Best Interest Rate for Whole Life
- Thread starter jasonten
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TevisVerrett
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Mornin' Jason:
I JUST answered your question in another post. . . take a look:
http://www.insurance-forums.net/for...ng-force-whole-life-policy-nmfn-t67497-2.html
Take care, hope this helps!
Whole life policies do not pay an interest rate per se. They do pay a degree of guaranteed interest and then (if participating) a dividend if the company declares one for the year (those who do generally pay dividends have a long track record of paying dividends every year for well over a century, even those who have abandoned the product for new business).
If we think for a second in terms of equivalents to your interest rate question though, you have to also understand that this so-called "interest" is not fixed meaning it can AND DOES vary from year to year when the dividend scale changes.
Additionally the dividend scale's dividend interest rate as reported by life insurers lacks universal agreement on what exactly the insurer pays the "interest" rate on. There are several facets to this, but the big important take away is that one cannot compare the declared rate of one company to another as they do not generally mean the same thing.
While it's true that MassMutual currently has what appears to be a very high dividend interest rate of 7.1%, this doesn't mean that they in fact pay more dividends per policyholder than any of their competitors or that you will in fact have a higher cash value because of this dividend interest rate.
I'll argue that the best way to compare dividend strength among insurers is by looking at the way dividend rates have changed over time. You can read our article on whole life insurance dividend rate variation at our site if you'd like.
MassMutual's performance is certainly very good among the companies that focus strongly on whole life insurance.
In addition...
Whole life insurance policies are not universally the same across life insurers. What some whole life products will allow you do to differs more or less favorably from one insurance company to another so simply having a higher "interest" rate does not necessarily mean you'll end up with more money.
If we think for a second in terms of equivalents to your interest rate question though, you have to also understand that this so-called "interest" is not fixed meaning it can AND DOES vary from year to year when the dividend scale changes.
Additionally the dividend scale's dividend interest rate as reported by life insurers lacks universal agreement on what exactly the insurer pays the "interest" rate on. There are several facets to this, but the big important take away is that one cannot compare the declared rate of one company to another as they do not generally mean the same thing.
While it's true that MassMutual currently has what appears to be a very high dividend interest rate of 7.1%, this doesn't mean that they in fact pay more dividends per policyholder than any of their competitors or that you will in fact have a higher cash value because of this dividend interest rate.
I'll argue that the best way to compare dividend strength among insurers is by looking at the way dividend rates have changed over time. You can read our article on whole life insurance dividend rate variation at our site if you'd like.
MassMutual's performance is certainly very good among the companies that focus strongly on whole life insurance.
In addition...
Whole life insurance policies are not universally the same across life insurers. What some whole life products will allow you do to differs more or less favorably from one insurance company to another so simply having a higher "interest" rate does not necessarily mean you'll end up with more money.
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I would like to know the differences between whole life and IUL. I just read "wealth beyond wall street" and they are praising IUL's for opening businesses and borrowing money from it without impacting the balance. Then i came across a site where BROKERS lean more toward whole life. I actually own a small whole life policy but since life insurance seems to be the only tax free vehicle, I am considering more of it. Now the lending part of the book has me intrigued but I would still need some of your all's expertise.
Check out the insurance pro blog, it has more info than I can type in this post and explains it better to boot. The Insurance Pro Blog
Bottom line - whole life has been around for a long time and is proven to work as a "bank on yourself" vehicle. Indexed life is still relatively new, and the insurance company has the keys to control how the policy performs. Whole life has strong guarantees, indexed life looks better in an illustration. Indexed life scares me a bit because the insurance company can change so many variables in the policy that affect how it performs. Read this article about what's currently happening with some UL policies:
Surprise: Your life-insurance rates are going up
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