A. If you placed the money you received in a bank, many things will happen and none of them are in your best interest when compared to your alternative option. In a commercial bank, your money will be liquid and accessible, but while there it will have minimal growth, you will be taxed on that growth, and once you need to use it it’s gone and no longer in the account earning for you. Most importantly, that money is fully exposed and has no protection against creditors and lawsuits, heaven forbid, anything bad and unexpected were to happen.
Once you placed the money in a banking policy with an insurance company, that money is fully protected from loss, it will grow historically at a much more favorable rate of return and will be liquid and accessible. However, because the money comes to you in the form of a loan and the loan is generated from the life insurance company’s general account, those borrowed dollars do not affect the growth of the cash value in your policy, therefore providing you with a double benefit. This creates exceptional growth potential for you that no commercial bank or other financial vehicle can provide. On top of that, it comes with a deferred bonus (i.e., a death benefit) delivered tax-free to your heirs and if the loan process is handled correctly, it is also possible to minimize taxation for both you and your farm or ranch.
