What About The $185 Billion In Liquid Cash Value Reserves?

 

While many of these gurus preach portfolio diversification, are they really practicing portfolio diversification.

Investment advisors only recommending taxable mutual funds or managed brokerage accounts may not want you to put too much money in tax-deferred accounts. Advisors only recommending tax-deferred accounts may not want you to place too much of your money in taxable mutual funds or brokerage accounts. Both two types of advisors might advise against putting money into tax-free accounts such as cash value life insurance, while the cash value life insurance agents & advisors will tell you to avoid taxable and tax deferred accounts.

If this sounds like your advisor, do they really believe in a diversified portfolio? Each one of the scenarios can work together to provide you with a totally diversified plan.

 

You have taxable accounts such as mutual funds and brokerage accounts, the tax-deferred accounts such as 401ks and IRAs along with the tax-free accounts such as Roth IRAs and cash value life insurance. You should explore the Taxable, Tax-Deferred & Tax-Free accounts for an overall comprehensive growth & income plan.

There Is No True Diversification Without Diversity Of Tax-Treatment Accounts.

 

Unfortunately, diversification for most advisors is simply diversifying, with products at their firm or recommended firm and that’s not true diversification.

 

The tax-free treatment of your money is just as important as the tax deferred treatment of your money along with taking advantage of strong grow accounts all 3 scenarios can play an important role!

 

Why does Dave Ramsey & advisor like him tell you to avoid cash value life insurance when the nation’s richest institutions can’t get enough of purchasing cash value life insurance.

As of 2022 a collection of our nation’s richest institutions is holding $185 Billion dollars in Liquid Cash Value, housed inside of cash value life insurance policies.

Apparently, they choose not to follow Dave Ramseys advice.

With some of our nation’s richest institutions, “The Banks,” the top 7 banks combine to own almost $100 Billion dollars in cash value life insurance. (87 billion)

 

Currently there’s 3163 banks that own cash value life insurance.

With 160 banks owning over $100 Million in cash value life insurance policies, with 52 banks owning a ½ $Billion in cash value life insurance policies, with 27 banks owning over a $Billion in cash value life insurance policies, with the top 4 banks owning over $10 Billion in cash value life insurance policies with Bank of America owning over $24 Billion dollars in cash value life insurance.

Don’t believe me click here to see for yourself:

 https://www.usbanklocations.com/bank-rank/life-insurance-assets.html

I’ve listed the top 25 banks owning cash value life insurance policies below, but the link above details the other 3138 banks owning cash value insurance.

Banks Ranked by Life Insurance Assets

The following is a ranking of all banks in the United States in terms of “Life Insurance Assets”. This comparison is based on data reported on 2022-12-31.

Rank	Life Insurance Assets	Bank Name
1	$24,036,000,000	Bank of America
2	$19,458,000,000	Wells Fargo Bank
3	$12,186,000,000	JPMorgan Chase Bank
4	$10,688,977,000	PNC Bank
5	$7,570,000,000	Truist Bank
6	$7,371,916,000	U.S. Bank
7	$5,296,000,000	Citibank
8	$4,604,000,000	The Bank of New York Mellon
9	$4,159,697,000	KeyBank
10	$3,649,000,000	State Street Bank and Trust Company
11	$3,435,175,000	First Republic Bank
12	$3,428,000,000	Regions Bank
13	$3,221,530,000	BMO Harris Bank
14	$3,190,080,000	Citizens Bank
15	$2,696,909,000	The Huntington National Bank
16	$2,579,512,000	Manufacturers and Traders Trust Company
17	$2,178,687,000	The Northern Trust Company
18	$2,055,906,000	Fifth Third Bank
19	$1,968,571,000	Capital One
20	$1,958,739,000	Santander Bank, N.A.
21	$1,770,917,000	TD Bank
22	$1,561,030,000	Flagstar Bank
23	$1,402,000,000	Comerica Bank
24	$1,229,169,000	Webster Bank
25	$1,211,761,000	Bank of the West

 

My question is this: What does Bank of America, Wells Fargo, JPMorgan Chase Bank, PNC Bank, Trusit Bank, US Bank, Citibank along with 3,000 more…. What do these banks know that Dave Ramsey doesn’t know? Or shall I say what Dave Ramsey doesn’t want you to know!

 

The facts are the facts, and the numbers don’t lie!

The next time you hear an advisor suggesting cash value life insurance isn’t a good idea, simply say this:

(What about the $184 Billion dollars in liquid cash value our nation’s banks collectively have access to which is held inside of cash value life insurance policies, the same policies that you say are bad.)

Why would 3163 banks own Billions in cash value life insurance if they were a rip-off as they like to say!

I’ll let you decide who’s the true rip-off!

The facts are the facts, and the numbers don’t lie!

Cash value life insurance is used by banks as a Tier 1 Capital Asset to increase their financial strength.

I’m going to bet your advisor wasn’t aware of that!

Banks have to have what’s called tier 1 capital… and up to 25 percent of their tier 1 capital,  has to be safe capital…it just so happens that the cash values of permanent life insurance fits the bill. And these banks also purchase cash value life insurance to insure the employees of the bank.” BOLI – Bank Owned Life Insurance!

Tier 1 capital is the core of a bank’s capital that is held in reserves. It is also used to fund some of the bank’s business. This kind of capital must be safe and liquid. In fact, regulators require that banks have a certain amount of tier 1 capital available. This determines the strength of a bank, and that capital is useful for funding any losses the bank might have.

If it’s good enough for the banks, it’s good enough for me! In other words, tier one capital such as BOLI – Bank owned cash value life insurance, helps in securing the strength and stability of a bank. If banks are using billions in cash value life insurance to provide a foundation for their institutions, why would Dave Ramsey and others say cash value life insurance is a rip-off?

A banks BOLI is capital that is safe, liquid, and has growth that’s not correlated to the stock market! A win for the banks, a win for the regulators and a win for you, the consumer!

If banks are aggressively increasing this asset tool to hold more cash value life insurance policies than ever before, increasing the amount of cash value life insurance they own during an economic crisis…. This should make you open your eyes.!

Think about it, Banks during a time of economic crisis are trying to purchase as much life insurance as they legally can. Cash value life insurance is a predictor of financial strength and stability for our banks.

(At any time you want, feel free to look in the mirror with a deep sigh of relief and say, it’s my turn to do the same)

 

According to: https://www.bolicoli.com/bank-owned-life-insurance-facts-and-figures/

Bank Owned Life Insurance (BOLI) continues to be a popular investment choice for a variety of banks. As of December 31, 2020, 3,137 banks nationwide reported cash surrender values on their regulatory filings. 67.6% of banks nationwide with assets between $100 million and $1 billion currently own BOLI.

• $184.6 billion of BOLI cash value now on bank’s financials as of 12/31/20

 

 

And there you have it: As of 12/31/20 banks have more than $184.6 Billion of Bank Owned Life Insurance -cash value!

As of this writing its June 2023, $184 Billion in life insurance cash value could be way under the new totals. After 2 ½ years since the publishing of this report it wouldn’t surprise me if the $200 Billion mark is breached.

 

 

This might be your first-time hearing about BOLI Bank owned Life Insurance policies, however banks started owning life insurance policies around 1994 and with most things it started off looking much different than how its viewed today in 2023.

Banks started taking life insurance policies out on their key employees which gave the more opportunities to store and grow capital securely. The death benefit also provides the banks with a means to train a replacement in the event of that employee’s death.

The cash value is useful in allowing the banks to prepare for a key employee to retire. This is how banks have “insurable interest” in their employees.

Banks have actually started group policies on the bank’s customers who have loans with the bank. This means that if a customer died, the death benefit would pay for any outstanding loans.

Banks are great at protecting their money. They see the value in having their money over-collateralized in order to protect it.

Bank Owned Life Insurance (BOLI) is a tax efficient method that offsets employee benefit costs. The bank purchases and owns an insurance policy on an executive’s life and is the beneficiary. Cash surrender values grow tax-deferred providing the bank with monthly bookable income. Upon the executive’s death, tax-free death benefits are paid to the bank.

BOLI is used as a tax efficient method for offsetting the costs of employee benefit programs.

 

The BOLI Advantages

BOLI is a tax favored asset with returns that typically exceed after-tax returns of more traditional bank investments.

Cash values grow tax-deferred and become tax-free if held until death

Death benefits are tax-free

Give banks the ability to efficiently generate gains to offset costs of employee benefits programs

Risks are well within standard business risks in the bank’s investment portfolio

Well-defined guidance on permissible usage by regulatory authorities

No surrender charges

Diversifies a bank’s investment portfolio.

 

Did you see the last part about “Cash value life insurance Diversifies A Bank’s Investment Portfolio.”

If bank’s view cash value life insurance policies as an important part of a diversified portfolio owning $184 Billion dollars in liquid cash value…… Why isn’t your financial advisor recommending cash value life insurance as part of your diversified portfolio?

The same benefits a cash value life insurance policy can provide to a bank is the same benefits a cash value life insurance policy can provide for you and your family.

I recommend LIRPs – Life Insurance Retirement Plans which are properly structured IUL policies!

Some advisors use Whole Life Insurance for the guaranteed interest rates however I like using IUL policies with historical rates of returns between 5% and 7% net of fees along with the ability to access your money not only income tax fee but cost free as well. The IUL’s I recommend typically have over loan protection riders (free) to prevent you from triggering a taxable event should you pull out too much money from your account, these plans can also double as long-term care plans should you wake up one morning unable to wash, bath or feed yourself the company will allow you to access a portion of your death benefit to cover your long-term care needs and depending upon the size of your policy at the time, this benefit could equal over a million dollars of income tax free money!

 

Over the last 27 years I’ve found that investment only advisors who actually take time to learn how cash value life insurance policies really work instead of just listening to the same refurbished outdated talking points, end up becoming outspoken proponents of cash value life insurance.

Not every IUL or Whole Life insurance policy is a good fit for maximum cash value accumulation. It can be very confusing not only for you the consumer but for the insurance agent or advisor recommending the product. In fact, I would say 94% of all insurance agents and advisors don’t truly understand how to properly structure a cash value life insurance policy for maximum tax-free cash value growth.

This is why I created a segment titled: IUL Mysteries, Myths & Facts Explained! Featured on my website.

After reading this 12-part segment you’ll know more about how to properly structure a cash value life insurance policy than 94% of agents and advisors who sell them.

Not sure if your plan is structured properly and need a second opinion, I’ll be happy review your plan line by line, with you watching me as I identify the hidden mistakes or the obvious wins of your policy contact my office today.

If you don’t have a Life Insurance Retirement Plan in place and would like to see if it’s a good fit for your goals, contact my office today. [email protected]