Private Family Banking (PFB) is a financial strategy that promotes multi-generational wealth generation, tax efficiency, superior estate planning, and asset protection for your children. It is a simple yet sophisticated way to create and pass on permanent family wealth. In short, PFB is a strategy that promotes:
First, funding whole life insurance policies to develop cash value.
The first step in private family banking is to fund whole life insurance policies and get them designed to work as private family banks. This is done by choosing a policy contract that has been designed to grow cash value at a faster rate than most traditional whole-life insurance contracts.
Second, borrowing against the policy
One of the most significant benefits of a family banking strategy is that it allows you to borrow against your whole life insurance policy without paying interest or having to jump through any of the hoops banks and other lenders have to. This means that if you are in a financial emergency, you can access the cash value in your private family bank.
Third, tax-free growth
Another advantage of a private family bank is that you can earn tax-free growth based on your life insurance policy’s cash value. This means that if you use the money in your private family bank to purchase a home, pay for college or start a business, you won’t have to worry about taxes on the profits.
Fourth, asset protection
There are four significant categories of asset protection in a private family banking system – and they all involve a whole life insurance policy. These protections are important because they help families protect their assets from the threat of loss of income, legal judgments, and creditors. In addition, having a family bank with an element of life insurance built-in makes sense, so they can enjoy the asset protection that comes with it.
Fifth, tax-free retirement income
The most common reason families use a private family bank is that it provides a way to provide for their retirement needs while maintaining tax-free growth of the policy cash value. This can make retirement more affordable than a traditional retirement plan or savings account.
