Disclaimer
This article is intended as a general guide. Licensing and regulatory requirements vary across provinces, and specific guidelines may change. Financial advisors should consult their provincial regulator or MGA to ensure they meet all necessary requirements and stay updated on provincial policies.
How to Use Whole-Life Insurance as a Personal Bank Account
While using whole-life insurance as a personal bank account can offer unique benefits, it’s essential to consider some important factors:
✅ Interest on Policy Loans: Insurance companies charge interest on loans taken from the cash value. Even though it’s the policyholder’s money, they’ll still be subject to interest.
✅ Impact on Death Benefit: Any loan not repaid will reduce the death benefit paid to beneficiaries, which may be a concern for those wanting to maximize the legacy they leave behind.
✅ Policy Premium Payments: Policyholders must continue paying premiums to keep the policy active, even if they’re borrowing against the cash value.
Participating whole-life insurance can indeed serve as a personal bank account for those who plan carefully and use it wisely. The cash value within these policies provides a versatile, tax-advantaged resource that can be accessed throughout life for various needs, allowing policyholders to remain financially agile and prepared for life’s opportunities and challenges. With strategic use, whole-life insurance offers more than just long-term security—it becomes an investment in the policyholder’s financial resilience and freedom.
