Participating Whole Life Insurance
a whole life insurance plan that provides
a combination of permanent lifetime
insurance protection (Basic Life
to accumulate a cash reserve to
use as a savings plan
for financial emergency, to supplement your children’s education
fund, or to have additional funds for retirement and so on.
During your lifetime,
Participating Whole Life Insurance can:
value that you can use for personal or business opportunities (any cash value
withdrawn from the policy may be subject to tax);
Supplement your retirement income;
Provide funds for long-term care or
Basic Life Protection
basic insurance protection is guaranteed for
life, as long as you pay the premiums when they are due.
insurance provides you with protection for a guaranteed
level premium. There are two guaranteed premium payment options:
level premiums payable for life and level premiums payable for
twenty years. The
basic life insurance
protection provides you with
guaranteed cash value, which you could get upon surrender of the
policy to the insurance company.
Besides basic life
your policy is eligible to receive annual dividends on the permanent
insurance portion of your policy. You
have an opportunity to share in the
earnings in the participating account that
is why this policy is called
Where the dividends come from?
When you purchase participating
life insurance, the premiums paid (along
with funds from other participating policies) are
deposited into an account called the participating account,
portion of the surplus generated on this account,
may be paid to policyholders in the form of dividends.
is mainly impacted by returns earned on investments,
mortality, terminated policies, expenses and taxes.
The amount available for distribution in any year will vary
upwards or downwards depending on the actual and expected experience.
share in this earnings is annually credited to your policy
as a dividend payment.
Dividend scale interest rate is calculated by the insurer every year
amount of dividends is not guaranteed.
Generally, dividends increase with the numbers of years the policy
Participating whole life insurance is eligible to receive
annual dividends through
variety of dividend options.
You choose one of
in cash or cash to reduce or pay premiums
Purchase Units in common stock segregated funds
Up Additions (PUAs)
have elected to receive your dividends paid in cash each year, the
dividend paid may be subject to taxation.
have elected to use the dividend to reduce your premiums each year, any
dividends payable will be applied to reduce the current year’s premium.
If, in the future, dividends are sufficient to pay your entire required
premium, you will receive any excess in cash. Dividends may be subject
to annual taxation once the annual dividend is greater than the required
dividend option operated similar to a saving account. Any dividends
payable are deposited with the insurance company and will earn an
interest rate. You have access to this cash and can make withdrawals at
any time. Interest earned on the dividends left on deposit is taxable as
earned and the dividends paid may be subject to taxation.
is similar to Option 2, but with a little more risk and greater chance
to earn income on your contributions.
Dividends are used to purchase Paid Up Additions (additional policies),
which are added to the basic policy and create another “layer” of
permanent participating whole life insurance, eligible to earn
Purchasing Paid Up Additions is the opportunity to have more
insurance without providing further evidence of good health or new
premium outlays. The dividends earned on the Paid Up Additions combined
with the dividends earned on your basic permanent coverage can result in
substantial increase in both the death benefit and cash value over the
life of your policy.
withdrawals are made by surrendering Paid Up Additions.
The policy begins with a combination of basic permanent insurance and yearly
renewable one-year term insurance which increases
amount of coverage.
one-year term insurance is called the Enhancement).
the total Death benefit will be higher than the guaranteed coverage.
Then dividends are used first to pay for the one-year term insurance
each year to reach the amount of coverage chosen and any excess
is used to purchase Paid Up Additions. Any
new PUAs automatically replace part of the one-year term insurance. Once
all of the original one-year term insurance has been replaced by PUAs,
the dividend conversion point is reached. At that point, all future dividends are used to purchase additional PUAs.
Participating life insurance is
an excellent solution for people who are:
lifetime protection combined with the opportunity for significant
increase their death benefit over time to keep pace with inflation;
accessing the cash value to supplement their retirement income or to pay
for long term care, while ensuring that there is a death benefit in
place to protect their estate.
Contact us for
information and free consultation.
If you have
any questions or concerns, please