How often do you complain about your towel being a rip off?
Probably not very often, a towel is a towel is a towel. It tends to do what you expect it to do… unless, of course, its the ShamWow.
For those that don’t know, the ShamWow is one of those “As Seen On TV” products. It’s essentially a shammy, or towel, with tons of uses. It promises “you’ll say ‘Wow’ everytime.”
According to a couple ShamWow reviews, the problem isn’t that it doesn’t absorb or doesn’t work, it’s the fact that it over-promises and under-delivers.
Now you might be wondering what this has to do with Bank on Yourself… I’m getting there.
When products don’t meet expectations, you start to hear words like “scam” “fake” “phony” or the more creative type – like “ScamWow.” A quick google search for “ShamWow” will suggest related searches. The first of which is “ShamWow Scam.”
According to Google, Bank on Yourself produces related searches such as “bank on yourself scam” and “pamela yellen bank on yourself scam.”
Google.com
What is Bank On Yourself
Bank on Yourself was founded in 2002 by Pamela Yellen after learning some of the valuable characteristics of whole life insurance from the Infinite Banking pioneer Nelson Nash. As someone with a marketing background, Pamela decided to capitalize on the opportunity to highlight some of these benefits.
The goal of the Bank On Yourself strategy is to teach you some of the uncommon uses of dividend paying whole life insurance, and how you can adopt some of the ideas that big banks, corporations, and wealthy individuals have used for centuries into your own finances. Great right? After all, this is what we at Becomingyourownbank.com have been sharing for years as well.
Bank on Yourself, however, takes it a step farther than we feel comfortable. They seem to reveal some little-known features of whole life insurance that don’t seem to exist.
The problem here isn’t what Bank on Yourself ultimately promotes (whole life insurance), because we think it has some exciting uses as well. The problem we have found is that potential candidates of the strategy are left thinking it does more than it can.
Why Google Thinks Bank On Yourself Feels Like a Scam
Just like anything else, if it sounds too good to be true it probably is. Sounds corny, I know, but cliches are cliches because they’re true.
Allow me to quote from a Bank On Yourself video, which appears to be a theme throughout the Bankonyourself website, and other Bank on Yourself material:
“When you save your money in a Bank On Yourself plan, you can borrow it to pay cash for a car, or anything else you might want, and the money in your plan will continue growing as if you never touched a dime of it.”
And directly from the Bankonyourself website:
“you continue to receive the exact same annual guaranteed cash value increase PLUS the exact same dividend you would receive if you had never borrowed a penny. This let’s you use your money and still have it working for you.”
I welcome your corrections, but it sounds to me like you can borrow your money, and continue growing it as if you never touched it. Does this feel like a magic towel yet? It does to me.
The truth is this. In an insurance policy, you don’t EVER pay yourself interest. It is ALWAYS paid to the insurance company, while leaving your money untouched and growing. You control the lending situation, but you never pay yourself.
(You can learn more about how this works by checking out our Infinite Banking Tool Kit)
Check out this review on Amazon:
She mentions the 6% loan rate back to the general account of the insurance company but one time. The rest of the time she says “bank on yourself”. You are banking with the insurance company. There are convenience, privacy and “term-less” factors leaning toward using your policy, but with car loans at the same 6%, it’s nearly a wash if you set it up like she says: pay back on the same schedule like it was a car loan, plus a little extra. That insurance interest expense is ignored for 99.99% of the book. If she was licensed, it would be taken from her. Whole life with PUAR and no direct recognition is a great product. She and the others using “yourself” instead of “insurance company general account” are doing it no favors.
As you can see, we’re not the only one’s who think it’s a little misleading…
(Learn more about how policy loans really work)
Bank On Yourself Authorized Advisors
Pamela has created a network of “Authorized Advisors” that educate people on the use of dividend paying whole life insurance. Quite often, we are contacted by someone that is working with a “Bank On Yourself Authorized Advisor.” Before I explain what my observations are, here is a description of the authorization process according to Pamela Yellen.
The potential candidate must have at least one year of full-time experience in insurance and financial services and complete a preliminary application. If the candidate passes this first step (which includes meeting several additional requirements set up by NACFA – a training organization in which I have no ownership), they are invited to apply for membership in the NACFA/BOY MasterMind Group
Those applications are scrutinized according to multiple and proprietary criteria established by NACFA. Since 2009, only 5-10% of preliminary applicants have been accepted into the group
In order to call themselves Authorized Advisors, the agent must study for and pass an 8-module (currently) training with manuals, videos and tests that all require a 100% score to pass. It takes an average of two full days for advisors to complete the material, and the average advisor has to make 2-3 attempts at each module to pass it
Authorized Advisors are also expected to attend three hours of ongoing training tele-classes each month.
After talking with potential candidates that have met with these advisors, here are a few of my personal observations.
Many of these advisors have a limited knowledge of how the product really works, leaving potential candidates thinking they can use their money from the policy, and have it continue to grow as well. This is consistent with what we see in her marketing materials.
There is an inconsistency between these advisors. There are many highly qualified and respectable agents that work with Bank on Yourself, but many that seem to have a far lower level of proficiency in this concept.
Here’s how I see it. You might want to buy a towel-like product that does a good job absorbing more water than a traditional towel, but you don’t want to buy a piece of material that you think can prevent carpet stains from soda, effortlessly clean your counters, and never be ruined, only to find it’s just a little better than a regular towel… am I wrong? It’s not about the product, it’s often about the expectation.
The Bank on Yourself pitch seems to be over-hyped, and will under-deliver according to the information we’ve gathered.
Here’s another Amazon Review referencing Pamela’s book “Bank On Yourself”:
“I agree with all the reviews that criticize this book for its anecdotal, infomercial tone- the writing is more irritating than informative, and I was annoyed by all the come-ons that insist only the author’s website and stable of very special “Certified Advisors” can construct such an insurance policy for you. If it’s really so old and established, surely a fee-only, non-commissioned insurance broker, lawyer or other third-party professional could help you construct your own plan and not be confounded by the concepts in this book (as the author claims). For $15, I expect that I am paying for solid information I can use, not a drawn-out advertisement.”
Dividend paying whole life insurance has been around for over 200 years. Now granted, its not well understood, and not often sold in your best interest, but it’s not new territory. The Bank On Yourself advisors aren’t the only ones that get it… we think we have a pretty good idea of how it works too 
The Truth About Whole Life Insurance
Now let me wrap this up. A properly structured whole life insurance policy has a lot of value. I personally own 3 policies. It is not, however, an unheard of strategy that banks “don’t want you to know about.” It’s a way to keep your money safe, earn competitive growth, and shelter your dollars from taxes. Within that, you have the ability to collateralize your policy, and borrow money from the insurance company at very competitive interest rates. By doing so, you will avoid being subject to interest rate changes by the federal reserve, much like Nelson Nash did in the 80′s (more on that in our interview with Nelson Nash). It provides great protection against future tax changes and interest changes that are inevitable.
(If you want to learn more about how dividend paying whole life insurance works, I recommend checking out our life insurance resource page, and seeing if it is something that fits with what you are looking for.)
This review of Bank on Yourself does a good job at summing up my point:
“Let me start by saying that I’ve been happy with the whole life policy I bought (against ‘expert’ advice) 22 years ago. Compared to the stock market hits I’ve sustained in 2001 and 2008, it’s been a steady, reliable performer, adding to my net worth… So, although I’m not anti-whole life, I also feel it’s not the panacea the author describes. It should be one part of a diverse investment portfolio, the majority of which should still be in traditional stocks/bonds/etc. This book is simplistic, and if you don’t read carefully, it can be misleading in its pitch to sell insurance.”
Your comments are welcome.
Jake