🏦 Why the Wealthy Use Cash Value Life Insurance as Their Private Retirement Bank

haleyn4
Oct 7
3 min read

When most people think about life insurance, they think about one thing: the death benefit.But what if I told you that life insurance is one of the most powerful financial tools for the living?

The wealthy have used cash value life insurance for decades as a private retirement bank, tax shelter, income tool, legacy builder, and financial safety net. Today, I’m going to show you how you can do the same—no matter your income level.

💡 A Personal Story: Why This Matters to Me

My daughter-in-law passed away at age 39 from pancreatic cancer.My son had been disabled for three years.Without her life insurance policy and the terminal illness rider that let her access part of her death benefit early, my son would have gone bankrupt.

That single event didn’t just save him—it changed my life. It inspired me to educate others about how powerful life insurance can be.

💰 What Is Cash Value Life Insurance?

It’s a special type of policy that allows you to:

Build tax-deferred savings (cash value) inside the policy
Borrow from it tax-free while it continues to grow
Use the death benefit for long-term care, legacy planning, or wealth transfer

When structured properly, you become your own bank—accessing funds without the penalties, taxes, and restrictions of 401(k)s or IRAs.

🔁 Be Your Own Bank: How It Works

You borrow against your cash value, not from it—so your money continues to grow uninterrupted.
The loan is secured by your death benefit, which is often hundreds of thousands (or millions) of dollars.
You don’t have to pay it back (but I recommend you do—and here’s why).

Let’s say you borrow $40,000 to buy a car.

If you use a bank loan, you’ll pay thousands in interest—and that money’s gone forever.
If you borrow from your life insurance, you pay yourself back—and your cash value continues compounding.

I’ve done this personally for over 15 years. I haven’t had a car loan from a bank since.

🔒 The Power of IRC Code 7702 & 7702E

These IRS codes govern how life insurance is taxed—and when structured properly, it’s one of the only legal ways to:

Grow wealth tax-deferred
Access income tax-free
Protect your family and assets from taxes, probate, and penalties

Some policies can even be partially tax-deductible when set up through a defined benefit plan.

📉 Life Insurance vs. 401(k) & IRAs

Feature	401(k)/IRA	Cash Value Life Insurance
Taxes	Tax-deferred, but taxed on withdrawal	Tax-free when structured correctly
Required Distributions	Yes (RMDs at age 73)	None
Market Risk	High	None – has guaranteed floor
Social Security/Medicare Impact	Can increase taxation	No impact on means testing
Access to Funds	Penalties before 59½	Anytime, penalty-free

💬 “It’s not about how much you earn. It’s about how much you keep—and protect.”

🏦 Why Banks & Corporations Use It (And You Should Too)

Banks call it BOLI (Bank-Owned Life Insurance)
Corporations use COLI (Corporate-Owned Life Insurance)
It’s listed as a Tier 1 Asset—above real estate, stocks, and bonds

If major banks—with the brightest financial minds—invest billions in this strategy, don’t you think it’s worth looking into?

👨‍👩‍👧‍👦 The #1 Wealth Transfer Tool (That Avoids Probate)

Cash value life insurance isn’t just for retirement income—it’s the most efficient way to pass on wealth.

Avoid probate
Avoid estate taxes
Create generational wealth
Control how your money is distributed (even “from the grave”)

Case Study: Prince died with no will or trust. His estate went to probate, and after taxes, lawyers, and government fees, only a small fraction went to his family.

Don’t let that happen to yours.

📞 Ready to Become Your Own Bank?

The first step is simple:

👉 Try my Retirement Tax Calculator to see how much you’re projected to lose to taxes👉 Then schedule a free consultation so I can help you create a tax-free, risk-free retirement strategy using the same tools banks and the wealthy use.