I have to admit, I didn’t know a whole lot about Dividend Paying Whole Life insurance until I learned about Infinite Banking, and now it feels like my mind is full of both the valuable and useless knowledge that might come with this topic. Needless to say, I have done a lot of research on the topic, so here is a little of that to pass on.
Dividend Paying whole life insurance is a whole life insurance policy that has cash value and pays dividends. The term “dividend paying” is more accurately defined as “participating.”
According to Investopedia a participating policy is defined as: “An insurance contract that pays dividends to the policy holder.”
Unlike a traditional corporation, or other insurance companies, a participating, or dividend paying, policy does not pay profits to stockholders. All profits from the company go to policy holders, and are payed out in the form of a dividend. In other words, as profits are generated from external investments, they are distributed to those participating, the policy holders.
Although dividends are not guaranteed to policyholders, many life insurance companies that offer these types of policies have paid them consecutively for over a century. Lafayette Life, a company founded in 1905, is one of these. According to their Legacy of Trust pamphlet,
“Lafayette Life has remained strong
despite the impact of two world wars, the
Great Depression, the stock market crash
and the challenges of a changing
marketplace, industry and society.
Nothing has deterred Lafayette Life from
meeting its primary obligation to policy
owners. Additionally, although dividends
are not guaranteed, Lafayette Life has
never failed to pay a policy dividend to a
dividend paying policy.”
This is consistent with most every dividend paying whole life insurance policy.
Advantages of Dividend Paying Whole Life Insurance
- A level premium guaranteed to remain constant, and never increase.
- A guaranteed death benefit
- Tax Free Dividends
- Tax Free Growth
- Liquidity and complete access to cash value
- Guaranteed growth every year, with no loss provisions
- Strong Growth