Posted on June 5th, 2025

by Laura Martin

2.5 min read

If you think banks make their money by storing yours safely behind vault doors and offering free lollipops—think again.

Banks and credit unions are masters of a well-known but rarely explained financial strategy: arbitrage. In simple terms, they borrow at low interest rates and grow at higher ones. They leverage your deposits (yes, yours!) to earn solid, consistent returns—then toss you a few crumbs in the form of 0.01% APY.

So, here’s the million-dollar question (literally): Why not do what they do?

🧠 The Strategy the Wealthy Use (That You Probably Haven’t Heard Of)

High-net-worth individuals and financial institutions often use max-funded Indexed Universal Life insurance policies (IULs) as a strategic financial tool. It’s not just about life insurance—it’s about tax-advantaged growth, liquidity, and protection.

Here’s how it works:

You fund the IUL above the cost of insurance (max-funded) to maximize the cash value.

That cash value grows tax-deferred, often linked to an index like the S&P 500, with zero market-loss exposure.

You can access the cash value tax-free through policy loans—without triggering capital gains or early withdrawal penalties.

Wait—banks and credit unions own billions in these IUL-like assets? Yep. According to bank-owned life insurance (BOLI) filings, over 3,800 U.S. banks hold more than $190 billion in cash value life insurance.

🧩 Why It Works (And Why It’s Not Mainstream)

Let’s be honest: most financial advisors won’t mention this strategy because:

1. They don’t specialize in advanced life insurance design.

2. It doesn’t generate recurring fees like AUM (Assets Under Management).

3. It sounds too good to be true—until you see how institutions themselves use it.

But when designed properly, a max-funded IUL can outperform traditional savings vehicles, offer principal protection, and still give you access to your funds. Plus, your money is compounded tax-free, not just tax-deferred like a 401(k).

🧪 Bottom Line: Think Like a Bank

Banks are in the business of making your money work harder than you do. It’s time you turned the tables.

If you're a business owner or high-income earner tired of market roller coasters, tax surprises, and watered-down “safe” returns, it’s time to look at what the banks are doing with their money.

Because the real secret isn’t in the bank… it is the bank.

Prefer to chat? Text 'BANK' to (832) 885-2067. Available: 📅 Monday–Thursday: 8 AM–5 PM (PST) 📅 Friday: 8 AM–12 PM (PST)

*Living Life Defender all-inclusive flagship product is an exclusive life insurance product designed for and distributed by Premier Financial Alliance. The owners and financial professionals at Vandj Life are proud affiliates of PFA and are appointed with National Life Group. This permanent life insurance policy offers both protection and the potential for cash value growth. Issued by Life Insurance Company of the Southwest®, a member of National Life Group®, it represents the next evolution in our shared commitment to financial security.