DEBT-FREE LIVING… & Cash Value Whole Life Insurance

Quick Summary

  • Part One is made up of several stories of people who fell into debt, and the negative impact in several areas of their lives.
  • Part Two is about how they climbed out of the crisis with wise counsel, personal discipline, and accountability. Ultimately it’s up to the individuals to solve their own problems, no matter the skills of the advisor.
  • Then there is an Interlude that goes through a quick history lesson of how our country got into this debt crises. It also introduces some of what the Bible says about debt as well as some common debt traps today.
  • Part Three goes into more detailed information on some practical services and strategies that are available. To me, this was the most interesting part because there are subtle things mentioned that seem confusing, but other things that could be a book on their own.

Cash Value Insurance

Life Insurance Policy Loans vs. Finance Company Loans:

  • Finance companies seek profit to produce income (dividends) for the owners of the company, which is not you and I. Mutual life insurance companies seek profit to pay income (dividends) to their owners as well, who are the policyholders.
  • Typical finance companies require borrowers to provide more collateral than the loan amount. An important reason is because the property typically utilized as collateral, fluctuates in value and is not guaranteed, therefore placing all risk on the borrower. The policy loan collateral is NOT your house, vehicle, etc., but the available cash value (the equity of the life insurance policy) equal to the outstanding loan. The cash value, used as collateral to secure the loan, is guaranteed by the insurance company, putting ALL risk on them.
  • The policyholder, who requests a policy loan from the insurance company, sets the terms of the loan, not the insurance company. The loan can be paid back whenever and however the policyholder decides. If the loan is never paid back, it will be deducted from the death benefit when the insured passes away. Finance companies give the borrow a schedule when they want to be paid, and prefer payments be setup automatically.
  • With certain mutually owned (owned by policyholders), dividend paying whole life insurance companies, interest and dividends are earned on the total cash value regardless of any outstanding policy loans. For example, if there was a policy with $100,000 in cash value, but an outstanding policy loan of $50,000, interest and dividends earned would continue compounding on the full $100,000 cash value. Repaying policy loans, with interest, contributes to the profitability of the life insurance company, which the policyholder is a partial owner of, producing consistent dividends. When loan payments are made to finance companies, all the future earning potential on the borrowers repayment dollars is lost in interest paid (to their owners, not you and I), as well as, any opportunities given up, forever.
  • Payments on loans through finance companies are typically amortized monthly to prioritize the interest before principle; whereas, loan repayments made to policy loans are applied as a 100% principle payment. The interest is tabulated throughout the contract year and applied once a year on the contract anniversary. Though the interest rate on a policy loan may be similar to a loan through a finance company, the volume of interest can be significantly lower.

Interest Rate vs. Volume

Consolidating Debt through Cash Value Life Insurance

More on Cash Value Life Insurance


Going to the Source of Truth

The Bible

  • Deuteronomy 15:4 However, there need be no poor people among you, for in the land the Lord your God is giving you to possess as your inheritance, he will richly bless you, 5 if only you fully obey the Lord your God and are careful to follow all these commands I am giving you today. 6 For the Lord your God will bless you as he has promised, and you will lend to many nations but will borrow from none. You will rule over many nations but none will rule over you.

“Banking is the most important and most profitable business in the world — It should be controlled by you and me.” — R. Nelson Nash



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Austin L Garner

Austin L Garner


Founder of Disciple Wealth Strategies. Serve God & Master Money (Luke 16:13)