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Cash Value Life Insurance vs. Banks

Business owners and managers alike understand the importance of having liquid capital to support growth. Though money for a business is necessary, oftentimes finding it or borrowing it can be difficult and stressful. There is one strategy, used by many businesses, which provides easy capital—cash value life insurance.

When you fund money into a dividend-paying whole life insurance policy, rather than a bank account, your money grows tax-free, earns interest, and creates cash value. The cash value is what provides liquidity to a business at any time and for any reason.

The many benefits of cash value life insurance—including liquidity—too often go unnoticed by business owners because whole life insurance is something that many financial planners do not talk about or promote today. There are several reasons for this, but one of the biggest reasons is due to the common belief that whole life insurance premiums are high.

On the contrary, a properly structured cash-value life insurance policy offers benefits for a variety of financial goals. Look at this list of well-known businesses that have been built and saved by the cash value of a whole life insurance policy.

Businesses Saved by Life Insurance

1929, J.C. Penney – James Cash Penney used the cash value in his life insurance policies to meet the payroll and day-to-day expenses of his department store, JCPenney. This allowed the company to ultimately rebound from the Great Depression. Today, the company has an annual revenue of $12 billion.

1939, Foster Farms – Max and Verda Foster borrowed $1,000 against their life insurance policy to invest in an 80-acre chicken farm. Today Foster Farms’ products are sold all over the world.

1955, Disneyland – Unable to secure a large enough bank loan, Walt Disney borrowed against the cash value from his life insurance policy to help finance the creation of his new theme park, Disneyland. Today, The Walt Disney Company has an annual revenue of nearly $70 billion.

1961, McDonald’s – When Ray Kroc bought out his partners (the McDonald brothers) he used cash value from his two life insurance policies to cover the salaries of key employees. He also used the funds to pay for the marketing campaign for his new mascot, Ronald McDonald. The franchise has since grown to over 37,000 stores in over 100 countries.

1980, Pampered Chef – Doris Christopher used a policy loan of $3,000 to start her new kitchenware company. The company was later purchased by Warren Buffet’s Berkshire Hathaway for $1.5 Billion.

For more information on the immense benefits that cash value life insurance can provide your business, request a consultation with a Paradigm Life Wealth Strategist.

We can customize a policy to fit your financial situation. As a wealth strategist we are available to answer your questions and show you customized illustrations, outlining an individual plan of action to help you achieve your goals.