Blog 84 – New Whole Life Insurance Versus Old Whole Life Insurance

The end of 2020 brought a major change to the life insurance industry by establishing new lower guaranteed interest rates for cash value life insurance policies. The exact rules vary a little depending on the insurance product, but the most notable change affected whole life policies. Because of these changes, the insurance industry had to overhaul their guaranteed interest rates to the newly permitted rates.  Every life insurance company had to redesign their whole life product portfolio and replaced their older offerings around the end of 2021.


Two big changes came along with this new legislation: First change, the new guaranteed interest rate assumptions allow these new policies to have lower death benefits and still pass the Modified Endowment Contract (MEC) rules. Two positive aspects of this first change were that it reduced the cost of insurance for those that were looking for high cash values and not death benefit, particularly, Infinite Banking Concept (IBC) policies and the lower death benefit makes it easier to underwrite high cash value life insurance. Second change, the new contracts have a lower guaranteed interest rate, but, since the dividend rates have not changed, the new policies add more cash to the policies via the Paid-Up-Additions (PUAs) rider. This means that the cash value component of IBC policies should be higher in the long run.

To illustrate the change, we compared an old (2012) IBC illustration with a brand new 2022 illustration from the same insurance company.

The comparison starts with an illustration from 2012 for a 54-year-old Preferred male designed to maximize cash value for the purpose of supplementing his retirement income. The client was paying premiums of $35,000 for eight years, exercising the reduced paid-up feature, and receiving an income stream of $20,200 for 23 years. We then compared the previous illustration to an illustration for the new whole life insurance product available in 2022 using the same scenario and from the same insurance company. We were anticipating lower cash values and lower income since the dividend interest rate was 59 basis points higher in 2012 then in 2022, but the results surprised us. The income stream for the same 23 years increased to $20,500 and the death benefits, nevertheless, dropped in the 2022 illustration, as it was expected.

Money Tree

In summary, the new whole life insurance products have lower guaranteed interest rates, which makes the spread between the guaranteed interest and the dividend rate much larger and since in most cases dividends are reinvested into the polices to buy more PUAs, the policies, long term, have more cash value and give the client more money in retirement. The life insurance industry is in good financial strength, and we have now seen evidence that it continues to innovate and deliver excellent whole life products. 

As we have always said, a properly designed Infinite Banking policy is a great place to store your money.

If you would like to learn how you can grow a substantial amount of cash that you have access to at any time without penalties, is unrelated to the stock market, and will generate income that is not included in your tax return, visit our website at or feel free to email us your questions at or call us toll-free at 1-844-443-8422.

Isis B. Palicio, LUTCF, MBA
Pedro A. Palicio, MBA, Ph.D.
Infinite Banking Concepts® Authorized Practitioners

We are experts in designing high cash value dividend-paying whole life policies

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