Whole Life Dividends
You Have Options!
Dividends paid by Participating Whole Life Insurance can be used to:
- Purchase Paid-Up Additional Insurance
- Accumulate at Interest
- Reduce Premiums
- Paid in Cash
Some policies have additional dividend options. I can help you determine which option is right for you. And you can CHANGE your dividend option!
Paid-Up Additions
This is the most popular dividend option because this option provides the greatest acceleration of both cash value growth and increasing death benefits. Many policies allow the owner to purchase even more Paid-Up Additions with a special rider. Dividends used to purchase Paid-Up Additions are not taxable.
Accumulate at Interest
This is currently the least used dividend option, but that may change if interest rates were to increase drastically and reach new highs like they did in the past. Unlike the tax-deferred growth of Paid-Up Additions, the interest on dividends left with the company is taxable as ordinary income.
Reduce Premiums
This dividend option can be used when the policy owner wants to offset their premiums with policy values, sometimes in concert with the surrender of accumulated paid-up additional insurance, dividends held at interest, or with policy loans to minimize or eliminate current premiums.
Paid in Cash
This dividend option can be used to create an income stream during retirement, especially for paid-up policies where maintaining a legacy is more important than maximizing tax-free cash flow from the policy using loans.
Your Agent
Brent D. Gardner, CLU, ChFC
Brent began his life insurance career in March of 1991 as a part-time College Agent, and then as a full-time Career Agent with a large mid-western mutual life insurance company. In January of 1997, Brent started Life Solutions, an independent life insurance brokerage agency, taking over a family-built book of business that dates back to 1922, including servicing and delivering claims on dividend paying whole life insurance policies issued in the 1890s.
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