Customer Reviews

Bank on Yourself: The Life-Changing Secret to Growing and Protecting Your Financial Future

5 star:		(96)
4 star:		(9)
3 star:		(6)
2 star:		(5)
1 star:		(29)

 

 

I agree with all the reviews that criticize this book for its anecdotal, infomercial tone- the writing is more irritating than informative, and I was annoyed by all the come-ons that insist only the author's website and stable of very special "Certified Advisors" can construct such an insurance policy for you. If it's really so old and established, surely a fee-only, non-commissioned insurance broker, lawyer or other third-party professional could help you construct your own plan and not be confounded by the concepts in this book (as the author claims). For $15, I expect that I am paying for solid information I can use, not a drawn-out advertisement. Thank goodness I checked it out of the library first. It gets three stars for presenting an interesting financial tool, but gets docked 2 stars for the bad presentation and shameless self-promotion. But here is the plan boiled down, as best I understand it (and I'm no financial whiz- if this is totally wrong, someone correct me):

You take out a whole life insurance policy with a mutual/ participating insurance company (this means you are automatically a shareholder in the company as well as a policyholder, as opposed to insuring with a commercial, publicly-traded company in which you only own your policy and have no stake in the company unless you also buy stock- kind of like a credit union vs a bank, so you receive dividends on the cash value of your policy). Your policy allows flexible paid-up additions riders (PUAR) to be paid in addition to your premiums, up to the IRS limit per year. Your policy also must allow non-recognition loans, so that you can tap your cash value for policy loans without sacrificing the dividends paid on the total cash value of the policy (including the amount you took out on a loan). So if you take out a $3,000 loan on $10,000 in cash value, you will still receive dividends based on the full $10,000 as long as you are repaying your loan (or at least the interest).

Essentially, every month you will pay your insurance premiums for your base policy death benefit (using totally arbitrary numbers, say, $500 a month for $250K in death benefit), plus a PUAR payment, let's say $250, that buys you additional, fully-paid death benefits, but does not increase your base premiums, so even though your death benefit continues to rise, your premiums remain the same. So you're on the hook for the $500 in premiums, but you put in $750 to accelerate your cash value. So after a few years you may in fact have a $275K death benefit, but still only have a $500 premium obligation. There's no magic here- you paid cash for that additional death benefit, but it is paid in full, rather than stretched over time like your base $250K benefit. The PUAR allows the cash value of the policy to increase faster than in a typical whole life policy, and your dividends are based on this cash value. Dividends are tax-free as long as they remain in the policy, so you are encouraged by the author to use them for purchasing more PUAR insurance year after year. The more PUAR you purchase, the higher your cash value, the higher your dividends, the more PUAR you can purchase the next year etc., etc.. Essentially, you are compounding your dividends, as you would compound interest in an interest-bearing investment. But you have to be careful- there are IRS limits on the amount of PUAR you can put into a policy, and you can lose tax benefits if you overstep those limits.

It takes some time to build enough cash value to take out a large enough loan to buy a car or take a vacation, but once you do, you can take policy loans out against your cash value and then pay them back to your policy with interest. This is supposedly how you "get back every penny" on your major purchases. But wait- you are still paying those premiums and PUAR payments at the same time you are repaying the loan with interest, so let's pretend you are now paying $750 a month to repay your policy loan in addition to the $750 you are paying to keep the policy in effect AND increase the cash value with PUAR payments. Essentially, while you are "paying yourself back", you are paying double ($1500 a month). Yes, the money is coming back to you (going into the cash value of your policy), more or less (the interest is not credited to your account, but you get a portion of it back in your dividend), but you will have that much less to live on during those months. Boiled down, this is a forced savings plan, and essentially you could do this much on your own with a bank account if you have iron discipline to continue high payments without a contract over your head. Fortunately there is a little leeway here- you can always stop PUAR payments during loan repayments if your policy gives you that flexibility (though your cash value will increase more slowly), and if things get really tough, only pay the interest on your loan and not the principle (though if you die, your death benefit will be reduced by the outstanding loan amount). Plus you are getting your dividends in full, as opposed to a bank account where you would lose the interest on any amount you took out.

So if you could double-pay yourself using a bank account, what's the real benefit? Your insurance benefit, the non-recognition status of your loans and the tax benefits of receiving dividends without increasing your income tax obligations (as opposed to bank interest, which is taxed). Eventually you will have such a high cash value, thanks to your PUAR payments, that at some point the dividends will be enough to pay the premiums in full for your original, basic benefit (your $500 a month for $250K death benefit), and the plan can be free-standing- you won't need to shovel in the cash every month to keep the policy in effect, but it also won't grow in cash value as fast unless you continue your PUAR payments. It will still increase, just more slowly. There are tax and legal protections for life insurance policies that will benefit you, as well as guaranteed benefits for your beneficiaries. Ultimately, you have to decide if you can live with the pinch and pain of overfunding a life insurance policy, particularly in the early years when you accumulate almost no cash value, and then during loan repayments, to also get the insurance, tax, and legal benefits. But I would definitely consult a trusted lawyer, accountant or insurance professional to understand the real ins and outs before signing on to the plan.

Others may say this is hype and an infomercial but in reality it is a different way of looking at how money works. You have to get over the fact that this is a whole life insurance policy. When you really look at whole life insurance without its name (one of my good friends sales used cars that doesn't make him a bad person) it is not so bad.

The book points out we finance everything either we pay interest to others or we give up interest on our money to an institution (ie banks). I have done this with an advisor and know others who have as well and there are no complaints (try surveying people that have been in the market for the last ten years and see if they ALL are happy with thier decision). The key here is that your money is always working for you and how the insurance company treats your loan seperate from your account.

-So if your cash value = $50,000 and you took out a $20,000 loan for a car the company still gives you dividends on the $50,000 and charges your loan the going interest rate.

-So first off you are being credited interest on $50,000 instead of $30,000 like a bank.

-Lets say the bank is paying net (after taxes) a rate of 3% and the insurance company (insurance companies costs are lower since they don't have braches/ATMs on every corner of your city) is paying 5% and your loan rate is 7%

-In the bank you only receive interest on the $30,000 or $900
-In your insurance policy you receive $2,500 ($50,000 at 5%) - $1,400 ($20,000) or $1,100 or 22% More

-In the next year (say you paid off 20% of your loan or put back $4,000 in your savings account)

-At the bank you receive 3% on $34,900 or $1,047

-In your insurance policy you receive $2,625 ($52,500 at 5%) - $1,120 or $1,505 or 44% more!

This does not work with mutual funds because they are too volatile (we never really know what we are going to have in the future), we don't know how we will be taxed, and we have to sell assets to get to our money.
This does not work with 401k/qualified plans because we have to wait until age 60 for no penalty (if the govt doesn't change the rules), most 401ks are full of mutual funds, we again don't know our tax rate, and again you have to sell off your assets

There probably are two reason people get hung up on this topic: one being that it is a whole life policy and the other is rate of return argument. People forget it is not about rate of return but rather money in your pocket. I'd rather have 2% of $100,000 than 10% of $10,000.

I ordered a copy of Pamela's book three weeks ago and had a hard time putting it down. Many of the problems she outlines in her book have been personally experienced by me over my adult life. I am now 58 years old.

About 7 years ago it became clear to me that the traditional way of handling my savings and investments was not working. The method that Pamela offers is one that I know works. My wife and I started our first Bank On Yourself plan 6 years ago and now own 4 plans.

Bank On Yourself will put you in a much better position than you would have been without this information.

For example, since I got my driver's license I have purchased 12 cars for a total spent of $150,000. I paid cash for some and financed all but one of the others. When I started to figure out how much interest I either lost or paid out on car loans it literally made my sick.

I would have been happy if I had recaptured just the purchase price on these cars instead of the $0 that I now have to show for the cars. That money would be very usefull right now.

The good news is that I will never ever have to finance another car outside of my Bank On Yourself plans. This is really great because cars today cost much more than they did years ago, so I can recapture a lot of money going forward.

I urge you to take a look at this book and make a very inexpensive and extrememly worthwhile investment in your future.

Alan Eckstrand

I suspect the four and five star ratings are for the principle, not for this particular book. The entire book is a marketing ploy, and advertisement and sales tactic for the author's company. The essence of concept could have been written in two pages, but then, a person would not be able to sell that as a book...
This is a pretty complicated and controversial topic. I have a background in investments, formerly licensed to sell securities, etc. Proponents of this often recommend multiple policies, with premiums of thousands of dollars a month. I'm not convinced that they couldn't be doing better by conservatively investing in something else and having some term insurance, although I can see the value of permanent insurance as well. Nevertheless, paying thousands a month on whole life insurance, a person could have $20,000 or more in cash at the end of a year at that rate, and pay for things up front. Obviously you are paying for the insurance coverage, which is great if you need it, but I can't comprehend buying more than you need.
As I said, the more you investigate, the more confusing you will find it. I was in the actuarial profession for a decade, although not life insurance, but I can assure you it is not as simplistic as people would have you believe. I have tried to dig deeply into the numbers. Again, my suspicion is that some people don't understand it. The jury is still out for me as I continue to research.
It would appear this book is based completely on the Infinite Banking by Nelson Nash. I haven't read it, but would start with that book first next time, plus do some internet research.

I first discovered this concept seven years ago when reading Nelson Nash's book,BECOMING YOUR OWN BANKER. Mr Nash approached the subject from a business point of view. Pamela Yellen has shared similar ideas from a personal and relational view. Together, they provide an excellent and compelling picture. It shows a fundamental approach nearly any normal, intelligent person can follow to establish his finances on a solid basis.

Having money stored safely where it is productive and available whenever needed creates all kinds of exciting possiblities. Not the least of these is the ability to respond to emergrncies and fully utilize oppoerunities as they appear.
I initially opened three accounts to test the theory and found them so efficient it became necessary to open up two more several years later to hold the overflow I had not expected to occur.

From my new position of strength and with my family protected by the substantial death benefits, I was able to invest with confidence. The results have been gratifying. What a wonderful feeling to have a place to store my profits in safety. I have come to also appreciate the ability to make returns in both my bank on yourself account and also in my investments at the same time.

I find this amusing. A few negative comments about Pamela's book indicate this is an old, proven idea. So much the better! Would we want to jump into some scheme that is unproven or even possibly unworkable?

And thank God that Pamela,s book is so compelling. How else would people catch her vision and turn their financial affairs around so effectively?
It is apparent that the same financial resources are available to all Americans. Ninety five percent of Americans are struggling financially. I am convinced that they tend to use resources like banks and credit cards in much the same ways. Five percent of Americans are financially successful.
Don't you suppose they use the same resources more wisely?

The bank on yourself concept and the resources involved are a far cry from the turmoil in our failing banking system and an oppressive slavery to debt which is so common today.

I say, "Why reject such a fine resource. Go for the gold."

Pamela Yellen's book creates a compelling case for accumulating substantial money that remains in your control, in a tax favored entity, you can access at will and re-use as you re-fill. I am a believer in permanent life insurance and have had other cash value policies for many years. When I learned of this, I transferred those values into my first and second Bank on Yourself policies. Why? Because it grows faster, it offers guarantees and dividends my other policies didn't.

I think Pamela's writing style is approachable and provides a pretty quick read. The stories of people from all walks of life and how they have used their BOY plans stimulated my imagination. It does seem this BOY idea would be well worth considering by many people. Open your mind, set aside your investment bias (I had to) and natural resistance to life insurance conversations and see what you think.

What an eye opening book this is. Pamela Yellen has done an outstanding job of demonstrating why mainstream, conventional financial advice has failed most Americans miserably, while the optimal solution has been staring us in the face for generations.

Since starting my own Bank on Yourself plan three years ago, I've been able to finance my businesses growth and recapture the entire cost. I never worry about the stock or real estate markets, and I know my money is safe and its growth is guaranteed. I don't even have to pay current income taxes on the growth or the dividends. What could possibly be better than that?

For those who are genuinely looking for the best way to create your own financial foundation, this book is a must read.

This book is just one big advertisement. It was nothing more than a pressure-sell. There are no "a-ha!" financial insights whatsoever, just a bunch of testimonial baloney, and a complete waste of time and money.

The fact that "Getting Started" is the title of the FOURTEENTH chapter should tell you everything you need to know -- this book is an infomercial that's heavy on hype and testimonials, and low on useful information. Yellen alludes to the "B.O.Y." system throughout the book as if it's a mysterious remedy for all financial ills. I realize that cutting to the chase -- "buy a whole life policy and borrow from it as needed" -- would make for a very short book, but that's pretty much the sum and substance of this waste of time.

To move yourself closer to financial freedom, begin by not spending money on this book. I'll have to make do with selling my copy. I feel cheated.

I was surprised with how easy this book was to read unlike the other financial books I have read.

As a CPA, I am constantly investigating the strategies that my friends bring to me. After reading this book, I researched and verifyed that everything was indeed true. After I was comfortable with everything I started my own plan. I just wish I would have known about this 20 years ago.

I am recomending this book to everyone that I care about.