Here’s the top dividend-paying whole life insurance companies (by rate)

November 30, 2015 - Money

If you’re considering whole life insurance as an investment product — there are a few numbers you need to know before getting into it.

The first is how much you’ll have to pay into the insurance policy every year (or monthly) — that’s the premium. The second piece is the value of the insurance policy. The third piece is the dividend rate — this is arguably the most important piece because it determines how quickly or slowly you get into making actual money from whole life insurance.

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Whole Life Insurance Dividends Options

So what should you do with your dividends? What you choose to do with the dividends has significant impact on your investment and you have three options with the dividends you get from your whole life insurance.

1) GET PAID: You can choose to have the dividends paid out to you. If you choose this, you’ll have cash coming in every year from the premiums you’re paying. How much you’ll receive depends on the amount you’re insured for, how much your premiums are and the dividend rate for that year.

If you choose to have dividends cashed out, then your policy doesn’t grow (but doesn’t get smaller), your premiums remain the same and the annual dividends that are paid out rely on the rate as opposed to increased dividends from an increased investment (see #3).

2) PAY DOWN PREMIUMS: You can direct your dividends to pay down your annual premiums. If you go with this choice, over time (usually several years) you’ll pay off your whole life insurance and no longer have to pay premiums. Your whole life insurance won’t grow, but it won’t get any less either and you’re no longer shackled with having to pay premiums. Or how my agent put it:

When you use dividends to lower future obligations, your outlay each year is less because (insurance company) is sending you the dividends rather than reinvest. So yes, you’re technically not locked into a higher premium.

3) RE-INVEST This is what your agent wants you to do. Use your dividends to reinvest into buying smaller insurance premiums. The upside, as your agent will emphasize, is that by reinvesting your dividends to buy more whole life insurance, your policy will not only grow, but so will the cash value.

I’ve been told that you cannot choose two options, it’s all in on one of the three so select wisely.

History: The best dividend paying whole life insurance companies

As I’m sure you’ve noticed, the key piece to a successful whole life insurance investment are the dividends received. The dividends you get determines when and how much you ultimately make over time. Before you even get to the point of choosing one of the above options, you should go in knowing the history of the company’s dividend rate.

Of course, dividend rates fluctuate and change every year, but know a company’s dividend rate history and look for patterns in how much they’ve paid out for their whole life insurance products. Below is a list of the most well-known whole life insurance companys that have paid a dividend. From Mass Mutual to MetLife to Guardian, here are the dividend rates for each since 1988 broken down by decade:

WHOLE LIFE DIVIDEND RATE: 2010s
Company 2010 2011 2012 2013 2014 2015
General American 5.5 5.5 5.5 5.25 4.9 4.9
Guardian 7 6.85 6.95 6.65 6.25 6.05
John Hancock 5.75 5.75 5.55 5.55 5.55 5.3
Manulife 6.35 6.35 5.85 5.85 5.85 5.85
Mass Mutual 7 6.85 7 7 7.1 7.1
MetLife 5.75 5.5 5.5 5.25 5.1 5.1
New England Financial 5.25 5.25 5.25 5 5 5
New York Life 6.11 6.11 5.8 5.9 6 6.2
Northwestern Mutual 6.15 6 5.85 5.6 5.6 5.6
Phoenix 6.1 5.6 5.45 5.15 5.15 5.15
Sun Life 6.6 6.1 5.6 5.4 5.5 NYA*

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WHOLE LIFE DIVIDEND RATE: 2000s
Company 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
General American 7.75 7.75 7.5 6.8 6.55 6.3 6.05 6.05 5.75 5.75
Guardian 8.5 8.5 8 7 6.6 6.75 6.5 6.75 7.25 7.3
John Hancock 7.8 7.8 7.8 7.8 6.75 6.25 6.25 6.25 6.25 6.25
Manulife 8.5 8.5 8.5 8.25 8.25 8 7.75 7.5 7.5 6.85
Mass Mutual 8.2 8.2 8.05 7.9 7.5 7 7.4 7.5 7.9 7.6
MetLife 7.6 7.6 7.35 7.1 6.6 6.6 6.25 6.25 6.25 6.25
New England Financial 7.75 7.75 7.5 7.25 6.5 6.5 6 6 5.5 5.5
New York Life 7.9 7.9 7.32 6.79 6.79 6.79 6.79 6.79 6.79 6.14
Northwestern Mutual 8.8 8.8 8.6 8.2 7.7 7.5 7.5 7.5 7.5 6.5
Phoenix 7.61 7.61 7.61 7.61 7.61 7.61 6.5 6.5 6.5 6.1
Sun Life 8.75 8.75 8.5 8.2 7.55 7.55 7.55 7.4 7.4 7.15
WHOLE LIFE DIVIDEND RATE: 1990s
Company 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
General American 10.52 10 10 9.15 8.6 8.6 8.2 8.2 8.2 8
Guardian 11 10.5 10.25 9.75 9 8.5 8 8.5 8.75 8.75
John Hancock N/A N/A 9.5 9.2 9.2 8.25 8.25 8.25 7.95 7.8
Manulife 10.5 10.25 9.5 8.5 8.5 8.5 8.5 8.5 8.5 8.5
Mass Mutual 10.5 10.5 9.95 9.45 9.3 9 8.4 8.4 8.4 8.4
MetLife 10 10 9.45 8.8 8.25 8.25 8 7.6 7.6 7.6
New England Financial 10.65 10 9.65 9 7.75 8.75 8.25 8 8 8
New York Life 10.25 9.75 8.9 8.05 8.5 8.25 7.9 7.9 7.9 7.9
Northwestern Mutual 10 10 9.25 9.25 8.5 8.5 8.5 8.5 8.8 8.8
Phoenix 10 9 9 9 9 8.65 8.65 8.65 8.65 7.61
Sun Life 9.25 9.25 8.75 8 7.25 6.75 6.75 7.5 7.5 7.5

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WHOLE LIFE DIVIDEND RATE HISTORY 1980s
Company 1988 1989
General American 10.52 10.52
Guardian 12.00 11.50
John Hancock N/A N/A
Manulife 11.00 10.75
Mass Mutual 11.35 11.15
MetLife 10.00 10.00
New England Financial 11.00 10.90
New York Life 10.25 10.25
Northwestern Mutual 10.25 10.00
Phoenix 10.00 10.00
Sun Life 9.50 9.50

You never know what’s going to happen, if you did, you’d be wealthy by now. So if you’re going to pay premiums for whole life insurance and have that investment in your portfolio, go in with as much information as you can. Determine what’s the most important aspect of a whole life insurance policy to you (the policy or cash value or both?), know the dividend rate and choose based on what you consider the most important.

Having this key dividend data will make your life decision a lot easier. For more about life insurance and whether it makes sense for you, check out these other resources:

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