What is Bank on Whole LifeTM for Business?
When structured using one of our Bank On Whole LifeTM concepts, corporate-owned participating whole life insurance policies offer your company insurance protection, a tax-free death benefit, and a cash value that is designed to become a supercharged asset your company owns and controls; one that allows you to build equity year over year and access as a source of business capital through guaranteed contractual returns and potential dividends.
Think of corporate-owned participating whole life insurance as the savings vehicle, and our Bank On Whole LifeTM concepts as the turbo fuel injector that supercharges the strategies needed to grow the cash value in the policy over time. Your business can leverage the equity in your corporate-owned participating whole life insurance policy’s cash value to finance business expenses, expand your business, or use as collateral for other sources of business financing. By leveraging this equity, your company can also reduce tax implications.
Corporate-owned participating whole life insurance offsets tax liabilities upon death, effectively circumnavigating the double-tax trap, which enables you to preserve your assets for your business and your family. As a business owner, you can also use the equity in your corporate-owned whole life insurance policy to fund buy-sell agreements or arrange key personal protection.
A corporate-owned participating whole life policy can also provide you with a tax-free retirement income in the future. And besides being useful in balancing portfolios and planning for retirement, corporate-owned participating whole life has been long known for its estate planning benefits.
Since our Bank On Whole Life concepts are unique and intricate, the corporate-owned participating whole life policy must be structured by a licensed life insurance agent with specific training and credentials in these types of concepts—which include Bank On Yourself® and the Infinite Banking Concept®.
Our Bank On Whole LifeTM Concepts
Bank On Yourself®
SET Financial Solutions, a strategic partner of MacDev Financial, is the exclusive Canadian provider of the Bank On Yourself® concept and the Bank On Yourself® Professional Training program. As the leading experts in Canada on Bank On Yourself®, our licensed life insurance agents have completed the rigorous training to become Bank On Yourself® Professionals.
Bank On Yourself® (BOY) was developed by Pamela Yellen in 2002 and is a concept “focused on helping people achieve their financial goals and objectives using a little-known variation of a whole life insurance policy” known as participating or dividend-paying whole life insurance.
It’s a time-tested financial strategy with a 160-year track record that lets you grow your money, faster, safely and predictably—even when the stock markets, real estate and other types of investments tumble due to volatile market conditions. Yellen outlines the benefits of the Bank On Yourself® strategy in her New York Times best-selling books, Bank On Yourself and The Bank On Yourself Revolution.
Infinite Banking Concept®
The Infinite Banking Concept (IBC) was developed by Nelson Nash. He is also the founder of the Nelson Nash Institute and author of Becoming Your Own Banker—the first edition published over 20 years ago! The mission of the Nelson Nash Institute is “to educate and inspire individuals to take control of their financial lives by reclaiming the bank functions from others.” Similar to the Bank On Yourself® concept, the Infinite Banking Concept® uses participating (also known as dividend-paying) whole life insurance as the ultimate savings vehicle.
Wealth Factory is a comprehensive personal financial education and implementation program specifically designed for entrepreneurs, small business owners and healthcare professionals founded by Garret Gunderson, a lifelong entrepreneur & Senior Wealth Architect, keynote speaker and New York Times best-selling author of books such as Killing Sacred Cows: Overcoming Financial Myths That Are Destroying Your Prosperity and more recently Budgeting Sucks.
With “a mission to manufacture economic dependence for 1 million entrepreneurs”, Wealth Factory fills the gap in helping entrepreneurs and small business owners manage the complexity of their finances in a stable, protective way using an integrated, solution-based approach that focuses on the following core, foundational components critical to the successful financial management of any business: cash flow, taxes, estate planning, insurances, and investments.
Wealth Factory also educates entrepreneurs how to use the Cash Flow Banking system to create lifelong security based on a guaranteed rate of return using a permanent life insurance policy with a cash value as the lending vehicle. As a business owner, you can borrow money against the cash value in your policy like you might with a bank. However, unlike traditional financing, the benefit of Cash Flow Banking is the ability to recapture the interest you might otherwise pay to a bank. The balance in the policy remains the same even if you take out a loan and will continue to grow uninterrupted.
How Does Bank On Whole LifeTM for Business Work?
When structured in the right way, using one of our Bank On Whole LifeTM concepts, the cash value of a corporate-owned participating whole life insurance policy is comparable to the equity you build up in a home or real estate property when you pay a mortgage.
A home is an asset with a certain value you can use as collateral to obtain a loan called a HELOC (Home Equity Line of Credit). When you pay into the mortgage on your home, the payments reduce what you owe, and you gain in home equity—the value of the paid-off portion of your mortgage. The value of your home remains but you are leveraging the equity to collateralize the HELOC.
A corporate-owned participating whole life policy is permanent insurance that also creates equity with what is referred to as a cash value. This cash value is also considered an asset your company owns that can be used as collateral to secure financing from a bank or lending institution—one of the reasons we often compare it to homeownership. And along the same lines as the HELOC scenario, when you take a loan out on your corporate-owned participating whole life insurance policy, the cash value stays the same—as if you haven’t even touched it because you are leveraging the equity in the policy’s cash value as collateral.
One key difference with a Bank On Whole LifeTM structured corporate-owned participating whole life insurance policy is, as a business owner or corporation, you can access your money without going through financials—which is not usually the case with a HELOC. You simply request the policy loan from your advisor and within days, you receive the funds.
Another key difference with this type of policy is the time-proven potential to earn dividends. Impressively, for over 160 years, these types of policies have been paying out dividends in North America. The policy is structured to use these dividends to purchase more insurance known as paid-up additions, which accelerate and fast-tracks the growth of both the cash value and death benefit in your corporate policy.
Benefits of Bank On Whole LifeTM for Business
(Click on each link for more information via our dedicated Business pages.)
Corporate-owned participating whole life insurance is a unique alternative asset class, an all-in-one financial solution that protects your company and business interests against unforeseeable risks. When structured using one of our Bank On WholeTM concepts, the cash value of a corporate-owned participating whole life insurance policy can be used to fund key-person protection and buy-sell agreements as well as provide your business with a resource to draw from to optimize funds to manage liabilities.
When structured using one of our Bank On Whole LifeTM concepts, the cash value of a corporate-owned participating whole life policy provides your business or corporation with accessible, liquid capital that builds equity year over year through guaranteed returns and potential dividend earnings. This equity provides your business with readily available capital you can use as a source of business financing.
When structured using one of our Bank On Whole LifeTM concepts, the cash value of a corporate-owned participating whole life insurance policy is not taxed as a capital gain like other savings and investment products. The cash value in the policy grows on a tax-preferred basis, within limits set out by the Income Tax Act and Regulations. This provides you as a business owner, a tax-sheltered vehicle to store retained earnings while continuing to grow your money undisrupted.
When structured using one of our Bank On Whole LifeTM concepts, the cash value of a corporate-owned participating whole life policy can be used to fund business expenses during your working years. Under current Income Tax law, as the cash value in your corporate policy continues to grow uninterrupted, it can later serve as funding or a supplemental stream of tax-free retirement income when you do stop working.
If you are the owner of a corporation or a majority shareholder in a Canadian corporation with taxable investments, the Corporate Estate Transfer can help you reduce the impact of the “double tax trap” of transferring your shares from your corporation to your estate by reallocating corporate surplus from taxable investments into a corporate-owned participating whole life insurance policy structured with one our of Bank On Whole LifeTM concepts, instead.
When structured using one of our Bank On Whole LifeTM concepts, corporate-owned participating whole life insurance becomes a supercharged asset that provides your business with accessible, liquid capital that builds equity year over year through guaranteed returns and potential dividend earnings. You can leverage the equity in your corporate-owned participating whole life insurance policy’s cash value to finance business expenses, expand your business, or use as collateral for other sources of business financing. As a tax-advantageous asset in your company’s overall financial strategy, funds from other taxable investments can be re-allocated into your corporate-owned participating whole life insurance policy.