This best whole life insurance review page was last updated 3/2020.
Disclaimer: Which dividend-paying Whole Life policy may be best for you will vary depending on your particular age, occupation, hobbies, and health situation. We are NOT one-trick-ponies. Our main value proposition is that we perform extensive analysis and anonymous shopping among the best mutual life insurances companies to find our clients the best whole life insurance policy.
All that said…
In the vast majority of situations, we are finding that Penn Mutual’s newly released “Guaranteed® Whole Life” product is greatly outperforming every other mutual insurance company’s dividend-paying whole life policy.
The base policy of Penn Mutual’s Guaranteed® Whole Life policy is one of the leanest and meanest around.
Click to see a whole life insurance rate chart with comparable costs for different dividend paying whole life insurance companies
How much does it cost for whole life insurance? Well that depends on a lot of factors like:
- Your age
- Your health rating
- How much coverage you want
- Which dividend paying whole life insurance company is offering the policy
The cost for the exact same $1,000,000 policy on a male age 45 rated preferred will vary substantially between the best whole life insurance companies (between $13,570 – $20,530 annually). Furthermore, the internal rate of return (IRR) of those premium dollars also has a wide range of variance between companies.
Keep in mind that this is only for a pure base whole life insurance policy without any term insurance rider or paid up additions rider (PUA) to streamline costs or enhance performance. Even so, Penn Mutual’s Guaranteed® Whole Life base policy has one of the lowest premiums of the group, as well as the strongest IRR for long term performance of their cash value and death benefit.
The underlying actuarial efficiency of Penn Mutual’s Guaranteed® Whole Life insurance policy is so important because underneath any cost-cutting or performance-enhancing riders, the base whole life policy at the core should have solid performance since it accounts for a significant portion of your total premium allocation.
Penn Mutual not only beats but often CRUSHES the competition when looking at comparable over-funded whole life insurance policy examples.
Click to see a comparison of max-funded dividend paying whole life insurance companies on a cash value chart
- Actual results will vary for each company depending on your particular age, health, and premium structure, but we’ve found Penn to consistently illustrate much better than their competitors in most cases.
- This example below assumes ten maximum-funded premium payments (we can often create further efficiency by designing a 7-pay or 8-pay policy).
- This whole life cash value chart is assuming today’s low dividend rate for perpetuity (watch an example of an actual historical dividend paying whole life policy from 1980 as rates rise and fall over the years).
Even when over-funding these whole life policies, you can see that Penn Mutual’s Guaranteed® Whole Life policy requires less total premium yet still produces a superior IRR than other competing dividend-paying whole life insurance policies. This is because the majority of these premiums are going towards purchasing paid up additions. As I fully explain in our detailed article about PUAs, paid up additions are like little mini whole life policies all paid up in one shot with a single premium and stacked onto your base whole life policy.
Since you saw that Penn’s Guaranteed® Whole Life policy has the best performance for a relatively low premium on its base whole life policy, it’s no surprise that the paid up additions have a similar actuarial structure.
Penn Mutual has one of the most flexible, comprehensive, and robust (PUA) Paid Up Additions Rider around, especially when used in conjunction with their term insurance rider.
Click to learn why Penn Mutual’s (PUA) Paid Up Additions Rider is more attractive than other whole life insurance companies
With Penn Mutual’s paid up additions rider, you only need to heavily-fund it once every 5-years to keep your PUA rider fully available so you can continue to max-fund at any time during the next 5-year window. And by “heavily fund it once evey 5-years”, I don’t even mean you need to do the maximum. With Penn you only need to pay HALF of whatever your maximum PUA payment is once every 5 years to keep your option open to pay the maximum for the following 5-years.
This half-every-5-years flexibility window gives you time to ride out most cycles and keep your full PUA window open.
As with most carriers, Penn has a term rider (called the Flexible Protection Rider) that allows you to keep the amount of necessary base whole life policy low and put the majority of your total premium towards paid up additions. As you can see from the two graphs below, the more PUAs you pay into your policy, the quicker the term rider is replaced by purely paid up whole life insurance (which also increases your overall cash value performance as well as your cut of future dividend pools.
To better understand how whole life works with the different riders for optimal performance, check out our very popular video complete with examples of optimally designed dividend paying whole life insurance.
Penn Mutual’s unique “Overloan Protection Rider,” can keep excessive whole life loans from imploding your policy.
Click to understand how installing this safeguard at no cost can help when using whole life for retirement
- You are at least 75 years old when the policy is set to lapse from excessive loans
- Your Penn Mutual Guaranteed® Whole Life policy has been in-force for at least 15 years
- Your total policy loan equals 99% of your whole life cash value
When all 3 happen Penn Mutual’s Overloan Protection Rider will automatically freeze that remaining 1% of non-loaned cash value to preserve a minimal amount of whole life insurance for your heirs. Doing so ensures the tax-exempt status of all your prior lifetime distributions (policy loans or withdrawals) so your whole life policy doesn’t lapse, and furthermore so you don’t get stuck with a huge tax bill in your golden years.
Here are the benefits of this unique whole life insurance rider according to Penn Mutual:
When looking at all the other whole life companies that offer dividend-paying whole life insurance, only two companies offer this sort of protection against excessive loans when using whole life for retirement. Even then, Penn Mutual is the only company that offers it when also applying a term insurance rider in conjunction with a paid up additions rider (PUA). The other whole life company only offers it with their 20-pay or 10-pay whole life product, which obviously will have much less premium flexibility.
Penn Mutual’s chronic illness rider is one of the most generous among other dividend paying whole life policies.
Click to understand how Penn’s chronic illness Rider turns their whole life policy into a hybrid life policy with living benefits
How do these living benefits work with the chronic illness rider on Penn’s hybrid life insurance policy?
Penn’s chronic illness rider allows to access a portion of your death benefit (over and above your cash value) each year for an amount not to exceed the lesser of:
- 24% of your death benefit (including your base whole life policy, any term insurance riders, and paid up additions)
- The current year IRS per diem amount for long term care ($380/day or $138,700/year as of 2020)
(note: The ability, limits, and conditions to the receipt of a tax-free portion of the death benefit are described in more detail in Internal Revenue Section 101(g). Qualifying distributions are not deemed to be taxable since they are an acceleration of a tax-free death benefit.)
How do you qualify for this acceleration of your death benefit even though you’re not dead?
Essentially Penn Mutual’s Chronic Illness Benefit Access Rider can be triggered one of two ways, which happen to be very similar to the two triggers for a traditional long term care policy:
- Inability to complete at least 2 Activities of Daily Living (ADLs are bathing, dressing, eating, transferring, toileting, and continence)
- The insured has a severe cognitive impairment that requires substantial supervision by another person to protect the insured from threats to health and safety for a period of at least 90 consecutive days.
The major difference between Penn Mutual’s chronic illness rider vs. a long term care policy is the fact that these triggers can be for a temporary situation with long term care, whereas with Penn’s living benefits these triggers must be deemed to be the onset of a permanent condition according to a medical practitioner unrelated to the insured.
Also, every year you want another acceleration, the insured must be re-certified by a medical professional.
Keep in mind too that the acceleration is really just a very favorable lien against your death benefit. Because the whole life insurance companies were expecting to pay your death benefit at life expectancy, these early accelerations do accrue at interest against that future receivable. That said the lien accrues at Moody’s Corporate Bond Index (2.88% as of March 19th, 2020).
At least this a very fair and favorable present value advance, especially if you’re in bad shape, you can’t work, and really need the money.
Below is a very generic example from Penn Mutual on a different product that is pure death benefit with no cash value at the time of acceleration. Remember, the exact amount you would receive during lifetime and at death is a totally dynamic figure and will depend on your age at issue, age of claim, health, death benefit, cash value, policy performance, and so on.
With Penn Mutual’s illustration software, we have the ability to model complex situations for you (such as already taking policy loans and spending dividends) and see how much in living benefits you can still accelerate from Penn Mutual’s chronic illness rider. You can book a spot on our calendar at the bottom of this article.
5 Compelling Facts about Penn Mutual as a Company
Click to learn what makes Penn Mutual one the best whole life insurance companies
- Established in 1847, Penn Mutual is the second oldest American mutual life insurance company behind New York Life.
- Just because Penn is one of the oldest dividend-paying whole life company, they are an industry leader in technology with their new ACE-underwriting software. Most people can apply for up to $5,000,000 of whole life insurance and even term life insurance (fully convertible to their best whole life policy). Although Penn Mutual reserves the right to resort to traditional underwriting, oftentimes we are seeing EXAMs waived and policies issued within a week by this new ACE system which leverages technology to get necessary underwriting data.
- Penn Mutual has a significantly higher 5-year average yield on their investment yield. Unlike other whole life companies, Penn Mutual has no mortgage-backed securities on its balance sheet. Penn instead has made some very savvy investments into tech venture capital having profited handsomely in the company “Ring” as well as turning a $100,000 early investment in Snapchat into a $40,000,000 windfall for their balance sheet.
- Penn Mutual maintains one the biggest percentage of surplus assets on their balance sheet compared to other dividend paying whole life companies (Surplus was 14.7% of General Account Assets as of January 2019). A healthy surplus is incredibly important during low-yield environments so they can continue providing healthy dividends to whole life policyholders without disrupting fluid operations. Penn Mutual has paid a dividend to whole life policyholders for 173 years straight since its inception in 1847.
- Because of Penn Mutual’s superior yield on its portfolio and healthy surplus, they were able to maintain their dividend scale for 10 straight years after 2008 where all other dividend paying whole life insurance companies lowered theirs. Only recently in 2019 did Penn lower their dividend scale from the continuing pressure of low-interest rates, but they’re still leaps and bounds ahead of other whole life insurance companies as you can see in this dividend history chart:
As you can see Penn Mutual had one of the more competitive dividend histories before 2008 and without a doubt the most competitive dividend whole life policy since. Below is an example of how powerful such a consistent dividend history can be.
On the left in red shows how Penn Mutual’s actual whole life policy performed, and on the right in gray shows how it was originally illustrated 14 years prior on a whole life cash value calculator. You can see in these two whole life cash value charts that they are identical from 2006 to 2018. Only in 2019 is there a slight divergence due to a decreased dividend. Although this is a pure base policy and therefore not designed optimally for cash value, you can see the divergence widens in 2020, it is a relatively small percentage of the total cash value.
If you’re looking for the absolute best whole life insurance policy on the market, built lean and mean the very first time with the optimal blend of riders for maximum cash value performance, then look no further. Penn Mutual’s long-term commitment to policyholder value is obvious, and we’ll show you how to make the most of it with policy design and how to seamlessly integrate the best dividend paying whole life insurance policy into your other wealth-building efforts.
- Whether you send us over a competitor’s illustration you’re looking at to compare the exact same numbers through Penn’s cash value calculator,
- Or we jump on a web-conference together and build you the best dividend paying whole life policy from scratch while answering any questions and filling in any gaps in your learning.
We assure you a worthwhile experience with no pressure, no hard pitches, and no games. You’ll see the absolute best from the very start, and never get any pressure or hard pitches from us.
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