Introduction Of 2022 Dividend Rates of the 4 Major Mutual Companies For Insurance
2022 Dividend Rates of the 4 Major Mutual Companies For Insurance. Alright today we are going to go through the 4 major mutual companies and their 2022 dividend interest rates that will be applied to whole life insurance policies. So we’re going to cover the updated dividend rates and a whole lot more let’s have some fun.
So when it comes to the 4 major mutual companies we’ve got them listed here in no particular order MassMutual Guardian New York Life and Northwestern Mutual. Now why these companies are considered the 4 major mutual companies as this is an industry-wide term there are several reasons I’m going to cover 4 reasons for your 4 major mutual companies.
Cover 4 reasons
The first reason is company size if you were to look at their company size especially relative to other insurance carriers out there they are massive now other stock companies such as Prudential are quite large as well but again remember 4 major mutual companies they are all mutually held companies meaning there are no stockholders involved.
So (1) company size and (2) financial ratings specifically talking about the financial strength and safety ratings. If you were to look at the company’s Comdex score which takes all of the rating categories and almost gives a grade to an insurance company each of these 4 companies ranges between 98 and 100 with of course 100 being the highest.
(3) how long they’ve been in business all of these companies have been in business for over 160 years dating back to the 1800s that’s a long time that they’ve been in business. But then the 4th reason which is the biggest selling point in my opinion is when you look at actual policies real whole life insurance policies which would relate to you as a consumer.
The net growth rate
If you’re looking to take out a policy what company is going to give me the best results for my money where I’m going to see the cash value grow over time not just project good numbers but deliver what I’ve seen to be so so consistent are these 4 major mutual companies have delivered the strongest cash values.
When we look at the actual performance we’ve got a historical performance study that takes several policies with several companies, not just the 4 major mutuals we’ve seen the big 4 consistently deliver between a 4% to 6% internal rate of return that’s the net growth rate. You Can Also Read A Successful Businessman By Insurance Lawyer In 2022.
However, to set expectations properly in the low dividend interest rate or low-interest-rate environment we’re in today I would expect the policy to produce if it’s designed properly I would expect it to produce somewhere between 3% to 5%.
4 major mutual companies
You see banks corporations and wealthy individuals when you look at what they do with their money they position it with the 4 major mutual companies. I’ve mentioned a couple of times before that the largest client our company has that we work with I work with them is a bank.
That bank purchased high cash value bank-owned life insurance on 2 separate occasions on both of those occasions they used the major mutual companies the first time it was Mass and Guardian the second time was Mass Guardian and New York Life.
That was not because I simply recommended it banks do their homework and due diligence and so the wealthy and corporations the reason why actual performance not just projections it is critical so those are the 4 points if you can recall those.
Moving on their actual dividend rates for 2022 compared to 2021 have not changed one bit when we look at MassMutual you’ve got a clean dividend interest rate at 6% 6% flat Guardian 5.65% New York Life 5.8% and then you’ve got Northwestern Mutual at 5%.
Maximizing the cash value
Here’s something I want to add and it kind of ties into the actual performance piece when we see these different dividend rates or illustrations on paper different companies project different cash value and death benefit growth over time on the non-guaranteed side of an illustration which has to do with their current dividend interest rate.
What I will add and this is something I’ve believed in really once I saw the actual data and proof behind it is the dividend rate doesn’t matter a whole lot not when you’re selecting one of these companies if all things are equal from a policy design standpoint meaning I’m paying in $10,000 let’s assume I have a minimum $1,000 base premium I plough the other $9,000 into PUAs [Paid-up additions] maximizing the cash value.
If all things are equal I can close my eyes and pick one of them out of a hat and I can’t go wrong we’ve seen too much consistency with these companies going back and forth concerning who delivers the strongest actual internal rates of return which is the net growth rate. Remember the dividend rates are gross.
A $1,000 minimum premium
But when we look at the actual performance over time they go back and forth with each other so you really can’t go wrong with any of these companies that’s my personal opinion which is based on facts and data. Now what will help refine one’s decision-making process comes to PUA flexibility meaning if I want a high cash value life insurance policy.
If your goal is to pay in call it $10,000 per year let’s use a nice round number and this could be also a $1,000,000 per year just take a 0 off or add a couple so it’s $10,000 per year and you want a policy where you can commit to the minimum to have the ability to add more funds at discretion what you can do with each of these companies.
If you design it properly you could have a $1,000 minimum premium that would be your actual commitment might be a little bit higher than that we’d have to add a term insurance Rider in this case so it might be $1,200 my point is how do I commit to the minimum and then have the flexibility to add more PUAs at my discretion?
Add additional funds
Meaning if you want the ability to pay $10,000 per year to a whole life insurance policy being that safe liquid tax-free area to position money but you don’t want to get a bill for that because you don’t know if you could swing it each year and the same would apply.
If you’re paying in this number a lot of people do this I think I can pay $100,000 per year but again I don’t want to get billed for that how do you set it up properly? Well now using the $10,000 example you can commit to $1,000 and add additional funds into PUAs at your discretion.
Here’s where the difference comes in with the different companies all life insurance companies, not just the major mutuals have different rules concerning their PUA flexibility I give you a little bit of information here.
A MassMutual policy for maximum flexibility
So MassMutual, for example, has a couple of different rules when it comes to adding funds into PUAs if you want to optimize a MassMutual policy for maximum flexibility where they work best is you said.
Okay, I am comfortable and disciplined enough to make a 1-time per year payment adjustment meaning the 1st year I pay $10,000 the 2nd year I pay $5,000 the following year I pay $8,000 I can bounce it up and down year over year without any underwriting if the policy is set up properly.
They’ve got several different PUA Riders they’ve got their scheduled additional life insurance Rider their planned additional life insurance Rider their LISR Rider which is very important to build in maximum flexibility but the one thing to be aware of is that 1 time per year payment adjustment on the policy anniversary date.
A minimum base premium
There are ways you can add funds outside of the anniversary date but it is not super convenient at this point where someone wants maximum flexibility where hey when my premium comes due I can balance my payment up and down however I want MassMutual works well.
Where MassMutual also works very well is if someone says hey I want the ability to go with call it a 10/90 split a minimum base premium that means 10% of your payment toward the base premium 90% toward PUAs very cash-rich right off the bat and you want the ability to pay into it for a long period 30, 40, 50 years whatever it might be.