Mutual Trust Life Best Option To Use Dividends

Mutual trust life best option to use dividends

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Updated Nov 29th, 2019

Top 7 Whole Life Insurance Companies For Cash Value

Let’s not waste any time; here are our ratings for the best whole life insurance companies for cash value:

Each of the companies from the previous list has an explanation as to why we picked them, so make sure you read all of the company reviews.

However, if all you would like to get is a quote click: we will get you the best whole life.

Mutual Trust Life Insurance Review

In this article, we will not go over costs and prices of whole life. But if you want to get an idea of cost and prices then check out: Whole Life Insurance Rates

All of the companies we picked are Dividend Paying Participating Policies.

We will go over why we picked participating policies. But first, we need to make sure you understand some of the basics.

Also, in our article, we will go over:

  • What Is Whole Life Cash Value?
  • What Builds Cash Value?
  • How Can I Access Cash Value?
  • Always Chose A Participating Policy
  • More Companies With Whole Life That Didn’t Make It 

Introduction

Let’s look at some of the basics first, so we understand what the building blocks of a good whole life insurance policy are.

What Is Whole Life Cash Value?

Mutual trust life best option to use dividends

Whole Life Insurance is permanent insurance with strong guarantees. It has a guaranteed death benefit, guaranteed premiums, and guaranteed cash value growth.

Cash Value builds inside of whole life insurance policies.

Top 7 Whole Life Insurance Companies For Cash Value

Imagine this cash value portion like a savings account, that you can access at any time. We say it is a savings account because the cash value will only go up. It never fluctuates up and down.

Cash value is what makes every whole life insurance a desirable asset for many people.

Related: Whole Life Insurance For Dummies

What Builds Cash Value?

There are two aspects on most whole life insurance policies that build cash:

  • The guaranteed rate of return
  • Non-guaranteed rate of return (or dividends)

The guaranteed rate of return is a fixed rate of return that each company guarantees to pay. This guaranteed rate doesn’t change for the life of the policy.

Whole Life Dividends Explained

As it doesn’t change, it helps limit your downside risk.

The non guaranteed rate of return is added on top of the guaranteed rate. And it is also known as dividends.

Mutual trust life best option to use dividends

You get a dividend when the company does well. Companies pay these dividends to participating policies.

Example:

MassMutual guaranteed rate is: 4% and their dividend is 2.2%.

This gives us a total dividend of 6.2%.

Also, this dividend helps the cash value inside of policy grow tax-deferred.

Get More Cash Value

Also, there are ways of getting more cash value out of every whole life insurance.

This concept has been illustrated in-depth in books like Infinite Banking and Bank on Yourself.

You can get extra cash value by getting more paid-up additions on your policy.

All of the companies we from our top 7 list have this paid-up additions feature.

Some companies call it “Paid-Up Additions” Rider or PUAR (see paid-up additions rider) other companies call it ALIR (additional life insurance rider).

Adding more cash value to a policy is called “overfunding” a policy.

You will need to determine if getting an overfunded whole life insurance is the right fit for you. We go over overfunding and give samples here: Overfunded Whole Life Insurance.

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Without overfunding a policy, there are whole life products that are designed to grow cash value faster.

10 Pay and 20 Pay Products

10 pay and 20 pay whole life policies are great for building cash value quickly.

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When we say “10 pay,” what we mean is the amount of time you need to pay for the policy. So a 10 pay would be done in 10 years, and a 20 pay in 20 years.

This works because a whole life insurance policy can be paid up.

This means that after a certain period, you do not have to make more premiums, but you keep the life insurance and cash value forever.

Some of the best products out there for cash value accumulation are 10 pay or 20 pay.

Top 7 Whole Life Insurance Companies For Cash Value

Which means you pay for 10 years and you are done.

These products are also known as Limited Pay Whole Life Insurance

How Can I Access Cash Value?

One of the important things that you need to understand is how you can access your cash value. The cash value in whole life can be accessed in many ways:

  • Loans
  • Distributions
  • Take out dividends as cash

The most common way of taking money out of whole life is through loans.

These loans do not have to be paid back.

Because the whole-life has a permanent death benefit if you die, your loan will be subtracted from your death benefit.

The reason that taking money out in loans is the preferred method is that when you take a loan out of a policy, you do not have to pay taxes on that loan.

Now that we understand some of the basics let’s see how we created our top 7 list.

How We Compare Cash Values & Pick The Winners?

Mutual trust life best option to use dividends

To find which company has the best whole life, we need to compare cash values properly.

We have run hundreds of illustrations to find out which company was the best. That’s how we build our top 7 list.

However, we cannot only compare the total cash value in a policy.

Mutual trust life best option to use dividends

There are many variables we need to consider to get the best whole life for cash value.

In our top 7 ratings, we compared all of the following variables:

  • Company Strength
  • Cash Value Performance
  • Current Dividend Rate
  • Income Performance
  • Direct vs.

    Non-Direct Recognition

  • Always Chose A Mutual
  • Historical Dividend Rate
  • Underwriting Standards

Some of the previous variables are easy to understand, but some others are not as obvious. So let’s go over a few.

Mutual trust life best option to use dividends

Income Performance

In reality, you always need to see how much income your policy can generate.

Taking money out of the policy is one of the most important aspects to consider. The reason is that not all companies perform the same when you receive income out of the plan.

Using income as well, you truly see how a policy performs. So let’s look at something that can affect your income.

Mutual trust life best option to use dividends

Non-Direct vs. Direct Recognition

There are two types of whole life insurance contracts:

  • Direct Recognition
  • Non-Direct Recognition

This is an essential concept that you need to understand when you pick whole life insurance.

This determines how loans in a contract affect a whole life policy.

And as we mentioned before, taking income out of whole life is one of the best ways to test the performance.

Without getting overly complicated, Non-Direct recognition will pay the same dividend even if you take money out of a policy as loans.

This is why Non-Direct recognition will illustrate more cash (income) coming out of a policy.

So you shouldn’t compare cash values alone, because even if a direct recognition company has more cash value, you will be able to take out less cash.

Here is a list of direct recognition and non-direct recognition companies.


Direct RecognitionNon-Direct Recognition
AmeritasOhio National
Country FinancialNew York Life
Massmutual*MassMutual*
Minnesota LifeMetLife
Mutual Trust LifeLafayette Life
Northwestern MutualForesters
Penn Mutual
Savings Bank Life of Massachusetts
Security Mutual
The Guardian
Thrivent

Non-Direct vs.

Direct Example

Let’s use MassMutual who (as far as we know) is the only company that can offer both direct and non-direct recognition contracts.

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This will help us understand how the cash value can change drastically when you pull money out of a policy.

 The following picture is a sample illustration.

We used the following variables in the illustration:

  • Male
  • Age 35
  • $500,000
  • Ultra Preferred (Best Rating Possible)
  • Paid Up At Age 65 (No More Premiums)

Also, we illustrate taking maximum income from the whole life starting at age 65.

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Whole Life Direct vs. Non-Direct Recognition

If you look at the previous image, in the last rows you will see the numbers of a whole life after 45 years.

What you need to notice is that there is more than a $95,000 difference between taking money out of a non-direct recognition vs.

direct recognition.

Non-direct recognition is what generated more money in the long run, even though the cash values were the same before taking income out.

Always Chose A Mutual 

In reality, the most valuable whole life insurance is sold by Mutual companies.

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Mutual companies will outperform the competition because the policyholders are part owners of the company.

Stock companies pay dividends to stockholders, and then the rest will go into the policies.

But mutual companies pay dividends directly to policyholders. These policies that get dividends are called participating policies.

So we always advise to chose mutual companies vs.

stock companies.

From our top 7 list, all companies are mutual companies.

Insurance Company Policy Flexibility - Mass Mutual & Guardian

Top 7 Whole Life Insurance Companies For Cash Value 

We want to help you pick the best whole life insurance for cash value growth and accumulation. So we created this list to help you narrow down the field to a few of the best.

The battle for the top spot was very hard to pick, but someone had to win.

Please note that this list changes every year and even more often as we gather or new data is released from the companies.

Our ratings are not only based on all the variables we described, but also on what company our clients pick as the best choice more often.

So here are our in depth reviews for whole life insurance for cash value accumulation: