Introduction Of The Best Insurance Lawyer Performance With The Major Mutuals
The Best Insurance Lawyer Performance With The Major Mutuals. We are going to talk about proof of performance. When it comes to whole life insurance a reality that exists that not many people want to talk about is policies typically underperform. Meaning people open whole life insurance policies.
They’re interested in the cash value they look at that illustration and then the actual results are just less and less than what was projected every single year and people get disappointed say whole life insurance stinks why would anyone ever put money here?
And we can go on and on about that. But at the same time we do see whole life insurance policies that actually deliver strong cash values and people love their products we talk about banks corporations wealthy individuals positioning money .
The actual proof of performance
There all the time but where’s the actual proof of performance? Well if you work with our company you have access to our actual historical performance playlist which goes through all policies from 1975 up through 2021 that have lived the test of time and not the projected performance but the actual results.
Now why I say that if you work with us is that is something that whenever I’m going through specific companies and providing data from a compliance standpoint we do have to be careful as far as what we show and what we don’t show.
So with that said we are going to provide some historical proof of performance today on different life insurance carriers providing data that you may find very interesting. So in our last video we talked about the 4 major mutual companies 2022 dividend interest rates and one of the big big selling points.
I mentioned was point number 4 actual performance. We have seen or I have seen to be so consistent whole life insurance products that are properly designed if it’s not properly designed this whole video goes out the window.
Whole life insurance products
Whole life insurance products with these 4 major mutual companies that are properly designed have delivered strong internal rates of returns to consumers and this is a big reason why banks, corporations and wealthy individuals use them and anyone can use them it’s not exclusive to this group. The thing is where’s the proof of performance that these guys see that you can see? Can anyone see it? The answer is yes. You Can Also Read How To Start A Small Business With Small Insurance About In 2022.
The thing is if you’re in the business and you ever ask someone an insurance company for proof of performance it’s like pulling teeth you’ll either get no sometimes they play dumb with you and say oh do you mean dividend interest rate history like the dividend history look at our illustration or they start to bad mouth some other life insurance company it’s like no no no no a policy that has simply lived the test of time what did it actually produce?
Annual internal rate of return
So we’ve got policies that actually date back to 1975 a Guardian policy that one produced a net internal rate of return of just about 7.1% but keep in mind the policy was issued in 1975 and lived through a great dividend period we’ve got the actual policy too what I did was take all the data and put it on Excel and then actually just make it easier from the dividend interest rate standpoint and the annual internal rate of return.
So here we’ve got an actual piece from this is from a Blease report actually you can find this online if you search it we’ve got the full report we’ve used it in past videos a 20-year case study. Now it’s a little dated it ranges from 1984 through 2004 it’s on a 45-year-old individual this is public information people can find it if they look both consumers and those in the business.
The annual premiums
It simply compares a number of carriers the report or the study actually compared more than just who we have listed here and I reorganized it on the left as far as the order Mass, Guardian New York and Life Northwestern Mutual 45-year-old individual not a policy that is or none of these policies are apples-to-apples and that’s a big reason I don’t like this example meaning when we look at the annual premiums here they’re all different numbers it was all based on a $250,000 whole life insurance policy.
The premium was based on the insurance company’s pricing so no blends nothing going into PUAs [Paid-up additions] nothing that we would actually want to do which makes a big difference when I mentioned earlier talking about design but what you do see here 4 major mutuals different premiums actual cash values and actual internal rates of return.
New York Life policies
What do you notice? All of them are well above 4%. What do you notice when you start to look at other carriers below? None of them are even at 4%. Here you have National Life which primarily focuses on IULs today just about 4% with that old whole life insurance product but they didn’t hit it these are actual internal rates of return.
Now could be looking in this and say okay this is a bit dated Steve because it is but this is one of the studies I personally I’m not a huge fan of this kind of stuff because usually a company is going to show this report that looks the best on the report meaning hey look at us compared to the competition .
I don’t like that what I like are standalone policies here’s one example of a New York Life policy this was actually someone who is working with us and he provided his New York Life policies he was kind enough to do that we studied the historical payments what he made each year and then 17 years into it he’s added a healthy amount of PUAs to the policy his average IRR is just over 4% that’s net and that was issued in 2003 this study was actually ran through 2020 .
Actual cash value performance
So we’ve got to update it again based on the in-force illustration here’s the present dividend rate which now for 2021 and 2022 New York Life is at 5.8% but still this is the annualized IRR we see that it’s still performing will be a little bit lower than this but strong actual cash value performance difficult to find this kind of stuff out there one of the major mutuals.
If you were to look at I’m going to pull this up via the PDF we had to do this one a little bit differently because we had the statement so this was a policy with 1 of your 4 major mutuals the one company we cannot use actually because they only work with career agents not independent brokers talk about them being Northwestern simply because they’ve delivered like you can’t argue that they haven’t when you look at them.
Policy issue date 1989 okay what’s nice about this is we have the total cash value this was run from 1989 through 2017 the actual study period here total cash value $22,329 the premium he paid was $420 that’s it didn’t add anything to PUAs nothing fancy.
Mortality charges and insurance expenses
So what we did we go through this thoroughly in our historical performance case study line by line just to make it simple what he averaged out over 20 years we just aimed for that same cash value of $22,300 we’re just about a 4.63% net internal rate of return policy was issued pre-1990 so during a high dividend interest rate period but still proof of performance.
If we look at more recent policies we see the same thing let me go back here’s actually an all base policy that did not perform well at all when we’ve seen what I’ve noticed and it’s actually in the company’s dividend formulas it’s all companies formulas when you get to look at them .
When you have a product with a higher base premium I should just rephrase if you’re paying any amount of money into a policy the higher the base premium the weaker the actual performance typically is because insurance companies can adjust their dividends .
But really there’s 3 things behind the actual performance of a policy you have the company’s illustrated dividend rate but then you also have mortality charges and insurance expenses all of which can be adjusted after the fact so we go through this thoroughly in our case study but all that validated.