Whole life insurance is considered as cash value or permanent life insurance that offers benefits for the rest of your life. You can find some whole life insurance companies that provide dividend paying insurance policies, meaning the policies can pay dividends.
These policies also called participating whole life insurance allow you to share the profits generated by the insurance company. This page explains why you should choose dividend-paying whole life insurance.
Dividend-paying whole life insurance
Whole life insurance policies give you a guaranteed annual cash value increase. This guarantee depends on a worst-case financial outcome situation that is projected by your insurance company.
Therefore, your insurance company usually accounts for the death claims paid, expenses used to run the company, and premiums collected every year-end. If it performed better than its worst-case results projection, then they can pay you a dividend.
There is no guarantee on the dividends, though many whole life insurance companies have been paying them for years. Reinvesting dividends can be the way you can make more money.
You see, the reinvested dividends can increase both your death benefit and cash value in the most effective way possible, especially when you purchase a low amount of death benefit. Aside from this, keep in mind that these dividends are tax-free income that you can use in retirement.
You can also use the dividends to pay all or part of your annual premium, let your dividends grow with interest, or even take your dividends through a check or cash. Learn more about dividend-paying whole insurance companies at www.insuranceandestates.com/top-10-best-dividend-paying-whole-life-insurance-companies/
What to look for when choosing a dividend whole insurance company
You can find a variety of whole life insurance companies on the market, but the best ones offer unique services. Besides offering dividends yearly, they should also have the below requirements:
Non-direct recognition
The ideal whole life insurance company should provide non-direct recognition policies. This means the insurance company should pay you dividends regardless of whether you take a loan against your policy or not.
There is nothing more fulfilling than accessing your cash value so that you can use it the way you want to. So when you get a long non-direct recognition policy of whole life insurance, you can use the money while it’s still increasing in your account.
Financial strength
The whole life insurance company should be in a good financial position on the market. Hence, you should always check the strength of the company by going through the rankings provided by rating service providers. In this way, you can have the peace of mind knowing that the whole life insurance company can pay your claim in the future.
Flexible paid-up additions rider
It’s important for the dividend-paying whole life insurance company to offer flexible paid-up additions. In this way, you can have more death benefit and cash value over time.
While some companies may provide this flexibility when it comes to paying for it, others don’t. therefore, make sure that you choose only the whole life insurance company that offers this flexibility.