These are the stories of four wealthy, well-known people who share a similar story of how a key asset played a significant role in creating their wealth and legacies. There are many more.

Jim Pattison

Jim Pattison, Canadian business magnate, investor, and philanthropist.

In 1961 when Mr. Pattison opened his first business, a General Motors automobile dealership franchise at the corner of 18th & Cambie in Vancouver British Columbia, he persuaded the Royal Bank of Canada to lend him $40,000, which was significantly more than the bank’s lending limit. To complete the funding, Mr. Pattison sold his house, assigned the $7,000 of cash surrender value of his life insurance policy to the bank, and gave.a personal guarantee for that loan as did his wife. GM loaned Mr. Pattison $190,000 for the preferred shares in his company, Jim Pattison Ltd. He said:

“If it wasn’t for cash values of my life insurance policies, the bank may have decided against granting me the necessary capital to begin my first business endeavour. I am certainly an advocate of life insurance as a vehicle to help a young person take advantage of business opportunities that may present themselves in the future. It happened to me; it can happen to others. I am grateful for the living benefits of life insurance”

Revenue of The Jim Pattison Group now exceeds $14 Billion with over 49,000 employees.

Walt Disney

In 1955 Walt launched Disneyland in California which may have never opened without the leverage capabilities of his life insurance policy. Unable to secure a bank loan through traditional forms of financing to build Disneyland, Walt scraped together his own financing and collaterally borrowed from the cash value in his policy to help make up the capital required to start construction of the infamous theme park.

Disneyland opened in 1955 and hosted more than 3.5 million visitors in its first year. It continues to be a resounding success.

Ray Kroc

In 1955 Ray Kroc opened his first McDonald’s store, By 1961, he had bought out the McDonald brothers. In the early years when McDonalds was not the financial success it is today, Kroc borrowed money from two life insurance policies (and also his bank) in order to cover the salaries of his key employees and to build an advertising campaign around the soon to be famous mascot, Ronald McDonald.

McDonald’s grew to more than 700 restaurants in the next 10 years.

Ted Rogers

Ted Rogers, the founder of Rogers Communications, held over one hundred million dollars in dividend-paying whole life insurance in family-owned private corporations. These policies saved him millions in corporate tax for years. After his passing in 2008, these insurance policies were paid in a matter of weeks, creating liquidity to help offset massive capital gains taxes with tax-free capital. 

Access To Capital
While the prospect of reduced tax and increased family wealth is great, these individuals also like to know they can access the cash if an opportunity or emergency happens. That is where the cash value of these structures plays a role. The tax-exempt cash value remains an asset on the balance sheet, but the growth is not exposed to the annual taxation that other company assets are subject to. This cash value can be leveraged in order to preserve it from tax. Each of these business icons each did so. 

The popularity of whole life insurance was so great that governments implemented tax rules to make them less attractive in 1982 to make government RRSPs more attractive. Despite doing so, whole life insurance remains the world’s most sound, stable and versatile asset class in history.

These icons, and many more icons, ignored the advice of life insurance critics, and acquired whole life insurance.  Had they not, their legacies may not have happened.  Perhaps its the critics who are the dummies. Next time a critic puts down whole life insurance compare the net worth of the critic to the wealth of these icons.

Its time to rethink your thinking. Its time to rethink whole life insurance.

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12 Aug 2021

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