Certain Savings: The Top Alternatives to Saving in a Bank


Savings are the foundation of a strong financial strategy—providing more certainty in times of opportunity and/or emergency. Yet where should our clients store those savings? While banks may be the most obvious (and typical) choice, they’re not always the best choice. Helping your clients move from a bank-centric mindset to something different can be challenging. If your clients are looking for ways to optimize liquidity, certainty, and growth, banks will not cut it. So what to do? It’s simple. Include cash value life insurance as the foundation of your client’s financial strategy.

Why Have Cash Savings?

Don’t dismiss the phrase “Cash is King” as an old-fashioned cliché. Cash, and more importantly cash flow, is one of the most important components of your clients’ financial toolkit. As you’re likely to know, cash assets should not only grow but be safe and accessible too, no matter what circumstances arise. It’s important that we help guide our clients towards choices that offer all three aspects. 

The best place to store savings is somewhere that gives you liquidity, safety, and the chance for growth without risk. These features transform a typical savings account into an asset that help all other assets perform better.

What’s a Bank Bail-In?

In the recent months, banks have bit off more than they can chew, as the FED has removed reserve requirements to help assuage times of crisis. They simply don’t have enough cash to meet the demands of the time. 

When banks get in financial trouble and lack the cash necessary to meet a withdrawal request, customers of the bank are forced to process transactions through the Fed’s discount window. This process involves filling out complicated government forms and waiting for long periods of time. This seems unreasonable when someone simply wants to access his or her own savings in a timely manner.

The most troubling part is that because of provisions in the Dodd-Frank Act, cash saved in banks are non-secure loans for the institution. This means that banks can use their client’s money tp bail-in if they go under. In other words, depositors take the loss in order to keep the bank afloat.

So Where Should We Store Cash?

Obviously, neither you nor your clients can avoid banks completely. Checking accounts are necessary. However, when it comes to emergency/opportunity funds, however, there’s an even better option for your clients than the bank. As Prosperity Economics Advisors, we advocate for participating whole life insurance from a mutual company. This type of insurance  functions not only as “death protection.” It also has living benefits for your clients that can used for emergencies, opportunities, and legacy.

Mutual companies operate similarly to credit unions and co-ops. They focus on the interests of policy owners, not shareholders. You can assure clients that when they choose a mutual insurance company, the long-term growth of their policy (rather than business profits and risks) is always top of mind. Your client’s dreams come first with whole life insurance.

Cash Value Life Insurance Has Unique Benefits

Unfortunately, many people assume that life insurance is something for the distant future. The reality, however, is that this kind of insurance offers real benefits while you’re still alive. This is something we as Prosperity Economics Advisors endeavor to teach clients everywhere. A properly structured participating policy (dividend paying policy) from a mutual company provides guarantees such as:

  • The ability to benefit from company profits. This is an added perk on top of the guaranteed dollar amount (guaranteed cash value). Historically, dividends have paid out for more than a century, even in the worst financial climates. There is no reason to think that might change in the future.
  • A guaranteed dollar increase to the cash value each year, resulting in a new “floor.” Your policy will never decrease so long as it’s in-force, and loans are repaid. And your clients will see gains even if no dividends are paid.
  • There is a guaranteed death benefit, and the policy is permanent. Meaning that so long as the policy is in-force, a death benefit will be paid. If your client lives to policy endowment, they’ll receive the death benefit themselves.
  • Premiums will not increase, meaning one doesn’t have to deal with unexpected changes or guesswork.

Life insurance is a dependable asset. It’s existed for almost 200 years and for nearly that amount of time, mutual companies have paid dividends. Even in times of turmoil and financial hardship—depressions, recessions, and wars—dividends were paid. There is one specific company that has paid out dividends absolutely every year since 1869. Often, clients are even paid more than what is projected. This is possible because companies frequently surpass their minimum guarantees.

One of the greatest advantages to a whole life policy is the lack of volatility or market risk.

Cash Value Can Provide a Legacy

Whole life insurance also acts as a form of legacy planning, aside from it’s living benefits. Legacy planning can include, yet is certainly not limited to:

  • Family bank strategies
  • The use of trusts to optimize assets and create criteria for family participation
  • The creation of a family creed and family retreats

Not only does the cash value lend strength to family dynamics while alive, the death benefit passes onto heirs, and when used wisely can continue to carry a family legacy. Your work as a financial advisor, combined with CPAs, estate planning attorneys, and other professionals can create powerful family legacies for clients.

Reap the Rewards! 

Payment of all premiums and paid-up addition riders are all that is required to benefit from whole life insurance. It can often be described as savings that shows up like a bill. When your clients put money in a typical savings account, that cash earns interest at a snail’s pace. Life insurance, however, grows and compounds at a higher rate. Clients can see significant returns with no market risk.

Have friends wondering what they should do with their savings? Tell them about the benefits of whole life insurance. It offers far better and more reliable benefits than banks or money markets. Encourage them to learn about this rock solid asset and put their dollars into a time-tested asset.

Sometimes it takes a crisis to make you realize just how important keeping your money secure and accessible really is. COVID-19 has certainly played this role. These are extraordinary and challenging times. Try to use this time to make real accomplishments. Did you know that Shakespeare wrote King Lear and Macbeth during the black plague? Isaac Newton developed his theories on gravity, calculus, and optics when the University of Cambridge was closed because of the Bubonic Plague. Keep a positive mindset and think of the possibilities!

Opening a participating whole life insurance policy elevates cash savings to an entirely new level. Contributions to the policy means benefits for life. Participating whole life insurance is the best personal finance strategy for your client’s future Prosperity.

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