The debate over dividend recognition with participating whole life insurance policies has been raging for about three decades. For most of that time, it's a debate that existed only in the annals of the life insurance industry. At least until just a few years ago.
What happened a few years ago to bring it to the forefront? Well, a savvy marketer from New Mexico (who shall remain nameless because she doesn't need our help with promotion) decided that using the debate as a marketing weapon was a good idea.
Thus spawned the countless conversations we now have with people who've read certain books, blog posts etc. proclaiming that policies from companies that use non-direct recognition of dividends are always superior to those policies from companies that use direct recognition.
We'd be okay with that sort of characterization if it were actually true.
But as is usually the case with whole life insurance, it's just not that simple. There are few scenarios that fit into an always category.
And the debate over dividend recognition (direct vs. non-direct) is no exception.
In fact, we sell policies that use non-direct recognition and we also sell plenty of policies that use direct recognition.
As usual, our answer on which is better…it depends. Listen the episode to get a more detailed explanation and of course more of our commentary.