How Do Life Insurance Dividends Work?
How do life insurance dividends really work?
If you didn’t know, when you own a Sacred Account (high-early-cash-value-dividend-paying-whole-life-insurance) you actually are treated as an owner in the insurance company that your policy is held with.
I have my own Sacred Account, and as an owner of my Sacred Account, I receive profit from the insurance company each year.
Just like investing in any other business, when the business makes money, I make money as an owner in that business.
So it works the same way with the Sacred Account.
Having an account makes me an owner and being an owner means I share in the profits of the insurance company.
Here is how it works:
- The life insurance company earns income from sales
- The life insurance company pays expenses
- The life insurance pays death benefit claims
- The life insurance company earns income and gains from investments
- The life insurance company has a surplus of profit
- The life insurance company distributes that profit as a dividend to policy holders
Here is a real-life example!
Mass Mutual Life Insurance Company just declared a 6% dividend to be paid in 2023.
Now, here is the confusing part for most. A 6% dividend does not mean I am going to receive 6%.
Generally speaking, I am going to receive 3–5% and that is because 6% is a gross number and is before insurance costs and expenses.
Often times, a person will hear that they get a 6% dividend and think that if they have $100,000 in cash value they will receive $6,000.
Really, on average they will receive $3,000-$5,000.
Dividends are great and being part owner of a Fortune 500 life insurance company is great as well!
But it helps to understand where dividends come from, how they are calculated and how much to expect in my Sacred Account!
If you’d like to learn about how you can use the Sacred Account to build more wealth and achieve greater financial freedom, I want to give you a free copy of my book The Blueprint to Financial Freedom!
Click here to get a copy!
Not only do you get this book which is filled with strategies on building greater wealth and financial freedom, but it also comes with a free Course Supervisor to ensure you finish the book and understand the material, PLUS a free 1 on 1 coaching call so you can apply what you’ve learned!
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To Purpose, Wealth & Freedom,
Jerry Fetta
Jerry Fetta is the CEO and Founder of Wealth DynamX. He is a nationally recognized financial expert featured in Forbes, Yahoo Finance, Fox, Chicago Weekly News, New York Finance, interviewed on over 45 podcasts with world renowned experts, earning endorsements and affiliations throughout his career with names like Kevin O’Leary, Grant Cardone, Dave Ramsey, and Pamela Yellen.
Jerry’s mission in life is to help create millions of financially educated and solvent families achieving greater financial freedom and sharing the truth about money with those around them.
Learn more at www.WealthDynamX.com
(DISCLAIMER: The information in this content should not be considered tax, financial, investment, or any kind of professional advice. Only a professional diagnosis of your specific situation can determine which strategies are appropriate for your needs. Wealth DynamX can and does not provide advice unless/until engaged by you.)
