Ben Thinks Like a Banker

A funny thing happened. Even though Ben was utilizing banking principles in his life with his whole life policies, he actually had more and more money flowing through actual brick and mortar banks and believe me, the bankers take notice! As the checks Ben deposited from his whole life became larger, the President of Ben’s bank called him up and asked him to get together.

Ben was all about learning new things these days and so he jumped (not literally) at the chance. It turned out that Ben and James, the bank president, really got along well. They were both passionate fans of the Texas Longhorns and really hit it off talking about the upcoming football season. It turned out that James was also a believer in Christ and was doing some really cool things with the neighborhood Longhorn foundation to help a lot of local kids who were growing up without fathers. This really touched Ben and he began to work with James to reach out and bless these kids’ lives.

As they spent more and more time together, Ben was also interested to learn what went on behind the scenes at the bank. He had always heard most financial advisers and banks telling people to buy term and invest the rest of their money with their products. He told James how wonderfully his whole life policy had performed and really even saved their financial lives due to the devastating accident which had happened years ago.

James then revealed to him that the bank actually owned far more whole life than Ben could imagine. Millions upon millions. He said that it was the perfect vehicle for the bank to keep reserves in because they got the professional management of the life insurance company who was expert at managing the portfolio for the highest return without risk to principle. Even though they were a bank who was in the business of making money on other people’s money, each loan they made had some risk to it like any investment , so they needed to keep a certain amount of money absolutely secure. The government mandated certain levels, but after the banking crises of the early 2000’s, his bank decided to keep even more money in a safe place. They grew to love whole life over the years watching it perform so much better than any other secure, liquid asset. And for the fact that it gave them tax advantages.

Ben was shocked at first because what the banks were doing was so different from what they were telling others to do, but then he remembered an article he read by the lead financial writer for the Orlando Sentinel about 30 years prior. This man had spent a career writing about good financial decisions and anytime life insurance came up, he slammed whole life and said the only smart thing to do was to buy term insurance and invest the rest in better performing investments than the slow and steady whole life.

Ben had followed this exact type of mainstream advice until the day that he went against the flow of “conventional wisdom” (the same wisdom that had left everyone broke!) and bought his first whole life policy. He remembered the article where the writer “confessed” that he had owned a whole life policy for 30 years (at the same time he was telling others how horrible it was) and he was shocked to discover that it had been his best performing asset. He still didn’t really understand it, and explained it away, saying things like inflation and market corrections that he never saw coming always seemed to have relatively positive impacts on his whole life policy and negative impacts on everything else he was doing.
But Ben began understanding all too clearly. This “financial expert” really just swallowed what the financial institutions spent billions of dollars trying to convince the public and regurgitated it to an uneducated public. He knew more stats than them so he seemed educated, but funny enough, the stats he projected going forward never seemed to work like he predicted. Ben understood all too well that life seemed to work that way all too often!

Remembering this made Ben really content knowing that he had followed wisdom that was over a hundred years old instead of falling into the latest and greatest get rich quick scheme. And it was doubly comforting to know (although at this point with his own real life experience, he didn’t much need outside confirmation) that the banks were doing exactly the same things!

This is Part 8 in the story of Ben’s life using Whole Life Insurance in a variety of ways. You might want to read the introduction to this series which will link to each post in the series explaining how whole life works as well as linking to each post in this series on Ben’s story.

Photo credit: Portal Matematico

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