Guardian or Penn Whole life

[pfg1]

I think several folks have made the point that you are trying to flesh out. And NO, future cash value is not dividend multiplied by the current cash value. Way more involved than that.
The key to maxing the growth is the design and funding of the policy. I think you are fine with any of those 3 designed properly. My personal choice is Penn. Others like Mass, and others Guardian.

 

[Purdue]

I think several folks have made the point that you are trying to flesh out. And NO, future cash value is not dividend multiplied by the current cash value. Way more involved than that.
The key to maxing the growth is the design and funding of the policy. I think you are fine with any of those 3 designed properly. My personal choice is Penn. Others like Mass, and others Guardian.

See, this is again opposite of what the other agent said that no dipping from the CV. If the expenses are taken out and then the dividend is declared, why is it not fully credited. Nobody seems to know and when I press, I get attacked, called an agent etc. It's your livelihood and I understand that but I am also investing my hard earned money and I deserve to know this. I also understand that you don't need to tell me for free. I am willing to pay a consulting fee to anyone who can help me understand this point. Please message me, if interested. Thanks

 

[Tahoe Ray]

See, this is again opposite of what the other agent said that no dipping from the CV. If the expenses are taken out and then the dividend is declared, why is it not fully credited. Nobody seems to know and when I press, I get attacked, called an agent etc. It's your livelihood and I understand that but I am also investing my hard earned money and I deserve to know this. I also understand that you don't need to tell me for free. I am willing to pay a consulting fee to anyone who can help me understand this point. Please message me, if interested. Thanks

This is from Brandon Roberts who is an expert on whole life and used to post here:

Whole Life Insurance Dividend Rates Exposed• The Insurance Pro Blog

This may help explain the disconnect of the declared dividend vs. the actual amount credited to your policy.

He has a lot of other great articles pertaining to whole life on his site as well.

 

[LGilmore]

Again to the OP, what face amount are you looking for? How old are you? How's your health? How long do you want to fund the policy? These are all factors, please answer.

 

[DHK]

Misrepresentation and Ignorance: A Dangerous Blend for Ethics

Whole life dividend rates

A third issue Kinder mentions is how agents describe whole life dividend rates. “Companies put out an ad in The Wall Street Journal saying ‘7 percent dividend,’ and now agents are saying that their policies are paying 7 percent. No, that's not how a dividend works. A dividend is not a rate of return on the cash values of the policy. Dividends are a surplus of earnings distributed to their mutual policy shareholders,” he said. “Agents should not be connecting the insurance company dividend to individual policy performance ... but it happens all the time.”

Dividends are distributed according to:
- Length of time the policy is in force (longer earns greater dividends)
- Underwriting criteria (standard gets lowest treatment; heavily rated and preferred rated policies get higher dividends)
- Current cash values ($100,000 cash values get higher dividends than $10,000 cash values)
- "Recognizing" a loan against cash values (for direct recognition policies)

Never buy a policy based on their "dividend rate". That's another form of "dividend selling" and it's stupid. Always ask 7% of what? THAT'S the key.


Brandon Roberts has a whole report on his site that you can request and it's very good - as @Tahoe Ray posted. You can request it here: The Insurance Pro Blog - Best whole life insurance

 

[Purdue]

Thanks for the information. I guess I have to be prepared to accept that the company may only credit the guaranteed rate and anything extra is a bonus. That is about 3.5%, may get 4% which is same as investing in bonds. Atleast, with WL, will have 3 to 4 times more amount DB protection. I guess, that's the way I have to look at it.

Penn and Guardian are bot direct recognition companies. Does recognition matter that much when it's time to take retirement income?

Dividends are classified as the return of premium and not subject to income tax. Shouldn't they also be not subject to loan interest?

 

[DHK]

Life insurance may be your asset, but the cash values aren't "yours".

Meaning: The cash values are securing the reserve for the death benefit. When you borrow from the life insurance company, you are pledging your cash values as collateral for that loan while you are alive... and the loan is repaid out of the death benefit proceeds when you pass away.

The uploaded/attached PDF will help provide you with additional information and clarification.

 

[Allen Trent]

Dividends are classified as the return of premium and not subject to income tax.

I don't believe that is 100% accurate. While dividends are not taxable at the time they are credited while the dividend stays within the policy (like a PUAR purchase with the dividend). They can be taxable eventually when you have taken out more from the policy than your cost basis investment into the contract. Some clients get a rude surprise in later years of a policy when they have chosen certain dividend options such as having the dividend pay down loans or having the dividend pay the premium on the policy or accumulate at interest. Basically, if you have depleted your own cost basis investment into the policy through withdrawals & surrenders or loan interest conpounded, you can indeed be taxed on dividends distributed from the policy

 

[Lloyds of Lubbock]

I don't think Penn or Guardian or any reputable whole life company has ever not paid a dividend.
Your cash values will be in excess of your guarantees.
Direct rec and variable loan interest rates both have their plusses and minuses but in reality
it should not alter your decision.
Guardian gives you an option to switch to a variable rate in the 10th year.
Penn uses a variable rate with direct rec.
You can always take your polcicy to a bank that does cash value loans and pay a market rate by taking a cash value backed loan.
Even if you choose a direct rec policy, you can borrow at current rates

 

[Purdue]

I don't think Penn or Guardian or any reputable whole life company has ever not paid a dividend.
Your cash values will be in excess of your guarantees.
Direct rec and variable loan interest rates both have their plusses and minuses but in reality
it should not alter your decision.
Guardian gives you an option to switch to a variable rate in the 10th year.
Penn uses a variable rate with direct rec.
You can always take your polcicy to a bank that does cash value loans and pay a market rate by taking a cash value backed loan.
Even if you choose a direct rec policy, you can borrow at current rates

People always tout that your money will be working in 2 places at the same time with cash value permanent life insurance. I don't see any positive spread here. At best, it's a wash, unless you borrow at 6% and are able to get 10% somewhere. I am not aware of any safe bets where I can get 10% or you have to be content that your premiums compounded without paying any TAXES (sorry said interest by mistake) all these years? That's the only advantage? This only makes sense if you have already maxed out your 401k,right?