BETHESDA, Md., Sept. 3 MD-Capital-Asset-Mng
BETHESDA, Md., Sept. 3 /PRNewswire/ -- During the worst banking crisis
since the 1930s, when 9,000 banks failed, nervous depositors are overlooking
the bank that even the Great Depression couldn't put out of business, says
author and investment guru John E. Girouard.
"Many people would sleep better and be in better financial shape if they
remembered the lessons their grandparents learned the hard way," he says. "The
one financial institution that withstood the economic collapse of the
Depression was life insurance."
Girouard says those who held what is called "participating" or "mutual"
whole life policies, which dominated until the 1970s, "had essentially stashed
money in their own bank. Policyholders can borrow against the cash value of
accumulated premium payments, and the cash value earns untaxed income."
Mutual whole life policies have historically earned more than taxable bank
CDs, and carry ironclad guarantees: your cash value and the death benefit is
secure.
"People like to save and hate to borrow," Girouard notes. "They don't
realize that when you save in a bank, you're lending it money that it lends to
others to make a profit for its shareholders. When you borrow from the bank,
the interest you pay is the bank's profit."
He says two of the most confusing words in the financial services industry
that cause people to make mistakes that can cost them millions over their
lifetimes are "saving" and "loan."
"These two words have different meanings when used by these two different
financial institutions. People think it's a cost when they pay their whole
life premium, when actually they're saving cash in historically one of the
safest places there is. Then, you can borrow those premiums at will from 'The
Bank of You,' and when you repay the loan, you're paying it to yourself.
Meanwhile any unborrowed premiums continue to earn untaxed income."
But people get hung up on the idea that they are incurring debt, even when
they're borrowing their own premiums, says Girouard. "It's one of the most
difficult ideas to get people to understand and embrace, even though the
Greatest Generation understood and benefited from it for decades."
John E. Girouard is author of "The Ten Truths of Wealth Creation"
(www.johngirouard.com), and CEO of Capital Asset Management Group.
SOURCE Capital Asset Management Group
