Why Ralph Loves Mutual Whole Life Insurance for His Clients

Posted by Ralph Sklar @ 9:20am on May 6, 2016

Not everybody loves Mutual Whole Life Insurance but I do – and here is why:

Whole Life insurance is an idealistic product. It provides lifetime financial security for your family with a premium that is fixed for as long as you live and it builds guaranteed1 cash values that you can withdraw or borrow when you need a convenient source of funds2. But what makes ‘Mutual' Whole Life insurance special is that everyone is in it together.

Policy owners share the risk of dying too soon and of living too long. They share in the expenses, and they share in the profits. I am not a socialist, but conceptually I like that. I also like that the insurance company’s interests are aligned with the policy owners. You see, many financial firms will invest money as if it was yours – which it is. But a Mutual Whole Life company invests money as if it was their own – which it is. When you pay a premium your money becomes the property of the insurance company, and the insurance company becomes the property of you. Not the whole company. Just a little bit of it, but as an owner you share in the profits that are distributed as dividends, and you gain peace of mind from the profits that are retained by the company to enhance security.

Of course you are also a customer, so in addition to sharing in potential profits, you have a contractual right to steadily accruing guaranteed cash values - which will be stepped up to match the promised death benefit when you die. And when your concern changes from the problems created by dying too soon to those created by living too long, you can generally exchange your Whole Life policy into an annuity to generate an income that will last as long as you do. Not all Whole Life policies are the same. You still have to look at performance, and some companies and policies have advantages over others. We can help with that.

1Backed by the claims paying ability of the company issuing the policy
2Loans against your policy accrue interest and decrease the death benefit and cash value by the amount of the outstanding loan and interest.