Life Insurance! After just those two words, your attention is probably starting to waiver. But life insurance has played a key role in the creation and survival of some iconic businesses! While most of us think of life insurance as a death benefit, some of the most successful businessmen understood how to leverage the living benefit aspect.
Let’s start with Jim Pattison. When he decided to open his first business, a General Motors automobile dealership, he used his life insurance policy as borrowing collateral. If it wasn’t for the cash values in his life insurance policies, the bank manager may have decided against granting the loan to begin his business endeavor.
Next is Walt Disney. If it were not for life insurance, Disneyland might not have existed. After failing to secure traditional forms of financing to build Disneyland, Walt decided to provide his own financing. A large part of this came to be by collaterally borrowing money from the cash value in his life insurance. While Disneyland was an immediate success, getting the $17 million to open meant that Walt had to mortgage everything, including his personal insurance.
And then, Ray Kroc, who at 52 opened his first McDonald’s. What most people don’t know is that Kroc did not take a salary during his first 8 years and to overcome constant cash-flow problems, Kroc borrowed money from two life insurance policies (and also his bank) to help cover the salaries.
While we may not all be the next Jim Pattison, Walt Disney or Ray Kroc, most of us will have opportunities and emergencies in our lifetime; the cash in a life insurance policy (which is creditor protected) is a great vehicle to help you take advantage of business opportunities and cover emergencies. Please contact us if you’d like to have more of conversation on how to use life insurance while you’re alive.