 10% of your total debt and at least nine months of salary. That way, if you lose your job, you can cover debt obligations and living expenses without any stress. (For more details on the Rockefeller Formula, visit www.RockefellerFormula.com.)
If you want to become wealthy, you must learn to think wealthy.
Some of the most powerful and wealthy people of the past century have relied on the power of the Rockefeller Formula using Cash Flow Insurance. Along with the Rockefeller family, that elite list includes people and groups like Walt Disney, James Cash “J. C.” Penney Jr., Ray Croc, the Rothschild family, John F. Kennedy and Franklin D. Roosevelt. Senator John McCain secured initial campaign financing for his 2008 presidential campaign by using his life insurance policy as collateral.
The rich play by a different set of rules. The solution is simple: If you want to become rich, you must invest like the rich and start your own family bank.
In my next post, I look at how you go about establishing a healthy financial baseline.
I’d love to hear from you, about where you are so far in setting three months of expenses aside, so that you can begin to build your Wealth Capture Account. Have you begun this necessary step yet? Thank you for sharing.
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