There are a few critical components the plan requires for it to work successfully like a bank.
Those components are as follows:
- Guaranteed Cash Value- about 60-70% of the growth is Guaranteed.
- Dividends- only a mutual company (not a stock company) can offer this growth since the policy holder "participates" in the profitabiltiy of the company. (hint: Lafayette Life, the company endorsed by Pamela Yellan, author of "Bank on Yourself", is not a mutual company, but a stock company).
- Paid up Additions- (aka a PUA-rider) - This buys increasing amount of Life Insurance which in turn earns greater cash value and dividends
- Non-direct recognition- the ability to borrow from your policy and have it continue to grow as though nothing was taken out. (hint: Guardian Life doesn't offer this in their plans, so it doesn't work like a bank, but more like a bond fund).
- Tax Deferred growth-all the growth grows without being taxed allowing the principle of compounding interest to really work efficiently.
- Flexabitly and accessability- you can borrow from your policy at any time for anything. No approvals, no applications.
- Increasing Efficiency - the plan should be designed to become increasingly more efficient over time. The plans designed by Lafayette and New York Life seem to become less and less efficient over time. One reason may be because they don't reward policy owners equally, in that they play "favorites" with some policyholders who came in during more favorable times.
Disclosure: I'm not an insurance professional - I've merely been a hard-nosed shopper of various whole-life products and I have yet to find the company that mirrors or at least resembles the pattern proposed by Nash. (And yes, I've tried contacting Nelson Nash directly a few times, but have been unsuccessful in getting some basic questions answered from him).
Still a believer in the philosophy & power of using a whole life policy as a banking business - just not convinced I've found the product that does what Nash suggests.