Comparing Dividends From Mutual Life Insurance Companies Dividends
Participating whole life insurance from mutual life insurance companies offers lifelong coverage, cash value growth, and the potential for dividends. However, comparing different policies can be challenging. Here's how to make an informed choice.
Understand Dividends
Participating policies pay dividends based on a company’s financial performance. These dividends can be used to reinvest, reduce premiums, or purchase additional coverage. Dividends are not guaranteed, but mutual insurers like Guardian and MassMutual have paid them consistently for over 150 years.
Client access: MassMutual: Historial Dividends Study Guardian: The whole story of dividends (text for client access)Evaluate Historical Dividend Performance
A company’s history of dividend payments is a strong indicator of its reliability. MassMutual, for example, has paid dividends every year since 1869. Similarly, Guardian has maintained a steady dividend payout since 1868.
Here’s a chart comparing the historical dividend rates from 2014 to 2023 for four leading insurers:
Historical Dividend Rates for top rated mutual life insurance companies from 2014 through 2023.
Compare Premiums and Cash Value
When comparing policies, request illustrations to see how premiums, cash value, and dividends stack up over time. Keep in mind that the Dividend Interest Rate reflects net investment returns, but note that companies calculate these rates differently, so avoid using DIR as the sole comparison metric. There’s so much more to each company than just their dividend mutual rate. I share this only to give our more technical clients a peek under the hood.
Assess Financial Strength
I have personal experience working with New York Life, MassMutual and Guardian Life both as an agent and a client. I always suggest only work with insurers with strong financial ratings from agencies like A.M. Best or Moody’s. This helps ensure the company will continue on its path for many decades.
Utilize Dividends
Depending on the company, you may have a lot of flexibility on how to use your dividends. For example, you can use dividends to grow the policy using paid-up additions, which increases your cash value and face amount. Other clients want to reduce premiums or take dividends as cash.
Deeper Dive: Guardian vs. MassMutual
If you're interested in a detailed comparison between Guardian and MassMutual, check out the full table of historical dividend rates analysis from 2010-2023, which provides insights into their performance from 2010 to 2023, including their best and worst years. The table shows the average dividend rate over time and highlights key performance metrics for both companies.
Conclusion
To compare whole life policies effectively, it’s so much more than the company's dividend history—obviously, financial strength and flexibility in dividend usage. But really how your policy is designed is paramount for success in the long term in reaching your objectives. Feel free to text for access to the client materials here if you don’t already have access.