Ben’s Whole Life Policy Frees Him

Are you frightened at the thought of your financial future?
Are you frightened at the thought of your financial future?

A few more years flew by and Ben and Greg’s dry cleaning business was flourishing.  They  opened two more stores and were finally seeing nice profits in all of them.  Over time they purchased the building that the second cleaners occupied, as well, and then both the building and the business of the two new locations.  Each time, whether they bought a building (the real estate) or the equipment, signage, and other start up costs, it took about $100,000 or more.  But each time, Ben was able to find this money within his whole life policy.

About that time Ben had turned 60 and Greg was pushing 70.  A large national chain came knocking on their door.  They wanted to buy all four locations and the real estate they did business out of.  Greg couldn’t say YES fast enough when he heard that they wanted to give them $4,000,000 (about $2,000,000 each when everything was figured)!

Ben knew that if something happened to Greg he couldn’t run the operation without being able to walk and Kim had no desire to be involved, so he said yes, too.  About 60 days later Ben was out of business and depositing $2,000,000 in the bank!  Everything was fantastic….for about a month.

As Ben started spending a little money here and there he began to realize that if he or Kim lived a long time, $2,000,000 might not be all that much.  They were spending about $100,000 a year, and they weren’t extravagant by any means.  Almost penny pinchers.  $100K didn’t go as far as it used to!

Ben got to thinking about the friends he and Kim often got together with – Bill and Jennifer.  They were great people, but the only thing they could ever do was meet at each other’s houses because they were scared to death to spend the money that they had accumulated in their 401k’s.  They also had about $2,000,000, but they knew that if they lived a long life this would just not be enough, so they never spent any money that they didn’t absolutely have to.  Ben did not want to be forced to live this kind of life, but he had to ask himself, “Do I need to live like this to survive?”

Ben started to get nervous about their future until he realized that the whole reason they had this small fortune was because their whole life insurance policy had been a foundational tool which helped them build it.  Ben and Kim sat down with their advisor and revisited what they first heard when they started the policy.

They could conservatively invest this money and freely spend it down over the next 25 years knowing that they would probably run out around age 85 unless something changed.  Of course, they might be dead by then, so it would be a shame to be in the poor house for the last years of life while they had millions in the bank!

But they were feeling good and had no plans to die early, so they looked at the original projection for the policy.  It was a quirky habit they had.  The policy had performed so much better over the years because of the extra loan repayments and the higher dividend rates, but there was something nostalgic about looking at the original projection from 25 years before.  They saw that his main policy had projected that in a few years at 65 they would have $1,415,662 of cash value and have a death benefit of $2,847,692.  They knew both numbers would be more than this based on where they were already, but even these original forecasts felt great.

They looked a few lines down at age 85 and saw that they would have $4,528,378 of cash value and a death benefit of $5,592,341!  And these were conservative numbers that the policy was already outproducing.  This gave them the confidence to know that they could spend the $2,000,000 they had just received from the sale of their business because the whole life policy would be there for them if they needed it.  As a matter of fact, it would be worth far more than they had in cash today.  The future looked secure.

This is Part 9 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.

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