Marshall Family Banking System Case Study: In-Force vs Original Illustration (Part 6)

The moment we realized “liquidity” isn’t a theory

Thirteen years ago, Lucas and I thought we were being responsible by storing a lot of our capital in gold and silver. It felt safe. It felt timeless. It felt like the kind of move people make when they’re thinking long-term.

And then we needed cash.

Not someday. Not “in retirement.” We needed liquidity for real life—building a business, making decisions, moving when opportunities showed up. And in that moment, we learned something the hard way: an asset can be valuable and still be a terrible place to store accessible capital.

The spot price was down. We had to sell at the wrong time, and that’s when the question got painfully simple:

Where do you store capital so you can access it when you want it—without losing control, without begging permission, and without being at the mercy of timing?

That question is what led us to build what we now call our family banking system—and in this Part 6 case study, we’re pulling back the curtain again.

In this Marshall Family Banking System Case Study: In-Force vs Original Illustration (Part 6), Bruce Wehner and I walk you through the real mechanics: premium paid, cash value, loan availability, in-force illustrations, original projections, and what actually changed over time.

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What you’ll learn from this Marshall Family Banking System case study

If you’ve ever looked at a whole life insurance illustration and wondered, “Can I trust these numbers?” you’re not alone.

And if you’ve ever asked:

• “What happens to cash value when you take a policy loan?”
• “Do you still earn dividends with a policy loan?”
• “How do I compare an in-force illustration vs original illustration?”
• “When does a family banking system break even?”

…then this article is for you.

This is Part 6 in our series, and it’s designed to help you understand how a family banking system works using real policy performance—not theory, not hype, and not marketing claims.

Here’s what you’ll gain by reading:

• A clear picture of family banking system with whole life insurance and why we use it
• What our numbers look like (in round terms) after years of funding
• The difference between cash value vs loan value (and why that matters)
• Why in-force results can differ from the original illustration
• How dividends changing over time can materially impact long-range projections
• Why we’re still committed—and why this is about control, not “rate of return”

What is a family banking system?

A family banking system is a capital control system—built to give your family a dependable place to store cash, grow it steadily, and access it on demand.

Bruce and I both see this with families every day: the biggest stress isn’t usually “investment performance.” It’s capital access. It’s the ability to make a decision when life happens—without panic, without selling assets at the wrong time, and without losing future opportunity because you couldn’t move quickly.

For us, our family bank is built on whole life insurance cash value from a mutual company, structured intentionally for:

• Liquidity and access
• Predictable growth (guarantees + non-guaranteed dividends)
• A growing death benefit for multi-generational wealth
• The ability to borrow against the policy while the cash value continues to compound

And I want to say this plainly: this is not an investment.
This is savings. This is capitalization. This is a financial foundation from which you can invest with confidence.

That distinction matters.

Why we started: liquidity, then legacy

We started this journey because we needed liquidity. Later, we realized something deeper: a family banking system is not just about “having cash.” It’s about building a structure that can last.

After my near-death experience, our perspective on money and estate planning shifted permanently. We began asking a different question:

What would it look like to leave our children more than money—while also leaving them a financial system that works?

That’s where the multi-generational aspect of this became central. Lucas said it simply in the episode: it’s for now and for the future.

Family banking system case study: our “13-year” system with a reset (1035 exchange)

One important clarification: when we say “13-year update,” it’s because the concept has been in our family for 13+ years.

But the specific policies we’re showing in this case study are newer because we did a 1035 exchange—moving cash value from one policy to new policies. That move effectively hit a reset button in terms of what you’ll see on the current policy timeline.

So while the family banking system is 13+ years in, these particular contracts are five policy years into the current structure.

That matters, because a lot of people look at year 1–5 and get discouraged. In early years, policies have costs, and break-even in whole life insurance doesn’t happen immediately.

But “break-even” isn’t the only goal—and really it’s not even the most important measurement.

Premium paid vs cash value: the real numbers (round terms)

Let’s make this tangible.

At the time we pulled these figures (Watch the YouTube video to see all the numbers):

• We had paid a little over $300,000 in total premium into the two policies
• Our total cash value (if we paid off the outstanding loan) was roughly $282,000
• The amount we could access as a loan (if we paid off the outstanding loan) was roughly $260,000
• We currently had a policy loan of about $48,000

With that loan in place:

• Cash value showed lower (because of mechanics like premium refund timing and reporting)
• The available loan value was lower (because part of the cash value is collateralized by the loan)

Here’s the key takeaway for your own family banking system with whole life insurance:

Cash value vs loan value in a family banking system

Cash value is the pool. Loan value is how much the company will allow you to borrow against that pool.

When you take a policy loan, you are not “withdrawing” your cash value. You’re using the insurance company’s money and collateralizing your cash value.

That means:

• Your cash value can keep compounding
• You can repay the loan and free up borrowing capacity again
• You are not interrupting the internal growth the same way you would if you pulled money out of a bank account

Bruce made this point clearly: banks stop paying you interest on money you remove. With policy loans, the system behaves differently because you’re borrowing against the reserve, not pulling your capital out.

“Do you still earn dividends with a policy loan?”

In our case, yes—because our company is non-direct recognition.

That means the company does not reduce the dividend crediting due to the presence of a loan. (Some companies do recognize the loan and adjust dividends; those are direct recognition companies.)

Bruce’s point was balanced, and I agree: it’s not that one is “good” and the other is “bad.” There are tradeoffs. There are no solutions—only compromises.

But you need to understand which kind you have, because it affects how policy loans show up in performance over time.

How a family banking system works year-to-year: the numbers keep rising

One of the most encouraging things we’ve seen is simple: The amount we can borrow has continued to increase year after year.

A family banking system is not built for bragging rights. It’s built for usability.

The question isn’t “What’s the highest theoretical projection?”
The question is “How much capital can I access when I need it—without breaking my plan?”

When you consistently fund a system, you build a growing reservoir of capital that you control. This is why we call it an “emergency/opportunity fund.” It’s there for emergencies and opportunities.

In-force illustration vs original illustration: why our numbers changed

Now let’s get to the core of this Part 6 case study:

Marshall Family Banking System Case Study: In-Force vs Original Illustration (Part 6) is about comparing the illustration you get when you start… versus the illustration you get after real years of performance.

Here’s what we showed:

• The original illustration used the dividend crediting rate at the time the policy was issued and projected it out to age 121.
• The in-force illustration used the current dividend crediting rate (after multiple increases) and projected that forward.

In our case, the company had increased dividends multiple times since the policy began. That changed the long-range projection significantly.

Why illustrations change (dividends change)

Bruce explained it simply: insurers don’t “predict” future dividend rates; they take today’s rate and project it forward.

So if the rate changes, the projection changes.

And in recent years, as interest rates rose from the near-zero era, many mutual companies increased dividends because their bond portfolios began earning more.

That’s why our in-force looked better than the original in long-range years.

The compounding effect: what changed by age 75

To show the compounding power, we compared age 75 projections on original vs in-force.

The annual dividend projection by age 75 moved from around $70k to $102k on the updated projection. That’s not a small difference.

And when we looked at cash value and death benefit, the differences were meaningful—hundreds of thousands more in projected cash value and a noticeably higher projected death benefit.

Now let me be very clear (because this matters for integrity and expectations):

• Dividends are not guaranteed.
• These are still projections.
• But the comparison illustrates how a relatively small change early can compound into big differences later.

And that’s true whether you’re talking about compounding growth… or compounding debt.

Break-even in a family banking system: what it means and what it doesn’t

People love to ask: “When do you break even?”

It’s a fair question. And it’s also an incomplete question.

Break-even can mean:

1. Annual cash value growth exceeds the premium you paid that year
2. Total cash value equals total premium paid

In our system, we’re entering the phase where the cash value growth in a given year can exceed the annual premium—especially when you look at the combined system.

That’s encouraging.

But Bruce made a strong point: break-even isn’t really the point. If the goal is to mimic the banking function—capital access, control, stability—then what matters most is building the reservoir.

In the Nelson Nash coaching world, there’s a phrase: “The answer is premium.” In other words: capital solves capital problems.

What’s inside an annual statement: dividends, PUAs, and how death benefit rises

We also looked at an annual statement to show what’s really happening under the hood.

A few important takeaways:

• Dividends can come from different components (base policy, paid-up additions, etc.)
• Once a dividend is declared and added, that value is locked in (it doesn’t get clawed back)
• When dividends buy paid-up additions, they can also purchase additional death benefit

Paid-up additions rider (PUA) and compounding

This is one of the reasons we like dividends being added back into the policy: you get compounding on compounding.

Could someone take dividends out as income? Yes. But for building a family banking system for generational wealth, we prefer to keep building the asset.

Direct vs non-direct recognition: what to know

Here’s the simple version:

• Non-direct recognition: dividends are credited the same whether you have a loan or not
• Direct recognition: dividends can be adjusted based on whether there’s a loan

Again: not “good vs bad.” Just tradeoffs.

But it matters because if someone is constantly borrowing and never repaying, a direct recognition structure may diverge from original projections more dramatically.

Annual premium payment and “premium refund”: a detail most people miss

We also talked about why we generally encourage annual premium payments.

One reason is lower administrative cost. Another is something many people don’t realize:

If you pay annually and you pass away early in that policy year, there can be a premium refund component because you prepaid for coverage you didn’t “use” for the full year.

And this is part of why cash value snapshots can fluctuate slightly across the year depending on the reporting moment.

The core mindset shift: this is about control of capital

Lucas said something I want to reinforce: people are trained to shop based on projected rate of return.

But with a family banking system, you’re building something different:

• A stable place to store capital
• A system you can borrow against
• A structure that can serve opportunities
• A long-range tool that can move wealth forward through generations

If you want the highest short-term return, you’ll always be tempted to chase the next shiny thing.

If you want control, certainty, and usable capital—the family banking system is a different lane.

What this Part 6 case study proves

This Marshall Family Banking System Case Study: In-Force vs Original Illustration (Part 6) shows a few simple truths:

• A family banking system is primarily a capital access strategy, not an “investment.”
• Cash value vs loan value matters—because usability matters.
• Policy loans don’t require you to liquidate your asset, and in many designs you can still compound while borrowing.
• Illustrations are snapshots, and the in-force illustration vs original illustration comparison helps you see how changing dividends can impact long-term projections.
• You don’t need perfect understanding to start—but you do need a commitment to building capital over time.

If you’re building a legacy, the question isn’t “How do I optimize a spreadsheet for the next 12 months?”

The question is: How do I build a system my family can rely on for decades?

Listen to the full episode

If you want the full breakdown—including how we track our numbers, how the loan shows up, what the in-force illustration reveals, and why we’re committed long-term—go listen to the full episode or watch the YouTube video:

Marshall Family Banking System Case Study: In-Force vs Original Illustration (Part 6)

Podcast: Play in new window | Download (Duration: 1:22:21 — 94.2MB)

Subscribe: Apple Podcasts | Spotify | Android | Pandora | Youtube Music | RSS | More

In this episode, Lucas, Bruce, and I walk through:

• Why we started (liquidity first, then legacy)
• Premium paid vs cash value and borrowing capacity
• What happens when you take a policy loan
• Direct vs non-direct recognition
• How dividends changed and why projections shifted
• What we see as the long-term compounding power of this system

And if you’re exploring how to implement a family banking system in your own life, you can learn more by listening to the full podcast episode and then taking the next step when you’re ready.

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