Page 26 - Know-So Money, Hope-So Money, Retirement Secrets Wall Street Doesn't Want You to Know

commercial banks were never supposed to do. Before we knew it, they
were swimming in mountains of debt they couldn’t pay back and the

whole system came down.

Obviously, banks can easily become over-leveraged, and sometimes in
very risky investments, like those that led to the recent financial and
banking crisis of 2008, and the Great Depression of the 1930s. FDIC
insurance is critical for safety and protecting depositors from a financial

meltdown like happened in the 30s. However, as we saw in 2008, even
these measures were not enough to prevent another catastrophe.
Why the Legal Reserve System is Different

First, Legal Reserve life insurance companies are legally prohibited
from speculating with your money. Unlike banks, markets or any
other financial system, 100% of their investment of your money must,
by law, be invested in the very safest monetary vehicles available.

Most goes into long-term investment-grade bonds, treasuries, and
extremely conservative real estate and other types of commercial
developments.

Second, life insurance companies are required by law to maintain a

greater than one-to-one ratio of their capital to their liabilities. If they
bring in a dollar, unlike banks, they cannot lend nine, or six, or three, or
even one dollar. They can lend out (invest) only what is left over after
the reserve fund is set aside.

A large percentage of each premium dollar calculated by actuaries for

each company goes into the policy owner's reserve fund. This policy
reserve (Legal Reserve) fund is a liability to the life insurance company.
The fund is established as a way of determining or measuring the assets
the company must maintain in order to be able to meet its future

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