Whole Life Insurance
Understanding Whole Life Insurance: Participating vs. Non-Participating Plans
Whole life insurance is a type of permanent life insurance that provides lifelong protection and builds
guaranteed cash value over time. Unlike term life insurance, which expires after a fixed period, whole life insurance can last your entire lifetime—typically up to age 121—while offering valuable living benefits through accumulated cash value.
There are two main types of whole life insurance plans:
Participating Whole Life and
Non-Participating Whole Life. Let’s look at how they differ and how each can fit into your financial strategy.
Participating Whole Life Insurance
A participating whole life insurance policy earns dividends from the insurance company. These dividends can significantly increase both your policy’s cash value and death benefit over time, helping to offset inflation and enhance your long-term wealth strategy.
Example:
Consider a 35-year-old male, non-smoker, in excellent health, purchasing a $1,000,000 participating whole life insurance policy on a 30-pay schedule. His annual premium would be approximately $13,750 for 30 years.
Guaranteed scenario: His death benefit remains level at $1,000,000 throughout, and by age 65—after paying his last premium—his guaranteed cash value is $538,140.
Non-guaranteed (dividend) scenario: His death benefit could increase to $1,718,006, and his cash value could grow to $937,991 by age 65.
That’s nearly double the guaranteed value, thanks to the power of dividends and compound growth.
Over 30 years, he pays a total of $412,500 in premiums. By age 80, if he keeps the policy active, his potential death benefit could reach as high as $2,831,662—all while maintaining lifetime coverage.
This type of policy can be used strategically for cash value accumulation, legacy planning, and even self-financing—where you borrow against your policy instead of from a bank. However, this concept isn’t ideal for everyone. It’s important to review the pros and cons of using participating whole life insurance for wealth building and financial leverage.
For more details, or to explore if this approach is right for you, call 1-866-526-7264 to speak with a licensed insurance professional.
Non-Participating Whole Life Insurance
A non-participating whole life insurance policy also builds guaranteed cash value, but it does not receive dividends. It offers steady, predictable growth and a guaranteed level death benefit.
Example:
Using the same 35-year-old male, non-smoker, in excellent health with a $1,000,000 non-participating whole life policy, his annual premium would be $10,320 until age 65.
At age 65, his cash value would be approximately $498,630.
By age 80, the cash value could reach $723,320, while the death benefit remains level at $1,000,000 throughout.
This type of policy appeals to individuals seeking guaranteed protection and conservative growth without the compouding nature of dividends.
Key Takeaways
Participating Whole Life Insurance: Offers dividends, higher long-term growth potential, and inflation protection.
Non-Participating Whole Life Insurance: Provides predictable, guaranteed returns with a level death benefit.
Both types include lifetime coverage and cash value accumulation, but should be custom-designed to match your budget and goals.
A Word of Caution
Whole life insurance plans are not one-size-fits-all. Each policy should be custom-built by a licensed advisor to align with your personal and financial objectives.
If you see websites claiming to “compare whole life insurance rates online,” proceed carefully. Legitimate whole life quotes cannot be instantly compared like term life rates. Some websites may provide incomplete comparisons or sell your personal information as a lead to third parties.
