Advanced Friday Zoom Sessions

Fundamental Friday – 12/12/2025

December 12 Review: Real-World Policy Use Cases

Key Takeaways

• Policy loans enable “money working in two places.”

  Cash value continues compounding while loaned funds are used for other purposes.

• Recapture interest by lending to yourself.

  Use policy loans for personal or business needs and repay at a higher, self-imposed rate (e.g., 7% repayment on a 5.3% loan) to recapture interest that would otherwise go to an outside lender.

• Policy loans can be a powerful family finance tool.

  One widow used a policy loan to eliminate her children’s 43% credit card debt—saving them approximately $42,000 in interest and years of payments.

Topics

Policy Overview: “Money Working in Two Places”

• The core concept is using a whole life policy’s cash value as a personal banking system.

• Key mechanism: A policy loan is taken against the cash value, not from it.

  • Cash value continues compounding as if no loan were taken.

  • Funds work simultaneously:

    • Inside the policy

    • In the opportunity funded by the loan

• Analogy: Like a home’s value growing regardless of an outstanding mortgage.

• Repayment:

  • Flexible terms set by the policyholder

  • Faster repayment restores available capital for future opportunities

Case Study 1: Family Debt Relief

Scenario:

A widow (Cindy) used a policy loan to help her children escape high-interest credit card debt.

Problem:

• Children were paying 43% interest, making repayment nearly impossible.

Solution:

• Cindy took a policy loan at 7% and lent the funds to her children at 14%.

Benefits:

• Children:

  • Interest rate reduced from 43% to 14%

  • Saved approximately $42,000 and years of payments on a $10,000 balance

• Cindy:

  • Earned a 7% spread (14% charged − 7% policy cost)

  • Interest recycled back into her policy, increasing cash value

Outcome:

• Loan repaid in approximately one year

• Capital returned to Cindy’s policy and available for future use

Case Study 2: Recapturing Interest

Scenario:

Shane Osmond used a policy loan to fund a $20,000 landscaping project.

Problem:

• A credit union offered a 7% loan, meaning interest would be a permanent expense.

Solution:

• Shane took a policy loan at 5.3%

• Repaid it at a self-imposed 7% rate

Rationale:

• Recaptured interest that would have gone to the credit union

Result:

• 1.7% spread captured as profit ($1,351) inside the policy

Outcome:

• Recaptured funds were used to start a new policy, accelerating long-term wealth creation