How do you like it when somebody says, “Don’t think of a pink elephant?” It might be funny the first time you hear it, but after that, well it becomes rather wearisome, especially if you’re kids think it’s the greatest joke ever.
So let’s think of something else. Let’s think of a library because libraries are a great example of wealth. You’ll notice that libraries don’t exist to hoard books. Their purpose is to circulate books. And the more they circulate their books, the more wealth they create. This is good for the library and it’s also good for those who have access to the books that are being circulated. Obviously, a library creates value when it circulates its books instead of just hoarding them and letting them collect dust. (Do not store up for yourself here on earth where moth and rust corrupts and thieves break in and steal. Matt 6:19)
Participating whole life insurance policies are similar to a library. These policies are an excellent place to save and store money, but just as books in a library, money should never be hoarded in the policy, or anyplace else for that matter.
Now consider if a library sold all their books so they could afford to build a second library. How much good would either of the two libraries be without any books to circulate? You can see that libraries don’t benefit anybody without books to circulate, no matter how many new library buildings they might build.
Libraries and their books are like your life Insurance policies and their cash values (savings.) They are not beneficial to you (only to your beneficiaries) unless you circulate the cash values they accumulate. But you have to make sure the circulation is complete. If a library only loans books out, and never sets up a system to have the books that are loaned returned, they are doomed. In the same way, if you borrow money against your life insurance policy(s) and never set up a system to pay the interest due or pay yourself back on the loan, you will bankrupt the policy…it will lapse and you will lose money.
You must set up a system that ensures you recover the money you have spent in life, or you too will be doomed. You’ll be doomed to working harder every day for the rest of your life to assure you have the quality of life you desire. Leveraging one policy to fund another policy without some plan or thought of how you are going to repay those loans is an act of financial futility not financial fertility.
The wise leverage of cash values from a life insurance policy will permit you to recover the cost of acquisition in your life (even if that purchase is another life policy.) The key here is not to expect the policy itself to make you rich! YOU have to make sure the circuit is complete. You have to repay the loans back to yourself and keep the policy in force by paying the insurance company their interest.
Participating whole life insurance policies are powerful financial tools, allowing you to circulate money that normally would be lost to you or that would cost you more in interest if used from any other source. This includes money in your own savings, 401k, IRA, Roth or other cash reserve. When you reduce or eliminate the cost associated with the use of money you no longer have to worry about what your retirement is going to look like. That is because you will always be able to recover the cost associated with acquisition throughout your lifetime. And that means retirement becomes more of a shifting of gears rather than a “sit back, kick up my heels and revel in all that I have accumulated and accomplished,” like the fool in Luke 12:18-19. Unfortunately, the focus of traditional retirement planning and marketing practices, encourages people to hoard money (build bigger and bigger barns.) I find this, as both a consumer and professional consultant, to be contrary to my purpose of being on this earth.
There is nothing wrong with having money and lots of it, but when we focus on the money, depending on it instead of how we can use it to create more value and wealth for others, the very dollars we have hoarded up will destroy us and any happiness that we ever hoped to attain because of the stash.