Bank vs Life Insurance, is there a difference?
“The sign over the door”
Let’s examine the difference between a brick-and-mortar bank and a life insurance company. Both are tasked with accumulating “OPM,” Other People’s Money. Both have employees, infrastructure, business overhead, and liabilities, where they each must produce a profit to stay in business. For the sake of our conversation, the big difference between the two is where those profits go. In the Banking System that we are accustomed to, the profits go to shareholders, usually in the form of dividends. In the Mutual Life Insurance Company, the same transfer happens. But, in this case, the Owners of the Policies within the Mutual Life Insurance Company are the shareholders and are entitled to this same luxury of dividends.
Compound interest;
He who understands it earns it…..
He who doesn’t….. pays it.
Albert Einstein
The only thing at issue is “how earnings are allocated.”
The CD owner gets interest. The Stockholder gets dividends.
The Life Insurance Policy Owner gets both interest (Guaranteed Cash Value) and
Dividends!!
We would not remember the Good Samaritan if
all he had was good intentions; He also had money.