COOL CARS AND THE POWER OF CASH VALUE LIFE INSURANCE
I’m John Boyd, better known as “The Cool Car Guy.” For nearly two decades, I helped people across the country buy, sell, trade, lease, and finance vehicles through my licensed car dealership, CoolCarGuy.com. Now, I’m relaunching the CoolCarGuy.com website as a classified ad and directory platform, along with a YouTube channel, to showcase cool cars.
During my time owning a car dealership, I discovered something that most people—and even financial experts—aren’t talking about: a smarter, more powerful way to finance your vehicle purchases and other major expenses.
The Secret the Banks Don’t Want You to Know
Let’s face it: most Americans finance their cars. Right now, Americans owe $1.626 trillion in auto loan debt, according to the Federal Reserve Bank of New York, accounting for 9.1% of American consumer debt. The average used car loan debt exceeding $26,000. That’s a staggering amount of money flowing into the pockets of banks, who charge hefty interest to finance a vehicle. On average, consumers pay $5,833.38 in interest over the life of a typical used car loan and almost $4,500 in interest a new car loan.
The car dealers and bankers have trained people to focus on the purchase price of a vehicle or better yet the monthly payments, but the real money grab is happening in the financing. You think you’re getting a good deal, but by the time you finish paying off that loan, you’ve lost thousands of dollars in interest payments.
Here’s a fact that should wake you up: according to R. Nelson Nash in his book Becoming Your Own Banker, “34.5 cents of every disposable dollar paid out is interest.” Think about that for a second. If you’re the typical American, over a third of your after-tax income is going straight to banks, mortgage companies, credit card companies, and other lenders. While books have been written on focusing on how to get the best price for a vehicle, the majority of people are getting whacked with interest payments on the back-end.
So, how did I come to know all this? I stumbled upon a little-known but incredibly powerful strategy, often used by those in the know—billionaires, banks, and yes, even estate planning attorneys who don’t just advise it; some of them practice it. This strategy involves leveraging the cash value of life insurance to make purchases.
How your purchase and loan is structured is far more important than the price of the vehicle. Over the years, I’ve seen clients use various methods to finance vehicles, from second mortgages to borrowing against 401(k)s. However, one of the best strategies I’ve encountered is using policy loans against cash value life insurance. This method offers a powerful way to finance not just vehicles but any major purchase.
Disclosure: I am a licensed life insurance agent in both New Mexico and Colorado, with access to multiple life insurance companies offering products designed to build cash value. Please note that eligibility for these products varies based on factors such as age, health, premium payments, and cash value accumulation. Each individual’s situation is unique, and the ability to qualify for specific policies may differ.
This content is provided for informational purposes only and should not be construed as financial or insurance advice. For personalized guidance and to discuss your specific circumstances, please feel free to contact me directly. Alternatively, you may consult another qualified financial professional.
Why Cash Value Life Insurance? And Why Are We Told to Avoid It?
We’ve all heard the advice from financial “gurus”—”buy term and invest the difference.” But the reality is, most people will “buy term and spend the difference.” These “gurus” have made millions telling Americans to follow this cookie-cutter approach, but here’s the truth: that advice keeps the financial system exactly where the banks want it—where you’re in debt, and they’re in control. What’s more, many of these “gurus” direct you to their “preferred vendors” for financial services, earning commissions and advertising fees from the companies they partner with. In the end, it’s just another way to keep the system working in their favor, not yours.
The issue with term life insurance is clear: only about 2% to 3% of these policies ever pay out. That doesn’t mean term insurance isn’t valuable—it’s often a great option when you’re working, especially if you have access to an inexpensive group policy through your employer. A personal term policy can also be useful during specific life stages, like when your kids are growing, you have a mortgage, or other debts that need coverage, as well as final expenses.
However, as people get older and premiums rise, many can’t afford to keep their term policies, leading to policies lapsing and creating a windfall for insurance companies. Meanwhile, 100% of people die, but very few term policies ever pay out. This is why whole life insurance was created—it builds cash value and offers guarantees that policy owners can actually use.
Whole Life Insurance Was Created Because Consumers Demanded It
Most people don’t realize this, but whole life insurance wasn’t created because insurance companies thought it was a great idea—it was born out of consumer demand. In the early days, many people were frustrated with term policies because they would lapse as people aged and premiums became unaffordable. Consumers felt cheated after paying premiums for years, only to get nothing when they needed it most.
Because of this, insurance companies developed whole life insurance as a response to these frustrations. It provided a solution where policyholders could keep their coverage for life while also building cash value they could access. It’s a time-tested product that has been around for centuries and was created not to benefit insurance companies, but to meet the demands of people who wanted a policy that lasted a lifetime and offered real value. It’s a crucial detail that many financial “gurus” conveniently leave out.
So why do so many “experts” tell you whole life insurance is a bad idea? Because it takes you out of their game.
The 1987 Tax Law Change: A Game-Changer
In 1987, the rules changed. The government, nudged by bankers and Wall Street lobbyists, decided that if you bought a single premium whole life policy, it would now be classified as a Modified Endowment Contract (MEC). This change meant you could no longer enjoy the full benefits of this strategy without major tax penalties. Why would they do this? Simple: A heavily funded life insurance contract was just too good for the average person—it allowed them to become their own banker, taking business away from traditional lenders.
Before the 1987 law change, savvy individuals could dump $100,000 or $1,000,000 into a policy and immediately borrow against it to buy cars, rental properties, or even fund businesses. They could earn 5.5% on their money while paying only 4.5% on the loan—effectively making money while they borrowed. It was a direct threat to the banking system because they weren’t getting those loans. People were using these policies to create their own private banks!
The Game is Rigged, But You Can Still Win
So, what did the banks do? They trained an army of “experts” to go around telling everyone that whole life insurance is a bad investment. If it’s so bad, why did they go to such lengths to change the tax laws? The answer is simple: they don’t want you to know how powerful this tool really is.
Today, you can still leverage this strategy, but the rules are tighter. You can’t fund it with a single premium anymore; you have to spread out payments and structure the policy correctly to avoid MEC classification. It’s not as easy as it once was, but it’s still incredibly effective.
Building Wealth with Cash Value Life Insurance
Setting up this strategy isn’t necessarily simple. It requires careful planning, policy structuring, and sometimes, a bit of patience. If you want to own a policy on yourself or someone else, there are qualifications to meet, including underwriting requirements such as medical exams. But here’s the key: You can own policies on others—children, grandchildren, or anyone you have an insurable interest in—and still control the funds.
A properly structured policy can be fully funded in as few as seven years with a reduced paid-up contract. You could buy a 10-year paid-up policy and never have to make another premium payment while maintaining both a death benefit and a pool of cash to borrow against. And guess what? You’re not limited to just one policy; you can have multiple policies working for you at the same time.
Not All Policies Are Created Equal—Choose Wisely
Not every life insurance policy or company is the same. Some use non-direct recognition methods, allowing your full cash value to continue earning interest even when you borrow against it, while others reduce dividends or interest based on the loan amount. Understanding these differences is crucial to maximizing the benefits of this strategy. Additionally, it’s important to be aware that policies can come with varying fees, interest rates, and conditions for borrowing. These factors can significantly impact the effectiveness of this strategy and should be carefully evaluated when selecting a policy.
When choosing a policy, you also need to consider the insurance company’s structure—mutual companies (owned by policyholders) vs. stock companies (owned by shareholders). Each has different priorities and benefits. If you’re going to take advantage of the Cool Cars for Life strategy, you need to use the right policy with the right company.
Why the Rich Use This Strategy and You Should Too
Think about this: If whole life insurance is such a bad investment, why do banks and billionaires invest millions in it? What do they know that you don’t? The truth is, cash value life insurance has been around for centuries, far longer than the IRS and modern tax systems. It’s a time-tested way to manage money that gives you control, guarantees, and growth.
Consider this: As of June 30, 2023, U.S. banks collectively held $184.6 billion in Bank-Owned Life Insurance (BOLI) cash value, according to reports from 3,153 banks across the country. If banks and billionaires are so heavily invested in life insurance as a financial strategy, doesn’t it make you wonder why they’re simultaneously pushing a narrative for the masses to avoid it? They understand its potential for secure growth and tax advantages—benefits they’d rather keep for themselves.
Control, Flexibility, and a Smarter Way to Finance
By using this strategy, you gain immediate control over your finances. You can pay cash for a car, take immediate title, and your vehicle becomes an asset, not a liability. There’s no credit check, no structured loan payments dictated by the bank, just a loan you control with guaranteed interest rates and a death benefit.
The Real Cost of Traditional Borrowing
While owning a business might offer some tax benefits for mileage or depreciation, most people face a very different reality: high interest rates and endless debt. Why stay stuck in that system when a better way is available?
The Numbers Don’t Lie
Let’s break down the real cost of traditional car loans. Take a $30,000 loan with a 6% APR for 72 months. Your monthly payment is $497.19, and by the end of the term, you’ll have paid $5,797.44 in interest alone. While the 6% APR reflects an annualized interest rate on a declining balance, the cumulative cost of borrowing tells a different story. Almost 20% of the loan amount goes just to interest payments over the life of the loan. This is how lenders and car dealerships present rates in a way that makes financing sound more affordable than it truly is.
The Cost of Borrowing Over a Lifetime
Consider how many cars you’ll buy in your lifetime. Many people with bad credit pay interest rates between 15% and 21%. If you purchase five vehicles over the next 30 years and pay an average of $5,000 in interest per vehicle, that’s $25,000 lost to the bank—enough to buy a car outright. Families financing multiple vehicles could see this number double or triple. That’s real money that could be building your wealth instead of disappearing into interest payments.
The Financial Benefits of Cash Value Life Insurance for Purchasing Vehicles
1. Lower Net Interest Rates: If you have $100,000 in a whole life insurance policy earning a guaranteed 4% and you borrow $40,000 against it at 4.6%, you still earn 4% on the remaining $60,000—or, with some policies, on the full $100,000. This results in an effective loan cost of just 0.6%. When you factor in compounding growth on the full cash value, your actual cost of borrowing can be close to zero.
2. No Credit Check or Application Required: Unlike traditional loans, borrowing against a life insurance policy doesn’t require a credit check, approval, or down payment. It’s as simple as a phone call or filling out a form. You control the loan terms, not the bank.
3. Death Benefit Pays Off the Loan: If you pass away with an outstanding loan, the death benefit covers it. Your heirs receive the vehicle title, minus the loan amount from the death benefit—providing financial security without leaving a burden.
4. Flexibility and Reusability: Once you repay the loan, the cash value is available to borrow against again, creating a revolving source of capital without the need to re-qualify. While it takes time to build up cash value, the benefits of having this financial flexibility far outweigh the initial commitment.
Chasing Dollars While Losing Thousands
Most people focus on the vehicle’s purchase price rather than the total cost of borrowing. With interest rates as high as 21%, a $20,000 vehicle could cost you an additional $12,464 in interest alone. The emphasis on the sticker price distracts from the real costs—high interest rates that drain your wealth over time.
Additionally, obligations on car loans or leases don’t just disappear if someone passes away; the debt often remains with the estate or co-signer. This is why having a strategy like cash value life insurance can provide peace of mind and financial security for your family.
Why More People Don’t Use This Strategy
Many people believe they can’t afford cash value life insurance, but the truth is they can’t afford not to consider it. Starting with an annual contribution of $3,000 to $5,000 could result in $30,000 to $50,000 in guaranteed cash value over ten years—along with a tax-free death benefit that continues to grow. You don’t need to be wealthy to utilize this strategy; you just need to think differently about how you manage money.
The Long-Term Benefit of the Cool Cars for Life Strategy
Few people maximize the benefits of cash value life insurance, but the wealthy know its power. The top 1% control 22% of all cash value life insurance in force. A billionaire buying $1.2 million in life insurance each month knows something most don’t. Why? Because cash value life insurance has stood the test of time since the late 1700s. It’s a strategy that allows you to access cash quickly and efficiently, without losing 34.5 cents of every after-tax dollar you earn to banks and lenders.
“If you’re interested in learning more or want to see if this strategy is right for you, feel free to reach out.”
Cool Cars for Life: A Personal Strategy That Works
I’ve used this strategy personally to buy vehicles and generate quick profits. With cash value life insurance, there are specific parameters and requirements for obtaining a policy, and a licensed life insurance agent can help guide you through the process. If I’m affiliated with a company when you contact me, I’ll provide an illustration to help you understand how this strategy can work for you.
THE DISCLAIMER
Cash value life insurance guarantees vary by insurance carrier and are based on the claims-paying ability of the insurer. Dividends paid by a mutual insurance company are not guaranteed and past performance is not indicative of future results. Products, product features, and riders vary by state, and some issuers may not be available in all states.
This material is provided for general informational purposes only and does not constitute investment, insurance, or tax advice for any individual. The strategies discussed involve risks, including potential tax consequences if the policy is not properly structured or funded. Readers are encouraged to consult with a licensed financial, insurance, or tax professional to evaluate their specific situation and determine the appropriateness of any strategy discussed.
By using this website, you agree that you are responsible for conducting your own investigation of the material being presented. Cool Car Guy, Inc., John Boyd, CoolCarGuy.com, and Cool Cars For Life will not be held liable for the use or misuse of the opinions or information provided here.
