2019 (Image: Allison Bell/TA)

Two big U.S. mutual life insurers are taking a cautious approach to 2019 policy dividend projections.

Northwestern Mutual Life Insurance Company says it will increase its dividend rate slightly, to 5%, from 4.9% for 2018. The company expects total dividend payments to increase to $5.6 billion for 2019, from $5.3 billion for this year.

Massachusetts Mutual Life Insurance Company says it will hold its dividend rate at 6.4%. MassMutual expects its total dividend payments to increase to $1.72 billion, from $1.6 billion.

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A mutual life insurer is a life insurance company that is owned by some or all of the company’s policyholders, rather than by stockholders, partners in a partnership, or sole proprietors.

Northwestern Mutual offers dividends to holders of participating whole life policies, disability insurance policies and some annuities.

MassMutual pays dividends to holders of participating whole life policies.

Northwestern Mutual says the 5% dividend interest rate it uses to calculate dividends is the rate for “unborrowed funds for most whole life insurance policies after mortality and expense charges have been deducted from policy values.”

The company notes that the dividend interest rate is not the rate of return on a policy and is only one of the factors used to determine a policyholder’s life insurance dividend.

Similarly, MassMutual says its 6.4% dividend interest rate is used to determine the investment component of the policyholder’s dividend and is separate from the mortality and expense components.

“It is not the rate of return on the policy and should not be the sole basis for comparing insurers or policy performance,” Mass Mutual says.

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