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The Hidden Asset Class the Wealthy Don’t Talk About—But Use Extensively

  • Writer: Barry Group
    Barry Group
  • May 19
  • 5 min read

The Hidden Asset Class the Wealthy Don’t Talk About—But Use Extensively

Introduction: Breaking the Middle-Class Money Myth


Most people follow the same financial formula:

  • Save in a 401(k)

  • Pay down debt

  • Invest in mutual funds

  • Hope compound interest and Social Security will carry them through retirement


But there’s a problem: this formula hasn’t worked for millions of Americans. According to Empower’s 2024 study, the average 401(k) balance for those aged 60–69 is only $182,100, yet the average retiree needs $1.1–$1.5 million to retire securely for 25+ years.¹


Meanwhile, ultra-wealthy families—those who are financially secure for multiple generations—are doing something very different. They’re allocating a portion of their wealth into an overlooked, private asset class that’s been used for over 150 years:

High cash value whole life insurance with mutual insurance companies.


This is not your average insurance policy. When designed properly, it becomes a guaranteed, tax-advantaged cash account you control—with liquidity, compounding growth, and a built-in inheritance.



A Historical Asset Class with Staying Power


We often overlook history in financial planning, but the world’s most enduring fortunes were not built solely on stocks or real estate. Instead, families like the Rockefellers and Rothschilds have long used whole life insurance as a multi-generational financial tool.


Here’s why:

  • Whole life insurance predates Social Security (1935) and the 401(k) (1978)

  • It provided a guaranteed savings mechanism during the Great Depression, when banks failed and markets crashed

  • Policies from companies like MassMutual, Guardian, and Ameritas have weathered every economic storm—World Wars, recessions, inflationary periods


Even today, banks remain the largest institutional buyers of permanent life insurance, owning over $180 billion in policies through “Bank-Owned Life Insurance” (BOLI) to stabilize their Tier 1 capital.²

If it’s good enough for the banking system, maybe it’s worth a closer look.


Building Wealth with Predictability and Liquidity


Most investment accounts tie up your money, expose it to risk, or lock you into penalties. A properly designed whole life policy flips that model:


  • Contributions grow tax-deferred

  • Cash value compounds annually at a guaranteed rate

  • You can access the funds at any time via policy loans

  • Your policy continues growing as if the money was never borrowed


This creates a perpetual compounding machine, allowing you to recapture the cost of major expenses while building long-term wealth.




How Wealthy Families Use Whole Life Policies


1. Private Family Banking

Families use their policies like lines of credit to fund:

  • Business ventures

  • Investment properties

  • Education

  • Vehicles

  • Large purchases


All while keeping their capital compounding inside the policy. This is the core of the Infinite Banking Concept®.


2. Tax-Free Retirement Income

During retirement, policyholders access their cash value via tax-free loans (as long as the policy remains in force). This income stream:


  • Does not count as taxable income

  • Does not reduce Social Security benefits

  • Is not subject to Required Minimum Distributions (RMDs)


This makes it a powerful buffer during market downturns when retirees don't want to sell assets at a loss.


3. Estate Planning & Wealth Transfer

High-net-worth individuals and business owners often use whole life policies for:


  • Funding irrevocable life insurance trusts (ILITs)

  • Equalizing inheritances among heirs

  • Creating tax-free legacy assets

  • Paying estate taxes


The policy creates an instant inheritance, tax-free and probate-free.



Mechanics: How High-Cash Value Whole Life Works


Traditional whole life policies are death-benefit-heavy and grow cash value slowly.

But when designed properly (often through reduced base premiums and increased paid-up additions), the structure flips: it maximizes cash value accumulation while keeping the death benefit in place.


By year 3–5, the policy may have 60–90% liquidity. By year 10, it often exceeds total contributions.

Policyholders then borrow from their cash value at low interest (3.5–5%), with the insurer using the policy as collateral. These loans:


  • Are not taxed

  • Don’t affect credit

  • Are repaid on your schedule

  • Allow your full cash value to keep compounding


Over decades, this creates compounded, tax-free wealth without the volatility of markets or restrictions of retirement plans.



Real-World Growth Projections


Let’s break down how $1,000/month—$12,000 per year—can compound over time inside a policy starting at different ages:

Age at Start

Annual Contribution

Total Contributed (to Age 70)

Projected Cash Value at 70

Projected Death Benefit at 70

25

$12,000

$540,000

$850,000+

$1.2–$1.4 million

30

$12,000

$480,000

$700,000+

$1.0–$1.2 million

35

$12,000

$420,000

$575,000+

$950,000+

40

$12,000

$360,000

$470,000+

$800,000+

45

$12,000

$300,000

$375,000+

$650,000+

50

$12,000

$240,000

$290,000+

$500,000+

Estimates are based on policy illustrations from Ameritas and other mutual insurers, assuming Standard health class and optimized design for maximum cash value.


Objection: “Isn’t That Expensive?”


The most common misconception is that whole life is “expensive.” But the reality is that it’s capital intensive—because you're building an asset.


Think of it this way:


  • A 401(k) defers taxes, exposes your money to risk, and restricts access

  • A whole life policy front-loads your contributions but gives you permanent liquidity, guarantees, and control


It’s not an expense—it’s a privately owned financial engine that compounds uninterrupted for life.



Objection: “Wouldn’t I Earn More in the Market?”


This is a false comparison. Whole life is not meant to replace high-growth investments. It’s meant to complement them—providing a stable, non-correlated foundation for your portfolio.


When markets crash, whole life continues to grow.


It’s the equivalent of owning your own bank while investing elsewhere—giving you leverage, liquidity, and safety simultaneously.



Comparing to Other Financial Tools

Feature

Whole Life Policy

401(k)/IRA

Roth IRA

Brokerage Account

Guaranteed Growth

✅

❌ (market-based)

❌ (market-based)

❌

Tax-Free Withdrawals

✅ (via loans)

❌ (taxed)

✅

❌ (capital gains)

No Early Withdrawal Penalty

✅

❌ (before 59½)

✅

✅

Creditor Protected

✅ (state-dependent)

❌

❌

❌

Tax-Free Death Benefit

✅

✅ (limited)

✅

❌

Uninterrupted Compounding

✅ (loan strategy)

❌

❌

❌


Why This Strategy Remains Hidden


There’s a reason you don’t hear about this in most financial circles:


  • Wall Street doesn’t profit from whole life policies

  • Most financial advisors are securities-licensed and not trained in insurance design

  • Many insurance agents don’t structure policies for cash value (due to lower commissions)


As a result, this strategy stays confined to:


  • Family offices

  • Business owners

  • Real estate investors

  • Tax-savvy professionals


But now, with the rise of financial education online, more people are catching on—and it’s changing lives.



What to Look for in the Right Policy


✅ Mutual insurance company (policyholders share in profits via dividends)

✅ Properly structured design (reduced base premium, increased paid-up additions)

✅ Flexible loan provisions

✅ Strong dividend-paying history

✅ Licensed advisor experienced in infinite banking or cash value optimization



Who This Is For


  • Professionals earning $80,000+ annually with positive cash flow

  • Parents and business owners who want to transfer wealth tax-free

  • Real estate investors who want liquid capital without selling assets

  • Anyone frustrated with Wall Street volatility



Conclusion: Build Your Financial System, Not Just an Investment Plan


If you're tired of being at the mercy of market swings, tax hikes, and restrictive retirement plans, it's time to start thinking like a banker—not just a consumer.


A properly structured whole life policy isn’t about dying—it’s about living better, building wealth predictably, and creating a legacy with intention.


This isn’t a gimmick. It’s the oldest and most stable financial tool in America—used by the wealthy for generations. Now, it can be part of your system too.



📞 Book Your Free Discovery Call


If you're a professional or entrepreneur and want to explore how to design a high-cash-value policy for retirement income, investing, or legacy planning:


📲 Call Barry Group at 866-322-5874Or visit www.barrygroup.net to book a consultation.




📚 APA References


Bank On Yourself. (n.d.). Whole life insurance vs. other investments. Retrieved from https://www.bankonyourself.com/whole-life-vs-investments


Empower. (2024). The state of retirement planning: Average 401(k) balances. Retrieved from https://www.empower.com


Forbes Finance Council. (n.d.). Why permanent life insurance belongs in high-net-worth portfolios. Forbes. Retrieved from https://www.forbes.com/sites/forbesfinancecouncil/

Insurance Information Institute. (n.d.). Overview of life insurance. Retrieved from https://www.iii.org/article/overview-life-insurance


Internal Revenue Code, 26 U.S.C. § 7702 (2021). Definition of life insurance contract. Retrieved from https://www.law.cornell.edu/uscode/text/26/7702


Nelson Nash Institute. (n.d.). The Infinite Banking Concept. Retrieved from https://infinitebanking.org


Federal Financial Institutions Examination Council. (n.d.). Bank-Owned Life Insurance (BOLI). Retrieved from https://www.ffiec.gov/

 
 
 

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