Whole life Insurance Policy Dividends

Whole Life Insurance Company Dividends

Whole life insurance is a very old financial tool, which is offered by companies, some of which are over 150 years old.

I began exploring this financial tool recently, and found that there are two types of companies; Mutual and. Stock insurance companies. Mutual insurance companies are owned by the policy holders, stock companies by the stock holders.

Why is this important?
If your insurance company is a stock insurance company, the companies profits at year end go to the stock holders as a dividend, which is taxable as “passive” or unearned income. If your company is a mutual insurance company, the company profits at year end go to the policy holders, as a dividend, but the US government considers it to be return of premium, so it’s a no taxable event. Additionally, this dividend can be applied to your premium or to the cash value of your policy.

How often do these companies pay this dividend?
The majority of them pay every year and about ten of them have paid dividends every year for 100 years. That means during every financial crisis of the last century these mutual companies have paid a dividend. This means mutual insurance companies like stock dividend companies are a good financial tool to investigate.

Conclusion:
Whole life insurance is a financial tool with some tax advantages and earning advantages depending on the type of product you buy. The decision should be based on factors affecting your financial goals and the general principle that it’s not what you make, it’s what you keep.

Remember knowledge is power, power brings wealth and wealth brings freedom.
Free yourself.

✍🏼 by Shortsegments.