Be Your Own Bank with Whole Life Insurance

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Have you ever wondered how to be your own bank using a whole life insurance policy?

Also known as a 770 Account or Wealth Maximization Account™, properly structured participating whole life insurance policies contain unique features that allow you to use life insurance as though it were your own private bank, while still retaining a death benefit for your heirs. 

Banking with whole life insurance is a wealth strategy better suited for some individuals than others. And before you build your own bank, there are a few key factors to understand about how this type of policy differs from typical life insurance. Here’s what you need to know.


Banking with whole life insurance is a wealth building strategy ideal for individuals looking to regain control of their finances—particularly when it comes to paying taxes and interest—and diversify away from Wall Street. This particular strategy works for:

  • Executives and business owners
  • Individuals looking to replace a 401(k)
  • Individuals who have maxed out 401(k) contributions
  • Individuals who want to retire early
  • Families with children (especially if saving for college)
  • Real estate investors
  • Individuals looking for increased cash flow

It’s not a get-rich-quick strategy, but it is a proven strategy—and it’s a safe one. Participating whole life insurance acts as a volatility buffer against market downturns and it’s been utilized by wealthy families and corporations for over 100 years. In fact, even banks hold billions of dollars in whole life insurance policies as assets. Shouldn’t your financial portfolio utilize the same strategy banks rely on?


When you build your own bank with a participating whole life insurance policy, the primary purpose of your policy isn’t the death benefit. It is to fund your financing needs, like buying a car or home, paying for a child’s education, investing in real estate, or even funding retirement

This is possible because whole life insurance features a built-in savings account called cash value, which earns a guaranteed rate of return and can be utilized as collateral, allowing you to borrow from your insurance company instead of a bank.

Why borrow from your insurer instead of your bank? There are several reasons:

  1. You’ll typically receive a lower interest rate
  2. You determine the payback schedule
  3. There are no credit checks required
  4. Payment history doesn’t show up on a credit report
  5. Your loan is private (no UCC-1 filing)
  6. You can access funds quickly
  7. Your loan amount is based on your cash value, not on income or credit score

In addition to earning a guaranteed rate of return (better than most CDs or other bank savings accounts), your whole life insurance policy may also earn non-guaranteed dividends if it’s underwritten by a mutual life insurance company. Any growth in cash value is exempt from income tax, dividend tax, and capital gains tax, provided it’s used properly. 

When you factor in growth from your guaranteed rate of return and non-guaranteed dividends, it’s likely you’ll still accumulate wealth with whole life insurance even if you’re paying interest on a policy loan. Your net interest will be positive. But that’s not all…

Most participating whole life insurance policies will pay returns on the full value of your policy, regardless of outstanding loans. For example, if you have $50,000 in cash value and you take out a $25,000 policy loan, you’ll still earn interest on the full $50,000. Every dollar you borrow still earns interest, even as you pay interest on your loan. You don’t have to sacrifice the growth of your savings to finance other opportunities. No other traditional bank or lender offers this benefit.


Before buying a whole life insurance policy, it’s imperative to understand the financial commitment involved with owning one. Whole life insurance premiums remain level for the duration of the policy—in other words, your entire life—so you need to have a steady income. Failure to pay policy premiums will result in a lapsed policy, and you could lose money.

Whole life policies are considerably more expensive than term life insurance. But remember, the primary purpose of your policy isn’t insurance coverage or a death benefit for your family—it’s your bank. Once the death benefit and administrative fees are covered, the rest of your premium payment is reflected in your cash value, where it grows your wealth tax-free and can be borrowed to finance other investments and purchases.

Further, because you’re buying a life insurance policy, you’ll need to be eligible for coverage. Ideally, you want to build your own bank when you’re young and healthy because you’ll receive favorable premiums. However, if you’re approaching retirement, already retired, or have been denied insurance coverage in the past, don’t let it deter you from seeking out a participating whole life insurance policy. At Paradigm Life, we work with the nation’s top mutual insurance companies and have years of experience finding policies for a wide range of clients.

Banking with whole life insurance isn’t a passive wealth strategy, meaning before you build your own bank, you need to be willing to take an active role in your own financial future. You don’t need a finance degree, but you do need a clear outline of your financial goals. What’s your primary reason for wanting to be your own bank? Are you hoping to retire early? Diversify away from market volatility? Gain a source of business capital? Invest in real estate?

Whatever your goal is now, it’s also highly likely that your goals and financial situation will evolve over time. So it’s important to find an insurance agent or Wealth Strategist you can meet with at least annually to discuss your insurance policy and make necessary adjustments for optimal performance. 

At Paradigm Life, our Wealth Strategists all own participating whole life insurance policies and are experts at banking with whole life insurance because it’s a wealth strategy they personally utilize. If you’re ready to build your own bank, we offer virtual consultations at your convenience and serve clients in all 50 states and Canada. 

Schedule a free virtual consultation today.


Q: What does it mean to “build your own bank” with whole life insurance?

A: This concept involves using a whole life insurance policy as a financial tool to accumulate and access cash value. It allows individuals to borrow against their policy for various financial needs while maintaining life insurance coverage.

Q: How does borrowing against a whole life insurance policy work?

A: Borrowing against a whole life insurance policy means taking a loan from the insurance company using the policy’s cash value as collateral. This loan typically has favorable interest rates and the repayment terms can be flexible.

Q: What are the benefits and risks of using whole life insurance as a personal bank?

A: The benefits include tax-free growth of the cash value, favorable loan terms, and continued life insurance coverage. However, risks involve the need for disciplined repayment of loans and understanding the long-term financial commitment of whole life insurance policies.

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