Someone recently asked about FDIC insurance for the money in the “banks” suggested by the EUREKONOMICS’ Money for Life Modelfor creating wealth and managing personal finances, which recommends that each American should act as his/her own banker.  (Some advisors refer to these as “family banks,” “infinite banks,” or “personal banks.”  The use of the term “banks,” “banking,” and “being your own banker” is analogous to how one creates wealth and manages personal finances rather than a direct reference to commercial or chartered banks.)

The answer is…

You can use any savings product - or you can also use your mattress - as your “bank.”  So, if you choose an FDIC insured product that’s where the insurance comes from.

However, over the past 100 years participating whole life insurance has proven to best serve those who follow the Eurekonomics’ Money for Life Model for creating wealth and managing personal finances.  When your money is in participating whole life insurance, it is in the most secure place possible.  All state insurance departments require that insurers maintain reserves adequate to cover the death benefits of the policies they have in force and those death benefits are significantly higher than the cash values.  In addition, each state maintains a guarantee fund similar to the FDIC, which guarantees some or all of the cash values in existing policies in the event the insurer fails.

By the way, no American ever lost any of the guaranteed cash value of a participating whole life insurance policy, while many Americans have lost money that was held by commercial banks and especially money that was held in speculativeproducts like mutual funds, ETFs, managed accounts, etc. - aka casinos.

PS - I actually know a man that uses a cigar box hidden under a floor board as his bank.  His pit-bull’s bed is over that spot.  However, we don’t recommend using your mattress, a tin can in the back yard, or a cigar box and pit-bull as your “Bank.”

Filed under: Money, Personal Economy, Whole Life Insurance, Your "Bank", creating wealth, fdic insurance, managing personal finances, Money, saving, savings, security, wealth, Whole Life Insurance