3 Reasons Canadians Are Choosing to Bank On Yourself

November 7, 2016 10:19 am Published by

There’s so much to love about Canada. Well, maybe not another soggy lower mainland day in November.

Health care, stable education system, safe schools, workable infrastructure – there’s so much to love and so much to save for.

In Canada, you’re free to pursue your goals, make money, and save that money for a future rainy day. However, it’s important to understand the options when it comes to saving your money. For instance, bank GICs or term deposits pay less than 1%. Stock markets can be quite volatile. And both of these types of investments can make it difficult to access your money when you need it.

If only there were an investment that helped us make more money than banks offer without the volatility of the stock market, and with the liquidity you need to access cash in the future.

Wait, there is! It’s called Bank on Yourself!

 

The Truth Behind the Bank On Yourself Method

What it is: Bank On Yourself involves the purchase of a whole life insurance policy.

What it means: The whole life policy allows you to invest dollars (“premiums”) in a tax exempt product that can grow at a much higher rate than what the bank offers you.

How it works: People apply for and then save money in a life insurance policy that can later be usedto fund purchases or retirement.

In english: Bank On Yourself means you invest in and then borrow from your own life insurance policy, which you can then pay back at your discretion. It effectively cuts out the bank and lets you save and borrow at your own discretion.

 

Here are three key benefits of the Bank On Yourself strategy:

  1. Guaranteed Death Benefitwith Tax-Free Participating Dividends

As with all whole life insurance, the Bank On Yourself strategy still ensures your beneficiaries will be paid out at the end of your life. But more importantly, your whole life policy will earn participating dividends on a tax free basis during your lifetime. This dividend allows you to grow your policy into an amount that can help you when you need money for retirement or other large purchases.

  1. Predictability

A lot of us are completely aware we need to save money for retirement, but not many of us have the time or resources to devote to finding unique funds that suit our goals. There’s no sure thing, and even if there were, the amount of time and research required to find it yourself probably wouldn’t be worth it. That’s why the predictable and stable return of Bank on Yourself is so appealing. It’s been used by Canadians to grow policies safely and consistently for over 100 years!

  1. Borrowing that does not impact the Growth

If you own a home, the bank will lend you money, right? Well, to a certain extent they generally will (60% to 70% is standard).

And if you borrow money from the bank using your home as collateral, that doesn’t stop your home from going up in value. Your overall home value is not negatively impacted by borrowing against it.

Whole life works the same way, except you can usually get up to 90% value back as a loan if you need it. Your participating dividend also continues to be earned in full even if you borrow against the policy while you’re still around to enjoy it.

Looking for a safe alternative investment that makes a good return?

Then a Bank on Yourself strategy may be the best road for you.

 

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This post was written by Marco Faccone