Locking in Your Return - The Power of Vesting

The investment portion of a whole life participating policy has some unique features that are often not talked about with clients. I want to touch on one note-worthy thing called vesting.?

Vesting means that dividends paid by the insurance company to the policy owner can never be lost or decreased when kept inside the policy. In other words, once you are paid your dividend, your investment can never have a negative return. Unlike traditional investments that can have positive and negative returns, the investment account inside an investment account can only have a positive return.?

The dividend being paid to the policyholder can fluctuate based on the dividend rate declared by the insurance company. Still, any dividends previously paid into the policy and vested in the new cash value is locked in. On a graph, it would look like stairs going up.

This does not mean that the cash value of an insurance policy can never decrease in value. This means that the only way you will have a decrease in the value of the cash inside the policy is by electing to use that cash value to do something else.?

Having the ability to vest the money that is paid out in dividends means that you can have positive compound growth over long periods of time. The return on your investment inside the insurance policy will never have a negative return, forever. This means long-term growth inside the policy can see a significant upside.?

Clients who are risk-averse may find comfort in investing their money into a life insurance policy that can give them the security of knowing their money can not go negative. A whole life participating insurance policy can be a great financial tool for helping your clients reach their long-term goals.

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