Participating Whole Life insurance

H i Terry, I’m considering a Participating Whole Life (PWL) insurance policy but have some concerns. I’m concerned that the mutual insurance companies that offer these will not be able to pay projected dividends given they are typically ~70% invested in high quality bonds which have had historically low yields for some time now. I also don’t see the younger generations, who are saddled with student loans, being able to afford these high premium PWL policies to the same extent the boomer generation purchased these and this coupled with the boomers dying off triggering death benefit payouts will put further pressure on the insurance company profits and subsequent returns to the policy holders. Are these concerns justified and are there cases where you would recommend a PWL policy?

Terry Says:  Most mutual insurance companies offer a “dividend” that is not a guaranteed payment to help build cash value in your whole life policy.  The best way to make sure that the insurance company is likely to continue to pay dividends is to ask about the company’s ratings — from either AM Best or Standard and Poors.  Or the most stringent ratings service of all, Weiss ratings at http://www.weissratings.com/.