Whole Life Insurance

Whole life insurance is a type of Cash Value life insurance that mixes an investment/cash account with the insurance.   The other main type of life insurance is term life insurance which is pure insurance with no cash account.  The debate between Whole Vs Term insurance is the focus of this website.

Whole life insurance is typically 8 to 12 times more expensive per year. According to the Wall Street Journal has a high incidence of clients abandoning their policies.   Because of the costs and complexities whole life insurance is probably not for most Americans.

There are however a couple of great reasons to consider purchasing whole life insurance such as funding special needs trusts and for truly extremely wealthy Americans.   Some people that can not quality for term life though may need to buy a form of whole life as that may be the only option available to them.

If you are considering purchasing any form of life insurance it is best that you check the Financial Strength Rating of that insurer.

The world of life insurance is confusing, do not get lost.

Life Insurance as an Investment in 2022

Written by Scott W Johnson

Does Life Insurance Look to be a Great Investment in 2022? Other Options vs Whole Life Insurance as an Investment? Should Life Insurance be considered an Investment? Life Insurance Investment in 2022? In years past legions of life insurance agents were hired to sell nothing other than Cash Value Life Insurance policies. Policies that carried.. More

The Cause for Coronvirus Concern with Life Insurance Investments

Written by Scott W Johnson

The markets are crashing.  Banks are reducing lending. Life Insurance underwriting is wobbling. How Safe are Life Insurers in the time of the Coronavirus Pandemic? The future of the life insurance industry might be at a crossroads while a new pandemic hits the world.  The financial dividends paid out by very stable mutual life insurers.. More

Is Mutual Life Insurance a Dying Breed?

Written by Scott W Johnson

Life Insurance can be offered from Companies that are established in many different ways. One type of company is called a Mutual Insurance Company. These type companies are very popular, especially for those that purchase Whole Life Insurance. But their percentage of Mutuals relative to All Life Insurers are near historic lows.  What is happening to.. More

Farmers Index Universal Life Insurance

Written by Scott W Johnson

Farmers New World life offers a variety of life insurance policy choices, including Term, Whole Life, and Universal Life. One of their Universal life options is their Index Universal Life (IUL) option. This product is rather complex and the investment calculations are as well. Consumers should consider asking these questions before they purchase their Farmers IUL.

When Does BTITR Not Work?

Written by Scott W Johnson

When does Buy Term and Invest the Rest not work? Technically it is not always the best choice for consumers and we highlight some candidates and some instances when whole life might just be your only or best choice.

Why Life Insurance Might be Taxable

Written by Scott W Johnson

Life Insurance in the United States is absolutely taxable – regardless of whatever everyone else says. However in general – proceeds from a life insurance death benefit, are often considered to be Federally Income Tax Free. That income free tax status though, does not pertain to numerous other types and kinds of taxes. Even the.. More

Goodman Triangle

Written by Scott W Johnson

The Goodman Triangle is a potential tax trap created when too many parties are involved on a life insurance contract. The original case from 1946 is considered a required reading for estate attorneys and seasoned insurance agents. The Goodman case can quickly prove that the old maxim (that life insurance is tax free) to be wrong.

How are Policyowner Dividends Treated in Regards to Income Tax?

Written by Scott W Johnson

Are policyowners / policyholders participating whole life insurance dividends really tax free? As with numerous simple questions no one simple answer is there. Policy owners generally may not have to pay income taxes but there are several cavets and reasons why someone might have to pay an income or another type of tax.

Direct Recognition

Written by Scott W Johnson

Direct, Not Direct Recognition which is better and which is the preferred method for whole life insurance buyers. Direct Recognition is a form of accounting used by Participating Whole Life Insurers to account for policy loans outstanding when calculating dividends. Our definition is both useful and illustrative of the various considerations that consumers need to think about when shopping for a participating insurer.

Policyholder Surplus

Written by Scott W Johnson

The policyholder surplus is a very important financial metric and assessment tool that too few consumers truly understand. PHS metrics show a slight bias to larger insurers by its own definition. Policy Holder metrics are extremely important for those wanting to purchase or consider purchasing longer term permanent policies and annuity contracts such as Whole, Universal, or various Annuities,