Whole Life: Featuring Triple Guarantees on Premiums, Death Benefits, and Cash Value

Paul Pichie

10/17/2023 · 3 min read

Understanding Whole Life Insurance

Whole life insurance is a comprehensive insurance product that not only provides a death benefit to beneficiaries but also accumulates cash value over time. Its intricacies are vast, offering several options for policyholders, such as dividend payments, participation features, and flexibility in premium payments through “paid-up additions.” Let’s explore these key components to help you make an informed choice.

Dividend-Paying Whole Life Insurance

Whole life insurance policies can either be dividend-paying or non-dividend-paying. Dividend-paying policies essentially share the insurance company’s profits with policyholders in the form of dividends. These are not guaranteed but are generally paid out annually based on the insurer’s financial performance.

Participating vs. Non-Participating Policies

Dividend-paying policies can be further classified into “participating” and “non-participating” types. In a participating policy, you are entitled to share in the profits of the insurance company. When the company performs well financially, policyholders may receive dividends. These dividends can be substantial and offer a form of return on your premium payments.

Non-participating policies, on the other hand, do not pay dividends. While these policies may have lower premiums, they lack the potential financial upside that comes from dividend payments.

Utilizing Paid-up Additions

Paid-up additions (PUA) are mini whole life policies that you can purchase using dividends or additional premium payments. These paid-up additions also accumulate cash value and can even earn future dividends, thereby compounding your benefits. One attractive feature of PUAs is the ability to use them to offset future premiums. By accumulating enough PUAs, you could essentially reach a point where your whole life policy requires no further premium payments.

Receiving Dividends in Cash

Another option for utilizing dividends is to receive them in cash. For policyholders who don’t wish to reinvest their dividends into their policy, a cash payout can provide an additional income stream. This feature provides liquidity and financial flexibility, especially in retirement years.

Payment Flexibility Through Paid-up Additions

The use of paid-up additions also offers the benefit of payment flexibility. By purchasing PUAs, you can reduce or even eliminate future premium payments. This can be particularly beneficial in retirement, during which income may be less predictable.

Quote and Apply™

Whole life insurance is now seamlessly incorporated into our Quote and Apply™ software platform. In addition to Term Insurance, Variable Universal Life (VUL), Indexed Universal Life (IUL), Universal Life (UL), Guaranteed Universal Life (GUL), Funeral Care, and Long-Term Care (LTC), we have expanded our offerings to include Whole Life insurance. Now, you can get quotes and complete applications for Whole Life policies with just a few clicks—Quote. eSign. Done. Our industry-leading multi-carrier quoting and eApplication platform empowers agents and their clients to drive leads and applications around the clock. Gain a competitive edge against direct writers and captive distribution channels with our comprehensive and user-friendly system.

Conclusion

Whole life insurance is more than just a death benefit; it’s a flexible financial tool with various options to suit different needs. Whether you’re interested in participating in your insurance company’s profits through dividends, or you value the financial flexibility that comes with paid-up additions, whole life insurance offers a plethora of choices to customize your policy to your unique circumstances.

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