he compares this strategy to his commercial bank is paying him 3% (net 2.34% after tax) charging him 5% for the loans. The following is a comparison of the two strategies: Total Deposits from Year 1 through Year 10 = $500,000 Age Commercial Bank Earn 3% Pay Loan @ 5% Privatized Family Banking Death Benefit / Waiver of Prem.
35 45 46 50
$50,000 $575,640 $437,680 $590,822 $530,320 $659,101 $599,951 $634,413 $676,754 $817,481 $901,680 $365,171
$32,508 $464,502 $500,851 $741,536 $375,282 $955,583 $900,388 $1,230,044 $1,581,474 $1,010,010 $2,033,544 $6,326,754
$1,353,234 $2,486,484 $1,517,139 $1,795,398 $1,738,595 $2,042,421 $1,992,418 $2,328,436 $2,669,003 $2,691,898 $3,085,755 $6,686,460
51
55 56 60
61
65 70 95
** Values may have changed due to dividends.
From age 70 – 90, he received tax-free $55,000 annually for a total of $829,440 with the PB. In the event of his death at age 70, his family would receive the $1,195,845 plus the net death benefit of $1,382,776 for a total of tax-free value of $2,578,621. The commercial bank account would only be worth $901,680. Plus, there was no death benefit during the entire time. Remember, he only invested $200,000 plus the interest on the loans.
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