Life Insurance statements. What should you know?

What would you want to know?

You get them on an annual basis.

Open them. Read through them.

These whole life insurance policies are not a registered security. You’re not going to get monthly or quarterly statements; you’re going to get an annual statement.

When you get your annual review statement, read through it. Look at the death benefit. In the video, I show three examples.

  1. Ameritas Life
  2. Penn Mutual
  3. OneAmerica

Each one of them shows the:

  • Death benefit that you started with
  • The base premium that you’re paying into it
  • The PUA amount.
  • Guaranteed amount

The questions that I get asked most commonly is, “Well, what’s this guaranteed amount? What’s the paid-up additions amount?”

Remember this: when a dividend or a paid-up addition is paid into your policy or interest is paid into your policy, it then becomes guaranteed. They can’t take it back out. It’s not like your old 401K statements where it’s up and down and up and down. The only way that that cash can come out of your life insurance cash value is if you take it out, or you stop making your payments and you go on an APL, an automatic premium loan, or when you pass away.

Neither the market conditions nor the economy, can or will change what is already in your policy!

The only way that that cash value can change is if you make a change to it.

Anytime a premium is paid and it credits to your cash value, whether it’s interest, dividends, paid-up additions, or base premium, it’s guaranteed

There will be a column that says, “guaranteed cash value” and that comes from your base premium. For example, if you have $1,000 a month base premium, you have $2,000 a month paid-up additions rider going into that policy, so you have a total of 3,000 a month, $36,000 a year. 12,000 of that 36,000 is going to be your base premium. That’s where the guaranteed cash value is. On the statement itself, it says “guaranteed cash value”. That’s what’s being derived from the base premium.

Then you’re going to have cash value of your paid-up additions rider. That’s the total cash value that’s growing and accruing as a result of the paid-up additions in your policy.

Then you’re going to have a column of paid-up insurance.

Then the dividend option that 99% of you have on your whole life insurance policy. Each year that a dividend is paid to your policy, what do you do with that dividend?

We issue every policy having that dividend reinvested into your policy. How do they reinvest it? They use it to purchase paid-up additions just like that example of 1,000 base, 2,000 a month PUA. That 2,000 a month goes to purchase paid-up additions into your policy. Not only death benefit but cash value. Same with the dividends. 99% of you have that as being reinvested in purchasing deferred additions to your policy. If you want to know how the dividend is being used, call our office and we will review your dividends with you.

All those columns added up together – (the guaranteed cash, the PUA that you pay in, the paid-up additions that are being reinvested into the policy) – add up to your total cash value.

It’s going to show you where it was last year, where it is this year, and the changes between the two from last year until now.

Most of you know that within the first couple of years, you don’t have access to the base premium, but we DO have access to the PUA that goes in. Then if you’re continuing to max out the PUA with the base premium, around the third year on, every dollar that you put in, you can access to.

The release of that base premium that you did not have access to at first, comes around year seven or eight in the policy. Some of you, that’s happening quicker because of the amount of cash that you’re putting in. Some of you, you’ve reduced your PUA, so it’s going to take longer for that to occur.

It is also important to check your beneficiary designations.

We want you to view this, at a minimum, on an annual basis.

Some of you look at this on a monthly basis. I’m empowered by, at least every quarter, updating my financial statement and viewing my life insurance policy values online, updating my financial statement overall. It empowers me.

At a minimum, when you get these paper statements in the mail, whether it’s OneAmerica, Ameritas, Penn Mutual, New York Life, MassMutual, or any other insurance policy, we want you to review them. We want you to look at them. We want you to be empowered by them.

If you have any questions about them, you can call, email, or you can certainly ask during your annual review with me.

Take advantage of that. When you get your statements, read them over. Get used to how to read them. What to look for.

Again, it’s a guaranteed fixed product so there’s not going to be much variation.

The only thing that’s going to vary at all is going to be that dividend.

We’re at a 40-year low, so we expect it to be even higher as the years go by. Right now, we’re in the lowest interest rate environment – the end of 2019 going into 2020. Dividends aren’t as high as they have been but they’re still incredible.

There’s nowhere else you can go and get this high of a guaranteed rate of return with cash that you’re relinquishing control of, that’s guaranteed, protected and liquid.