Wednesday, August 18, 2010

The Truth About Participating Whole Life

On June 4th 1963, a life insurance company issued a 29,000 participating whole life policy to a client name Joe at age 27.  It was then projected to accumulate 44,651 total cash value by age 73 based on the company's dividend scale.  Joe paid his annual premium of 527.22 every year for the past 46 years and the only withdrawal was 174.73 in dividend values which occurred April 1971.  On June 4th 2009, his annual policy statement read as shown:

Table One
Annual policy Statement as of 6-04-09

                    Death Benefit
                        Base policy death benefit                                         $29,000
                        Paid up additions death benefit                                 113,560

                        Total death benefit                                              $142,560

                    Cash Value
                         Guaranteed cash value                                            $20,494
                         Cash value of paid up adds.                                      92,552

                         Total cash value                                                  $113,046

                          Net premiums paid from
                          6-04-63 thru 6-04-09                                              $24,077

Was Joe's decision to purchase a whole life policy over 46 years ago a good decision?  Some consumers believe whole life is an obsolete product that pays poor return.

Why then do many critics of whole life support the buy term and invest the difference theory?  My thought is that the common belief that a good stock or mutual fund should outperform a whole life policy, has run its course. This is what everyone was saying and now those who had their money in the market have watched there life savings dwindle and no one knows where the bottom is now.

This is an idea that many rich have used for over 200 years.  Whole life has literally been around since our country's inception.  Now that the market has proven its unreliability, whole life is returning as more than a safe investment, but rather a high returning investment.

Now I cannot guarantee your policy's performance, but I can show you how these policies are able to perform so well when compared to other strategies like:

  • Whole Life vs. bank CDs
  • Whole Life vs. savings bonds
  • Whole Life vs. Term Insurance + Invest
  • Whole Life vs. Guaranteed UL
  • Whole Life vs. UL + Invest
  • Whole Life vs. Variable

Whole life insurance is one of the least understood forms of life insurance.  It is not an obsolete product nor a rip-off.  It can be the best type of insurance for some and if purchased at an early age and held long term, the true cost of coverage has proven to be less expensive than other types of insurance.

You can have your own illustration simply by emailing the address below.  Just give your date of birth, zip, and amount of coverage.

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