Become your own bank

👋🏾 Hey there, I’m Ronnie. Every week, I break down the money games the 1% play so the 99% can finally level up.

If the average person truly understood how the wealthy use life insurance, TikTok finance influencers would go extinct overnight.

I’m not exaggerating. Behind all the exotic investments, offshore trusts, and private equity dinners, there’s one strategy the 1% use that’s hiding in plain sight.

I’m talking Life Insurance.

But not the kind your job gives you, and definitely not the “$39-a-month, bury-me-nicely” kind.

I’m talking about cash-value life insurance — specifically, properly structured whole life or indexed universal life — that’s engineered to grow cash quietly, tax-advantaged, and fully accessible.

Think of it like the wealthy building their own safe, predictable, tax-sheltered private bank.

What Makes Cash-Value Insurance Different

A portion of your premium goes toward a pool of money called cash value, and that cash value grows every year (tax-deferred) at a stable, predictable rate.

There are two main types the wealthy use:

Whole Life (WL)

• Slow and steady.

• Guaranteed growth every year.

• Perfect for long-term, low-volatility storage.

Indexed Universal Life (IUL)

• Cash grows based on a stock market index (usually S&P 500).

• But (and this is the magic) losses are capped at zero. Market crashes = no loss.

• Upside is capped, but still solid.

Think of Whole Life like a Cadillac — smooth, predictable, old-school.

Think of an IUL like a Tesla — modern, responsive, but with guardrails.

Either way, cash value grows:

• Quietly.

• Predictably.

• Tax-advantaged.

This is why wealthy families view these policies as long-term investments.

Buy Life Insurance for Cash, Not Death

Before we get into the mechanics, let’s talk mindset. This is where the gap between the 1% and 99% starts.

Regular folks buy life insurance for a payout when they die. The wealthy buy it for what it does while they’re alive.

Most people think of money like a bucket of water.

• You fill it.

• You scoop some out.

• You hope it lasts.

The wealthy think of money like pressure.

• You direct it.

• You push it through valves.

• You put it in systems where it compounds, multiplies, and moves in loops.

Cash-value life insurance is one of those loops. Its policies build a bucket of money inside them (slowly at first, then aggressively) with these perks:

• Tax-deferred growth.

• Tax-free access if structured properly.

• A guaranteed minimum return (Whole Life).

• Potential market-linked upside (IUL).

• No contribution limits.

• No income limits.

• No stock-market panic attacks.

To the wealthy, that combo reads like a dream. It’s stable, it’s private, it’s tax-friendly, and it’s literally the opposite of the chaos the average person deals with.

And in the long term, this policy becomes:

• A savings account.

• A line of credit.

• A tax shelter.

• An investment buffer.

• An estate-planning weapon.

• A retirement income pipeline.

…all at once.

Borrow Against Your Policy (Not From a Bank)

Here’s where the play gets spicy. When most people need money, they:

• Take a loan.

• Use a credit card.

• Pull from savings.

• Cash out investments.

The wealthy skip all that and borrow against their life insurance policy instead, because borrowing is not a taxable event.

Let me break it down with a simple example you can picture:

Erica vs. The Bank

Erica has $100k of cash value built up inside her policy, and she wants to start a small real estate flip business.

She has two choices:

Option 1 — Borrow from the bank

• 9% interest.

• Hard inquiries.

• Strict repayment schedule.

• Must justify the loan.

• Risk of denial.

Option 2 — Borrow from her own policy

• ~5% interest.

• No credit check.

• No approval needed.

• No set repayment schedule.

• No tax consequences.

• Her original $100k stays invested and keeps growing.

She chooses Option 2.

Five years later, she sells the house and pays back the policy loan at her own pace. Her original $100k never stopped earning.

That’s the magic: earning interest on money even while you’re using it.

It’s called non-direct recognition (in certain Whole Life policies), and it allows your money to grow uninterrupted while you borrow.

This is the core of the private bank strategy.

The Infinite Banking Loop (How the Money Circulates)

You’ll hear terms like:

• Infinite banking.

• Bank on Yourself.

• Private family banking system.

Let’s break this loop down like you’re sitting across the table with a napkin, sketching it:

1. You put money into the policy.

2. The cash value grows year after year.

3. You borrow against it instead of from it.

4. Your cash keeps earning interest the whole time.

5. You repay the loan whenever or however you want.

6. When you die, the death benefit clears whatever is left of the loan — no taxes, no drama, no headaches.

You’ve essentially created a self-contained financial ecosystem where you are the depositor, the borrower, and the lender.

No outsiders, no gatekeepers, and no credit score swings to deal with.

Wealthy families love this because it creates a cycle of money that never leaks outside the family.

Even the Banks Use It

Let me hit you with the real reason this strategy lives in the shadows: Banks use this themselves.

JPMorgan, Wells Fargo, and others pour billions into these exact policies. They call it BOLI — Bank-Owned Life Insurance.

They treat it like their own institutional piggy bank that grows tax-free.

Because they understand that tax-free growth, guaranteed returns, loan privileges, and stability are about as close to financial perfection as you can legally get.

So yes, the banks sell you credit cards with 24% interest and borrow from insurance companies at 4–6%. The math speaks for itself.

Banks are literally copying the wealthy, and the wealthy are copying the banks.

Meanwhile, nobody teaches the average person how to do the same thing.

Structure Matters, A Lot

A cash-value policy only becomes a private bank if it’s structured correctly. If it’s structured wrong, it’s just an expensive life insurance policy that will disappoint you harder than a meme stock crash.

The wealthy structure their policies like this:

• Max fund the policy (stuff it with cash instead of focusing on the death benefit).

• Avoid turning it into a Modified Endowment Contract or MEC (a tax-trap version).

• Use paid-up additions riders (for Whole Life) or overfunding (for IUL).

• Make sure fees drop over time.

• Work with someone who knows how to design these for cash, not commissions.

This is why the “buy term and invest the difference” crowd always misunderstands this strategy, because they’re comparing two different planets.

Real Life Use Case Scenarios

Let’s explore some practical scenarios of how the rich actually use this in the real world.

1. Paying for College Without Touching Savings

Instead of draining a 529 plan, wealthy families borrow against their policies. Because a policy loan doesn’t show up on the FAFSA.

Translation: the kid qualifies for more aid.

2. Funding Business Ventures

Entrepreneurs love this because it’s flexible money.

Need $120k to open a second location? Borrow from the policy.

If the business takes longer to turn a profit than expected, no one is calling you for repayment schedules.

Try telling Chase Bank you’ll “get to it when you get to it.”

3. Buying Cars the Smart Way

Wealthy families often buy cars with policy loans.

If they spend $60k from their policy:

• The policy interest is around 5%.

• The money inside keeps earning 4–6%.

• They pay themselves back.

• The cash value continues compounding.

The car basically becomes a cash-flow tool instead of an expense.

4. Funding Down Payments for Real Estate

Cash sitting in the policy → borrowed out → used for a down payment → rental income pays back the loan.

Now the policy grows, the property cash flows, and the family wins twice.

5. Retirement Income Without Taxes

When wealthy people retire, they borrow against the policy for income.

No taxes, no required minimum distributions, no stock market rollercoasters — just smooth, engineered cash flow.

6. Estate Planning Power Move

The policy’s death benefit pays estate taxes or wipes out debt, keeping assets intact for the next generation.

Think of it as the cleanup crew that erases all the messy stuff.

Why Most People Never Hear About This

Three big reasons:

1. It requires patience

Years 1–3 are slow. The magic hits around year 6+, but most people want Lambos by next Thursday.

2. It requires discipline

You don’t skip funding it. It’s a long-term play, like planting a wealth tree.

3. It requires an adviser who knows what they’re doing

Most agents don’t understand (or want to sell) the low-commission, high-efficiency version of these policies.

They understand this is not a product, it’s a system. Systems take knowledge, and they don’t earn high commission checks.

Congratulations! You’re Now Ahead of 95% of People

If you’ve made it this far, you now understand a strategy that’s been sitting in the open for decades, just invisible to anyone not born into the right circles.

This is one of the quiet financial engines wealthy families pass down like family recipes. And once you see how it works, you can’t unsee it.

Now you know why life insurance is more than just a safety net.

For the wealthy, it’s a bank, a vault, a tax shelter, a credit line, and a generational wealth machine — all in one.

And the best part is that you don’t need to be wealthy to start, but you do need to think like the wealthy.

That’s the magic trick.

Until next time…

If you know someone who’d love this, don’t be selfish. Don’t forget to:

• Follow me on LinkedIn for more.

• Listen to the Margin of Curiosity podcast.