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It's November and that means it's time for most major U.S. life insurer who have any significant focus on whole life insurance sales to announce anticipated dividends for next year. We've already heard from a few life insurers and we are awaiting announcements from the others.
We figured we'd take a moment to discuss what these announcements mean, as well as offer up some commentary on the state of whole life insurance dividends going into 2019.
Last week I was having an email conversation with a member of our audience. As part of an email that I sent out (to those lucky enough to be on our subscriber list), I asked a question and I got quite a few responses. It’s a very nice thing to have a list filled with …
Universal life insurance is really not that interesting, but you’d never guess that by reading pretty much anything that gets published about it in the mainstream press. In fact, it has been featured in the WSJ more than a couple times in the last several years. Each time, the story gets a little worse. I’ll …
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Today's episode is all about the evils of working with companies that turn out to be major disappointments. Who are we talking about specifically?
Well, we're not gonna name names here. Not today.
Seven years ago the Insurance Pro Blog started as a resource to "demystify life insurance."
My original purpose was to spread the good word on life insurance--specifically whole life insurance and eventually universal life insurance--as a means to draw attention to myself as a licensed life insurance producer.
While the site works for that purpose and we regularly hear from people who found us while researching the topic for a personal purchase of life insurance, we attract more attention from industry professionals than we do from those who simply want to buy life insurance.
After nearly 7 years of ignoring that fact, we decided that we could do better.
So...
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First, I feel the need to provide context for this post. 99% of our clients want to use cash value life insurance as an asset class. Which means people need to distinguish whole life insurance from indexed universal life insurance.
Yes, there are other products.
But none that we feel are worthy of consideration.
Which is better?
What are the pros and cons of each? Why would a person use one versus the other?
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Every year, usually sometime in November, life insurance companies that sell participating whole life insurance report their plans to pay dividends to policyholders. When the insurance companies talk about it, they often refer to as their whole life insurance dividend rates.
Generally, the companies make their announcements by noting the sum of dividends–expressed in dollars–they intend to payout to those holding a whole life policy.
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Life insurance enjoys some unique tax benefits, but it also faces limits imposed by legislation we know as TEFRA DEFRA and TAMRA. These pieces of legislation established specific guidelines as to what you can and cannot do with life insurance.
Each of these pieces of legislation creates rules that agents, policyholders, and people looking at whole life or indexed universal life insurance (or any UL product) should know.
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Using whole life insurance as a place to store cash and to accumulate wealth works well for people who have a decent amount of discretionary income and realistic expectations. Most life insurance companies teach their agents that using a 10 pay whole life insurance policy is one of the best ways to accomplish the goal of accelerated cash value growth with a limited number of payments.
But it's not quite that simple. Making that assumption is a little bit of an oversimplification and causes a good bit of confusion with people looking to buy a whole life policy with the primary purpose of accelerated cash value accumulation.
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In our last post and podcast episode, we compiled the 5 Reasons Whole Life Insurance is a Bad Idea…According to the Internet. To show you that we are fair and balanced when it comes to the pros and cons, we thought it appropriate to discuss some of the scenarios or circumstance where whole life is legitimately not a great idea.
