Brandon Roberts

One of the long-standing criticisms regarding whole life insurance is that fact that distributions are often made through policy loans, which bear interest. The common discussion goes something like, “and you can’t even have your money; instead the insurance company makes you borrow it so they can charge you interest on your money.”

I’ve always found it fascinating that people bring this topic up as a way to rail against whole life insurance. In large part because it’s only about 25% true, but more so because it’s either an intentional or ignorant (intentionally ignorant) way to keep your eyes focused on the magic while the truth is in operation behind the scenes to make the magic happen.

Still though, I did say 25% true and I do mean that. And to give credit where credit is due, the nay-sayers at least got part of it right, and often times they know that one quarter of the argument better than licensed agents do.

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The other day I happened upon a piece that MSN Money reposted telling me (and you) what I (we) needed to know about whole life insurance. The piece is horrendously bad, but if you really want to read it, you can find it here—just don’t take anything it says seriously or as fact.

You’ll notice that the article really doesn’t say anything about whole life insurance loans and the truth is my beef isn’t with the article. Well, at least not for today. Maybe sometime in the future we’ll go back and count the errors Neda Jafarzadeh made. It’s truly sad that US News would green light such an erroneous piece of “information.” But we have other things to discuss.

I don’t typically spend much time on the comment section of news articles. Though I freely admit they tend to be the most entertaining section of the most news articles. Luckily one comment caught my eye as I quickly scrolled down the page about ready to close the tab. A comment from one AgainstGovernmentWaste who noted:

“Whole life insurance is the pay day lender of the middle class.” ~ Dave Ramsey

Oh boy!

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Indexed universal life insurance is another strong contender to whole life insurance for the purpose of accumulating wealth and generating retirement income through life insurance. If you need a primer on how indexing works, you can find that here. To explain the concept in 25 words or less, we’ll simply say that it’s a product designed to use stock index movements as a means to determine the credited interest rate on a universal life product. And if you need help understanding the basic mechanics of universal life insurance, that post is here.

So since indexed universal life insurance vies for your precious retirement-building-dollar, we figured we’d ask the same question we asked of whole life insurance just last week. How doe the income change as the assumed rate of interest changes.

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We’ve discussed whole life dividends a good bit at the insurance pro blog. We’ve also compared a lot of other insurance company stats in the past, and will continue to do so in the future. One such comparison is the effect a changing dividend has on projected income. This is important because it helps us determine who is the safer bet as defined as the company whose product is more reliable in the income projection side.

We live in no delusion about the fact that a policy illustration is merely a tool used to sketch the general function of the policy. It makes no promises regarding actual performance (unless we are looking at the guaranteed column). Still many, us included, use income projections to evaluate policy expenses overtime and dividend policy—remember, we can’t categorically declare non-direct recognition superior to direct recognition we have to look at specific company policy.

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We love paid up additions. That has never been much of a mystery around the Insurance Pro Blog. And we get a lot of questions about paid-up additions. The one questions that by far sticks out the most involves the variation in loads among various carriers. So in the interest of making this somewhat more readily available (though trust us, we’re more than happy to receive your emails so keep them coming), we figured we’d compile a quick reference guide for paid-up additions loads.

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It’s no big secret that we think whole life insurance is pretty awesome. Hopefully, most of you realized we were just being cheeky on our podcast last week when we declared that it sucked (though we don’t think it’s the answer to all the world’s problems).

We often receive questions regarding which company has the best whole life products. After giving this subject careful consideration, the time has come for us to make an official list. You’re very welcome!

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You can find the latest Whole Life Dividend Analysis here.

Whole life dividends are commonly reviewed and compared among companies. For the most part, all we see are current year rates compared. On the rate occasion, someone might bring up the average dividend interest rate among carriers over a certain time period—most often 20, because the people in marketing vaguely remember something about sufficient sample sizes from the one elementary stats class they took in college, problem is they’ve misapplied the rule.

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