It’s no big secret that we think whole life insurance is pretty awesome, even though we released a podcast last week declaring that it sucked. Hopefully most of you caught onto our general cheekiness and also learned that we’re not fanatical about the product, i.e. we don’t think it’s the answer to all the world’s problems.
Given this, we often receive questions regarding what company’s whole life products are best to buy. We’ve spent some time carefully approaching this subject. Inevitably, though, we knew the time would come for us to lay down our thoughts and make an official list.
First, a Little Explanation
We have to be very clear here, we are not declaring this list the only carriers from which you should ever buy whole life insurance. No not even close. Instead, this is our list if the carriers to whom you should look if you plan to purchase whole life insurance designed to maximize cash value and use the policy as part of a low risk asset strategy/retirement income play.
We’ll come back to this point in the end as there may be some notable omissions.
The 2013 List
The list consists of 7 carriers for whom we’ve determined—after much deliberation and policy design for prospective clients—are the top contenders for giving you the most potential cash value bang for your incoming premium buck. This list is in alphabetical order.
Also commonly referred to as One America, which is the parent company’s name, American United Life manufacturers a competitive—although somewhat quirky—whole life product. It’s non-direct recognition making it popular among the Infinite Banking die hards, and it also includes a unique declining paid-up additions load. A feature I’m sure they are proud of, but we’d contend this is actually counter productive as it creates a serious incentive to delay paid-up additions payments, which will decrease overall cash value growth potential. Time lost can never be regained.
Like most of the old mutuals, a company colloquially referred to more commonly as the Guardian, has an extremely long and annoying official name. For Guardian it’s sometimes a little more important to differentiate. As they began a little over 150 years ago as the Germania Life Insurance Company, but dropped that namesake during World War I for obvious reasons. They also have to contend with another life insurance company based on the Caribbean, an industrial manufacturer based in Michigan, and a very well known media company based in the United Kingdom when it comes to name recognition.
Few companies are as dedicated to the use of cash value life insurance as an asset as the Guardian. In fact, they own a web site dedicated to the cause, and paid a lot of money to develop a sales tool to compete with the likes of LEAP® and Circles of Wealth® to help their agents articulate the benefits of owning whole life insurance.
Our only word of caution regarding the Guardian is watch their career agents closely. They are in love with Guardian’s L99 whole life product. This product is rather death benefit focused and lags Guardian’s much stronger 10 Pay whole life product when it comes to cash accumulation and income generation. Their 10 Pay product is designed to accept paid-up additions beyond 10 years (a wonderful feature). In order to do this, the policy has to be properly blended to open the modified endowment contract premium higher, but this is an easy policy design for intermediate to advanced skilled agents.
You won’t see Guardian strongly recommended by most independent agents for various reasons. We work with them, and include them in our recommendations as we truly feel they are a strong contender for cash accumulation strategies. They are direct recognition, but they pioneered the concept, and certainly don’t let it drag them down too much.
When it comes to size and stellar financial ratings, MassMutual has it going on. Commonly referred to within Northwestern Mutual circles as their biggest threat, MassMutual has a super competitive product, and incredible industry reputation.
Non-direct recognition and one of the industries highest current dividend rates makes them appear really great on paper, and they have the historical performance to nullify any questions regarding the possibility of their being a top contender is a fluke.
Surprisingly, as a company, they don’t spend nearly as much time as some other companies on outwardly promoting whole life as an asset class. They have a number of brochures that highlight the benefits of whole life as a college funding tool, and wealth transfer vehicle, but their efforts are more here and there than a concerted and focused attempt like some others.
Despite this lack of highly honed direction, their product is top notch.
For years MetLife was sort of blah company. They had the whole snoopy thing going for them, which helps when it comes to branding, and as we know branding is the refuge for the weak minded. But they always appeared somewhat lost when it came to identity.
They didn’t really seem excited to jump on the trend wave and embrace guaranteed universal life insurance, nor have they showed any interest in building a competitive universal life product.
They dabbled a bit with the variable annuity business, built a decently competitive product and actually attracted a lot of money to it, more so because of their name and large distribution network.
Despite being a demutualized public company, they’ve kept their participating whole life product, which is a very rare move. But they were often ridiculed by the true blue mutuals for both being a public company and for having a rather lackluster whole life product.
And then something changed.
Then they rolled out this product called Promise Whole Life, and suddenly it looked like Snoopy wanted to play whole life insurance with the big boys. We have it on pretty good authority that they designed their Promise 120 product specifically to edge Northwestern out on price, touché Snoopy, touché.
And then something changed, again.
MetLife underwent another renaissance just this year when they rolled out three new whole life products all focused on shorter payment periods and better cash performance. We honestly didn’t expect a lot out of them, but knew the products were new so we had to place them into the rotation of evaluated companies. Wow were we surprised.
Their paid up at 65 whole life product is an incredible income generator. And their 10 Pay, though much more restricted with respect to available design features vs. Guardian and MassMutual, is no slouch.
We’ve been told that Met spent some time recruiting executive talent to once again be a strong contender in the whole life insurance space. What we’ve seen so far would indicate they made some very good hiring decisions.
We know some of you are going to raise an eyebrow at this. Northwestern Mutual made the list? The company at which we constantly poke fun? Yup, they did. And there are some very good reasons why.
First, let’s be clear about something. Our contention with Northwestern is less about them functionally as a company, and more about their undeserved sense of self-excellency and self-importance. Their cult-like atmosphere and belief that NML could never be beat out by another company, especially some of those smaller boutique types that actually manufacturer really great products, is especially annoying due in large part to my own character idiosyncrasies (i.e. some of us very much believe that numbers matter more than company kumbayah BS).
Putting aside the fact that many of their agents tend to be intellectually dishonest with themselves, Northwestern doesn’t manufacture a bad product. It may not typically be the best as evidenced by our personal review of the products available, but its certainly no where near the worst, and Northwestern at least holds the notion of whole life as a strong low risk asset as an important feature to the product.
Here’s the other thing, and I really wish every other carrier in the industry would send someone to Milwaukee to study this Northwestern jewel.
They have incredible customer service.
And I don’t just mean they are good at it. I mean like holy cats I love having to call them for something. They may not have written the book on how to train agents to be less obnoxious, and they may not have written the book on how to build the absolute best whole life product. But they certainly did write the book on how to excel at customer service, and I’d implore other carriers to read it.
Ohio National is a company that we adore and dislike almost in equal parts. They actually manufacture a really great product for cash accumulation purposes. And we’d love to be able to show people what it can do, unfortunately we can’t.
Whoever built their policy design (aka illustration) software was either pressed for time or got fired halfway through and they decided to go with what they had. To put it in more direct terms, their design software sucks.
Additionally annoying are strange limitations on paid-up additions that seem extremely arbitrary, though we’ve been reassured and have in practice discovered these limitations are circumvent-able. Still it’s extremely difficult to part with several thousand dollars of your money each year on a company for whom the agent/broker can only say, “trust me it works out better than this in practice.”
One big red flag we’ll note here. This company, and many of its agents are in love with their Prestige Max product. They like to suggest that it was designed to be maximum (i.e. MEC) funded without requiring the agent to do any tweaking. On top of that, it comes with this great “preferred loan” provision that reduced the policy loan interest rate to increase your potential income generation.
Sounds great, but a lot like Guardian and their strange love of one product that really is only so-so for our purposes, so too does Ohio National have a better product they usually aren’t telling you about. It’s their Prestige Xcel Plus (and the plus is crucial as that’s the product that can be blended) product. It’s a nasty product to design due to Ohio National’s terrible design software, but that’s where you want your money going if you’re doing this for cash accumulation and eventual income generation.
We remain amazed at Penn Mutual. Their career force is sitting on one of the best whole life products for cash value accumulation we’ve seen and no one there seems to be aware of this fact. The product is incredibly flexible, and has the most solidly built income-generating features of which we are aware.
Instead, most of their career agents are busy talking about guaranteed universal life insurance, and indexed universal life insurance. There’s nothing wrong with that, and indexed universal life can certainly be a strong contender for life insurance as an asset class, but their products aren’t as superlative in either of these categories (used to be but aren’t any more) as they are in the whole life space.
I suspect someone has figured out the superior strength of their whole life contract as Blease data shows us the vast majority of their whole life sales come from brokers and not their career agent sales force—a very unique result when compared to the other mutual companies with a career agent system.
Their paid-up additions rider is far more flexible than anyone else on the list, making those old worries about being committed to too large an outlay (something that has followed whole life for years) pretty much insignificant when designed properly.
And that’s the List
Call it the lucky seven if you wish. These are the companies for whom we’d be most comfortable placing anyone’s money if cash accumulation is the key goal. There are some companies for whom people might feel we’ve snubbed. Truth is we’ve looked at them all and made this determination after much deliberation and real life comparing for prospective clients.
If a company isn’t on the list its either because they tend not to focus their whole life product on cash accumulation or they simply don’t have a product that we’ve ever seen compete well against these seven.
[texthighlight color="blue-vibrant" ]Would you like help with setting up a policy for cash accumulation purposes? Contact us and we’ll be happy to help you out.[/texthighlight]
We’re sticking with reporting these companies in alphabetical order and not in order of who we think is the best and the worst. The reason is simple, different circumstances place them in different order.
We don’t always find that one company is always on top, and so we can’t categorically declare one better than the other. We can only point out who among all the possibilities tends to come out near the top.
In the future, we might get a little stricter in our process and cut it down to a top five or maybe even a top three. For now, we wanted to answer the question: of all the possible carriers, whom would be okay to look to for the purpose of focusing on cash accumulation?
We will be updating this list each year, so if we find that we need to make an addition or subtraction, we’ll do just that. For 2013, these are our top contenders for whole life insurance when focusing on cash accumulation or income.