Top 5 Best Dividend Paying Whole Life Insurance Companies for Maximum Cash Value Growth

by David Lewis

There are a little over 700 life insurance companies in the U.S. as of 2024. Of those, about 100 of them are mutual life insurance companies—companies that build and sell dividend paying whole life insurance. Of those, the best dividend paying whole life insurance companies can be boiled down to about 5 or maybe 6 of those 100.

Yeah... really.

Here's a shortlist of the top 5.

Summary: The Top 5 Dividend-Paying Whole Life Insurance Companies


Northwestern Mutual 

The rule-following older brother of "The Big 4" mutuals, and the model of what a mutual company is and ought to be in terms of GIA management, product pricing, and dividend sharing. Their total whole life dividends dwarf every other insurer in this list. At the same time, they're largely a black box unless you're a career agent for the company. Meaning, only Northwestern Mutual agents can illustrate and sell you one of NML's products. I've seen many Northwestern Mutual whole life insurance products. They all feel very similar. Many of them are a combination of base whole life insurance and a term rider. Some are base + a PUA option. Regardless, NML products aren't the highest cash value products on the market, and their premium and PUA flexibility is essentially non-existent, but the products themselves do very well if you hold them for several decades, all things considered.

New York Life 

In some ways, New York Life is Northwestern Mutual's rebellious younger brother. They have a strong whole life product line and the dividends to match. But it's the only company I've ever worked with that has minimum premium requirements for its whole life products. And, just like Northwestern Mutual, their PUA rider flexibility leaves a lot to be desired. If you are willing to pay up, the products themselves are pretty solid. Inflexible, but solid. Cash value growth on their new product line seems very good, and is finally (FINALLY) competitive with Penn Mutual, MassMutual, and The Guardian.

MassMutual 

A mutual company with a rich, and long, history of paying life insurance dividends. Solid whole life insurance product portfolio, with some innovative long-term care options. MassMutual has a more "corporate feel" than the other insurers, and the products themselves are more rigid in terms of what can be done with them (e.g. not a lot of flexibility in the PUA rider premiums). More flexible than NML and NYL, but still pretty stiff. Lots of product options, however, including a special high early-year cash value product which no other company has.

Guardian Life Insurance Company Of America

The baby of the old mutuals, with a long history of paying whole life insurance dividends. Dividend option Q is Guardian's term blend, which can be added to many of its whole life insurance products (notably, its Whole Life 95 and Whole Life 99 products). Option Q makes a lot of high cash value growth cases possible with this company that would otherwise be non-starters.

Penn Mutual

Penn Mutual is sometimes called Guardian's little brother, and decidedly the smallest of the old mutuals. Don't let that fool you, though. They've been paying dividends for over 175 consecutive years and is the second-oldest mutual company in this list. They have one of the most flexible products in the marketplace—a fully customizable whole life insurance product with high cash value growth in the mid to late part of the contract. Good if you plan on holding the policy for 15+ years. 

Northwestern Mutual 

Best For Low Net Cost And Overall Pricing

Northwestern Mutual (logo)

Northwestern Mutual Financial Overview

Capitalization Ratio: 13.80%

Comdex: 100

A.M. Best Company: A++

Fitch Ratings: AAA

Moody's Investors Service: Aaa

S&P Global Ratings: AA+

30-year DIR Average: 6.85%

Pros and Cons Of Northwestern Mutual

Pros

  • The highest total dividend payout of all the mutuals
  • Direct recognition
  • Great customer service

Cons

  • Policies can be very rigid with limited customizability
  • Closed ecosystem frustrates some policyholders

Northwestern Mutual has long been considered the gold standard for what whole life insurance ought to be. The company's primary focus is not cash accumulation, but its products have historically been used for that and have performed very well. 

Northwestern Mutual is the most "old school" of the mutuals, but also the largest (by far) and has a very strong company culture oriented around its flagship whole life products. Compared with other mutual carriers, NML seems more focused on achieving the lowest net cost for whole life insurance rather than touting high return on cash value.

Also, this is the only mutual in the group where you must buy the policy direct from an employee of the company. Northwestern Mutual doesn't have an independent field force. Every agent works for Northwestern Mutual. That can potentially be a good thing, but it can also limit your options. For example, if you want to get an independent review of your policy, you can't. Everything in Northwestern's portfolio is proprietary. You're also not going to see quotes from multiple different companies working with a Northwestern Mutual agent.

And, if you ask, the agent is likely to tell you Northwestern Mutual is the best life insurance company that's ever existed in the history of insurance companies.

To be fair, they do have excellent customer service ratings. The company's financial statements are clean as a whistle, and as a result... their products are really, really, good and tend to perform very well over the long-term.

PUA Limits

Their PUA rider is called "the additional premium rider".

In year 1, the PUA cap is the greater of 7x the Whole Life Plus premium, $100,000, or the Whole Life Plus MEC limit. In years 2+, it's the greater of 2x the Whole Life Plus 100 premium, $10,000, or the Whole Life Plus MEC limit. Any reductions in the PUA rider become permanent, so there's no real flexibility there. And, you can't add more than the scheduled amount without additional underwriting. And, unlike most of the other PUA riders from other companies, Northwestern Mutual requires you to pay PUA premiums with the same mode as the base whole life premium.

If you're looking for high cash accumulation, go with the Adjustable CompLife and buy as much paid up additional insurance as you can.

New York Life 

Best For Customizable Payment Options And Non-Direct Recognition

New York Life (logo)

New York Life Financial Overview

Capitalization Ratio: 14.0%

Comdex: 100

A.M. Best Company: A++

Fitch Ratings: AAA

Moody's Investors Service: Aaa

S&P Global Ratings: AA+

30-year DIR Average: 6.74%

Pros and Cons Of New York Life

Pros

  • "Dial in" payments to create custom payment length
  • Non direct recognition company

Cons

  • PUA rider is somewhat inflexible
  • High minimum premium requirements for some can make it difficult to buy smaller policies
  • Discourages policyholders wanting to use certain insurance concepts, like infinite banking

New York Life is, in some ways, like Northwestern Mutual, except older and a little bit more aggressive with some of its product offerings.

While they do things very differently from NML in terms of product design, their whole life insurance products are some of the strongest performing in the industry, cash accumulation-wise. It didn't always used to be this way, though. Back in 2018, NYL's flagship whole life insurance product was essentially the laggard of the bunch. Both guaranteed cash and non-guaranteed performance lagged Guardian (and Guardian was already known as something of a laggard back then). 

But, just like all the other mutuals, New York Life repriced their products, and now has one of the strongest-performing whole life policies in the marketplace. Officially, NYL rejects popular concepts like infinite banking and they don't really want to be known as an accumulation-focused company, preferring traditional whole life sales. 

However, their new Secure Wealth Plus is an attempt to compete with MassMutual and Guardian in the high cash value 10-pay whole life space. 

If you want long-term cash accumulation, however, stick with their flagship Custom Whole Life product, which can be "dialed in" to a specific number of premiums. For example, if you want a 7-pay whole life product, NYL's product can be customized to accommodate that. Or if you want a 23-pay product, they can do that, too. In that sense, the product is very flexible.

Like other mutuals, NYL offers a dividend option term rider which can be used in conjunction with paid up additions. 

The company's PUA rider allows for maximum paid up additional insurance based on the base premium, which then scales down over time.

PUA Limits

In the first year, your PUA cap is 10x the base premium. In year 2, it's 8x the base premium. In year 3, it's 6x the base premium. In year 4, it's 4x the base premium. In year 5+, it's 2x the base premium. This is based on current company practice, which could theoretically change over time. NYL does guarantee the PUA cap will never be less than 1x the base premium. 

The minimum PUA payment requirement is $0 in any given year, but if the policyholder pays nothing for longer than 2 consecutive years, the PUA rider is dropped from the policy. Also, unlike a lot of other companies, there's a lifetime maximum on paid up additions of $2 million.

So while the base product itself can be modified to accommodate nearly any premium schedule, that schedule then becomes (more or less) fixed after issue. If you make significant changes to the PUA rider, you risk losing it altogether. In that sense, NYL is very rigid in how the product works in practice. Also, for some products, like Secure Wealth Plus, New York Life wants a high minimum premium requirement. And for all cases where your insurance agent is part of NYL's independent field force, NYL typically wants a minimum of $10,000 per year premium from the policyholder.

MassMutual 

Best For High Early-Year Cash Values And Non-Direct Recognition

MassMutual (Logo)

MassMutual Financial Overview

Capitalization Ratio: 13.40%

Comdex: 98

A.M. Best Company: A++

Fitch Ratings: AA+

Moody's Investors Service: Aa3

S&P Global Ratings: AA+

30-year DIR Average: 7.40%

Pros and Cons Of MassMutual

Pros

  • Both non-direct and direct recognition policy loans
  • Simple term-blending option
  • Simple and intuitive online self-service via the MassMutual app

Cons

  • Somewhat rigid policy designs
  • Customizability is somewhat limited
  • Most policy changes (including changes to term blending and PUA riders) only allowed once per year
  • Openly discourages agents and policyholders from using their products for concepts like IBC

MassMutual has a decidedly more "corporate feel" than most of the other mutual insurers in the group, but they're very much a policyholder-friendly mutual carrier and one of the best whole life companies out there.

The company's High Early Cash Value product (Legacy HEVC) is unique among its mutual brethren in that it's specifically designed for high early year cash values. We're talking 85% to 95% cash value as a percentage of premium paid in the first year. The low early-year expenses means you get cash value almost equal to your cost basis in year 1 of the policy. 

This policy was designed more for businesses that need to show total cash value in the early years of the policy that is higher than a typical whole life policy. Normally, this is for accounting purposes or some special use cases where showing additional cash value on paper is an advantage to the business. If your accounting and finance guys are giddy over showing lower impact on the balance sheet, this product is going to look very appealing to them. 

But there are no free lunches. 

The tradeoff is... expenses are spread out over the life of the policy (instead of being heaped, which is how the company can offer the high early-year cash value). Because of this, you actually end up depressing long-term cash value. The longer you hold the HECV product, the more this becomes apparent. So, while you get additional cash value in the first few years than you otherwise would get, you pay for it later with lower total cash value. 

MassMutual's long-term cash-focused product is the Legacy 100 with the Life Insurance Supplemental Rider (LISR). The LISR is a sort of term + paid-up additions rider. The way it works is, the annual dividend plus the LISR premium buys a target face amount of insurance. Over time, the non-guaranteed dividends help buy permanent paid-up additional life insurance, which replaces the term insurance, and keeps the target face amount level until all the term insurance is gone. Couple the LISR with MassMutual's other paid-up additions rider, the Additional Life Insurance Rider (ALIR), and the product can produce some amazing cash values. 

The downside to MassMutual's design is actually the LISR itself. The way MassMutual does the conversion makes the rider highly sensitive to changes in the dividend. As dividend rates go down, the recommended (and eventually, the required) LISR premium rises, sometimes substantially. This is because dividends are a major driver of LISR-to-PUA conversion. And because MassMutual allows you to thin fund the LISR, policyholders can get a nasty surprise later on down the road if dividends don't work out as expected.

Another thing with the LISR and ALIR is they can only be changed once per year. Meaning, if you want to lower or raise your LISR or ALIR payment, you can only do so on your policy anniversary.

PUA Limits

The LISR minimum premium is $0 and the maximum premium is whatever is necessary to convert all the term insurance to paid up additions. Minimum premium for ALIR is $0, but if you lower your ALIR payments for 3 consecutive years, the company will change the maximum ALIR premium to whatever amount was the highest amount paid during those 3 years.

The hard limits for MassMutual's PUA riders are 10x base premium all years, with a $5 million annual limit for non 1035 exchanges. It's 20x base premium for 1035 exchanges with a $3M annual premium limit.

This makes MassMutual's policies some of the more rigid ones in the list—not too much flexibility in premium payments.

Even so, if you don't mind the rigidity of MassMutual's product line, these products have amazing growth potential.

One last thing here is MassMutual has done an amazing job with it's policyholder app. The app lets you log into your account, initiate policy loans, policy loan repayments, change premium payments, submit policy changes (e.g. change of beneficiary), and more right from the app. This is a huge time-saver, especially if you don't like talking to customer service agents.

Guardian Life Insurance Company Of America

Best for Diverse Selection Of Whole Life Products, Policy Customization, and Premium Flexibility

The Guardian Life Insurance Company Of America (Logo)

Guardian Financial Overview

Capitalization Ratio: 14.40%

Comdex: 99

A.M. Best Company: A++

Fitch Ratings: AA+ (Withdrawn for commercial reasons)

Moody's Investors Service: Aa1

S&P Global Ratings: AA+

30-year DIR Average: 7.02%

Pros and Cons Of Guardian

Pros

  • Wide range of policy options and riders, including an optional chronic illness rider and LTC rider
  • Unique index participation feature (equity indexing) not found on most whole life products
  • Low minimum face amounts for smaller policies
  • Non-direct and direct recognition policy loans
  • Coverage for adverse risk (i.e. people who normally wouldn't qualify for insurance)
  • Most flexible PUA rider in the industry, with low minimums, high maximums, flexible payment frequency, and the ability to pay both scheduled and unscheduled PUA payments
  • Simple and intuitive online/self-service options through the Guardian app
  • Embraces a variety of insurance concepts from LEAP, Living Balance Sheet, and IBC

Cons

  • Might be overwhelming for those who prefer simple policy options
  • PUA maximums decrease over time
  • Some policy options can be expensive compared to other insurance companies

Guardian is an interesting company. It seems to have a whole life product for every scenario.

You want high death benefit? There's a whole life insurance product specifically tailored for that. Want high early year cash value and a high 10th-year cash value? Use their whole life 95 product. Want the best long-term cash value performance? Choose the whole life 99. Want something geared towards high guaranteed cash value? Use whole life 121. Need a policy but not sure you qualify for life insurance? No problem. They have guaranteed-issue whole life. They even have basic whole life policies with very small face amounts and limited-pay whole life products which are paid up at specific ages or after a specific number of years if you are worried about your ability to pay premiums forever. Want to trade your whole dividend payments for an equity-indexing option? Guardian offers that, too.

They even have whole life policies specifically designed to be used for executive bonus plans and pension trusts.

In all, Guardian offers a choice of 12 different whole life products.

And, Guardian is known for constantly tweaking its product lineup and product features. Their product devs remind me of "the boys in the back room"—mad scientists always tinkering with stuff, but never finished. 

In some ways, that's good. It means they're actively developing and constantly improving their products. Much better that than let everything go stale. Sometimes their tweaks leave something to be desired, however, which is why I haven't always promoted them to my clients. 

Another deterrent for me was, in the past, their minimum face amounts were too high, and they seemed to be a more expensive option compared to some of the other mutuals. But, they've recently repriced everything, and are now one of the best dividend paying whole life insurance companies out there.

If you're looking for blended whole life or policies that work well with infinite banking, then you'll want to check out the company's dividend option Q (level term rider) and add generous paid-up additions rider premium payments. But, even without the term blending, Guardian's products perform very well and, in some cases, work better than the blended option.

Speaking of PUA payments, Guardian has a very generous PUA rider for the 2021-2022 series (the current series as of (2024).

PUA Limits

The minimum requirement to keep the rider active is $250 per year. In the first year, the PUA cap is set to the lesser of 3x the base premium or $2 million. You can also apply for unlimited excess PUA payments in the first year of the policy. In years 2-10, the PUA cap is 3x the base premium up to $2 million. In year's 11+, the annual PUA cap is 1x the base premium, up to a $2 million maximum. 

If you elected dividend option Q/R, the maximum annual PUA cap is 10x the annual non-rated base policy premium or $2,000,000 and can be paid at any time during the year until the face amount of the one-year term is reduced to $0.

For all guaranteed issue whole life products, Guardian caps the PUA payments at the lesser of $2 million or 1x the non-rated base premium.

Like many other companies these days, their customer service can be hit or miss. Thankfully, Guardian has an excellent self-service option via the Guardian app, which is simple and intuitive to use.

Penn Mutual

Best for Premium Flexibility and Policy Customizability

Penn Mutual (logo)

Penn Mutual Financial Overview

Capitalization Ratio: 17.50%

Comdex: 94

A.M. Best Company: A+

Fitch Ratings: AA-

Moody's Investors Service: Aa3

S&P Global Ratings: A+

30-year DIR Average: 6.72%

Pros and Cons Of Penn Mutual

Pros

  • Flexible PUA rider and payment frequency options, with the ability to pay unscheduled PUA premiums in excess of the regularly-scheduled amount.
  • Direct recognition policy loans
  • Rare overloan protection rider and chronic illness rider on whole life product
  • Low minimum face amounts for smaller policies
  • Embraces insurance concepts like IBC, LEAP, and other similar concepts

Cons

  • Customer service could use some improvement
  • PUA minimums are higher than other life insurers
  • Online portals and self-service options need improvement

The company's dividend-paying whole life insurance product is customizable to the point where you can "dial in" the number of premiums you want to pay and load your policy with an impressive amount of paid up additions. 

The company also offers a choice of 2 different paid-up additions (PUA) riders. Its term blending is what helps build large cash values in the product and it works a bit differently than some of the other company's blending options. First of all, the term rider is mated with paid-up additions, such that each premium payment decreases the one-year term insurance amount.

Combined, they called it the "flexible protection rider" (FPR), and it's the secret sauce behind squeezing out more cash value from their whole life insurance product.

A common problem with supplemental term riders and term blends is the term portion of the policy can cause the whole thing to implode if the term costs get out of hand. Sometimes, these kinds of riders are dependent on dividend payments from the company and if dividends are less than illustrated, you might have to kick up more premiums to keep things working smoothly.

For the most part, that's not true with Penn. If you illustrate a "no dividend" scenario in their software, you can "jimmy" the product so that the term rider never causes any other systemic problems. Then, under the normal dividend scenario, the product works as expected.

Like other term riders, the cost can increase, but that increase is capped at a maximum guaranteed amount. The PUA conversion also helps keep the cost of the term rider in check by systematically reducing the amount of term insurance in the policy over time.

In addition to the flexible protection rider, you can add one of 2 additional PUA riders:

1) The Enhanced Permanent Paid-Up Additions Rider (EPPUA) or

2) The Accelerated Permanent Paid-Up Additions Rider (APPUA)

The enhanced permanent paid-up additions rider adds death benefit on top of the base whole life policy. The accelerated permanent paid-up additions rider replaces the term rider portion of the policy with PUAs more quickly than the normal FPR schedule allows.

PUA Limits

The maximum PUA cap is set at issue, based on the policy design, and cannot be more than 20X the base annual unrated premium, up to a $5M annual limit.

Penn allows a maximum annual payment limit on the PUA rider that can exceed the normal scheduled PUA rider premiums. In other words, it's possible to make a one-time lump sum PUA payment that exceeds the scheduled PUA rider payment. This option must be designed into the policy at issue. Penn also allows a lot of flexibility in its paid-up additions riders. You can raise the PUA rider payment to the maximum annual payment limit or lower it to zero. 

The only requirement is you must make a minimum payment within any given 5-year period equal to 50% of the maximum annual payment limit. In other words, Penn's PUA riders will terminate if cumulative PUA premiums made within the previous 5 policy years are less than 50% of the annual payment limit. Compared to some of the other insurers in this list, that's pretty generous. And, between years 3 and 30 of the policy, you can make catch-up PUA payments equal to the difference between the previous year's payment and the maximum annual payment limit for that year.

Another unique thing about Penn's whole life insurance product is it comes with an optional overloan protection rider. This rider is triggered in your old age if you accidentally borrow too much against your policy and it would trigger a lapse (and thus a huge tax bill). A very thoughtful little detail you won't find on other whole life policies.

Choosing the Right Dividend-Paying Whole Life Insurance Company

You're going to be tempted to go with the company that illustrates the highest cash accumulation on paper.

Don't.

Whole life insurance illustrations can be very deceiving. I've personally seen illustrations where the highest-illustrating product underperforms a lower-illustrated product in real life. I've also seen inforce illustrations where the dividend rate stays the same or increases and yet the actual dividends paid is lower than illustrated. 

Some of this has to do with how the company pays dividends to policies on inforce business, and what happens to mortality and expense charges in the future. For example, it's possible for the dividend rate to remain level or increase, yet policyholders see actual dividends paid decrease. 

How can this be?

Simple. 

The dividend rate (which is what always gets touted by companies and agents) represents just the investment portion of the dividend. There are actually 3 different components to the dividend:

  1. Mortality savings
  2. Expense savings
  3. Investment gain

The first 2 can really eat into the 3rd if the insurer was overreaching on their assumptions.

So... instead of being hyper-focused on the illustrated performance of the policy, be hyper-focused on how the insurer runs its business. I write a lot about this in, How To Choose A Mutual Life Insurance Company. 

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About David


David Lewis is a licensed life insurance agent, and has worked in the life insurance industry since 2004. During that time, he has worked with some of the oldest and most respected mutual life insurance companies in the U.S. To learn more about him and his business, go here.