The data in this report is pulled from a comprehensive database compiled annually by the editors of Full Disclosure. Twenty-four participating (dividend-paying) contracts are featured on an illustrated basis with 14 reporting actual results. This compares with 19 projections last year with 11 historical samples.
All data is current as of Feb. 1, 2006, a period by which many insurers have declared their current dividend scales for the year. Companies that have a later dividend scale revision were asked to illustrate values based on the upcoming dividend scale. By using these tables you can get an idea of how policies currently are being illustrated, as well as how leading plans issued by many of these insurers 10 and 20 years ago have returned value to policyholders historically.
Whole life remains a cornerstone of the life insurance industry, accounting for about a quarter of premium volume. Its inherent stability and guarantees make it a popular choice for the risk-averse and for business uses such as defined benefit pension plans. For instance, a life insurance policy under a 412(i) plan can provide up to half of the plan’s retirement income funding. The guaranteed cash values and premiums of whole life make it an ideal solution for such a plan. Of course, life insurance doesn’t have to be part of a 412(i) plan, but it is simple, retirement benefits are guaranteed and death benefits are made available (subject to limitations on amount and taxability).
Illustrated values are based on a Male Age 40 paying on a $250,000 policy. The class specified is best nonsmoker as long as the class represents at least 15% of the contract issued of each policy. Illustrations are divided between all base (100% whole life coverage) and policies blended with 50% term. Blending policies in this fashion allows a lower premium outlay while retaining a responsible level of all base coverage to cushion any adverse changes in dividend scales. There is more risk to the level death benefit and premiums that are guaranteed in an all base policy, but the upside to the consumer–and the seller–is a more affordable premium.