Hybrid Mortgage Arbitrage allows any consumer or business owner with debt, to bank like a bank and turn their liabilities into income and wealth.
SANTA MONICA, Calif., May 3, 2022 /PRNewswire-PRWeb/ -- How do banks, credit unions, and other organizations in the finance industry use tax-advantaged products to offset costs?
Bank Owned Life Insurance (BOLI) is a great way for banks to save money on their employee benefit costs.
Banks are responsible to pay their employees an adequate employee benefit package. All while being fiscally responsible and profitable in the long run. The rising cost of employee benefits is an issue facing businesses of all sizes and BOLI is a viable solution for banks, credit unions and other community financial institutions.
A 2021 US Bank Location study reveals the amount of assets banks have in life insurance. Here are the top 3:
$24,068,000,000 Bank of America
$19,483,000,000 Wells Fargo Bank
$12,139,000,000 JPMorgan Chase Bank
No matter what type of BOLI program is used, the biggest benefit is that income earned on the cash value of the policies is generally not considered an employee's taxable income -- unlike benefits you would typically see in a 401(k) or profit-sharing plan.
"Through this study of BOLI we've learned how it has already helped to fund scholarships, construct community building and more. Now we can clearly see that life insurance to supplement income is a solution that could be used by middle class people to turn their debt into income and generational wealth," states Ron Harris, CEO of Financial Literacy Group.
"Through our research, we found that a similar solution under current tax law, would work for individuals, families, business owners and nonprofits. Because of the change to the IRS code via the 2020 Cares Act, we were able to design a consumer version of BOLI". Says, Harris.
Now the cash value in an IUL could include the policyowner's debt balance and that would provide a tax-free death benefit, living benefits, and potential tax free earnings and no risk.
This means an individual, family or business owner could put the money needed to pay their debts into the policy and borrow that money and still pay their debts.
"Using accelerated debt payoff and by over-funding an IUL with the insured's debt balance, the insured can fund their own bank in less than 10 years. Using a special rider that makes a policy liquid gives the insured access to the growing cash value as loans that never have to be paid back. This turns Infinite banking on its head". Explains, Harris.
Because this is a loan from the insurance company, there are tax advantages and no matter how big the loan gets, it is collateralized by the policyowner's cash value, which was originally the debt balance, the loan is paid by the collateral when the insured dies.
Financial Literacy Group is changing the narrative on financial wellness, our solutions equalize the financial playing field between middle class Americans and financial institutions. We teach adults who live on Main Street how to manage their finances like people who work on Wall Street, one individual, one family or one small business owner at a time.
Media Contact
Ron Harris, Financial Literacy Group, 1 3234191600 Ext: 1005, [email protected]
SOURCE Financial Literacy Group
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