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Review of Penn Mutual’s Guaranteed Choice Whole Life Insurance Policy

Guaranteed Choice Whole Life Insurance Policy Review

The following article highlights a product from what we consider to be one of the best life insurance companies in the marketplace. For more on this top rated company, please visit our Penn Mutual review.

Benefits of Penn Mutual Guaranteed Choice Whole Life

The Penn Mutual Guaranteed Choice Whole Life insurance policy is a participating whole life insurance policy designed to provide three guaranteed items: death benefit, cash value accumulation, and fixed premiums.

Policy Payment Periods

One great benefit of the Penn Mutual Guaranteed Choice Whole Life insurance policy is that you can choose how long you pay premiums.  The limited pay whole life insurance payment period can range from 10 years to age 100.

Shorter payment periods are available. However, shorter periods could result in the policy being considered a Modified Endowment Contract or MEC.

The best part is that even when your premium payment period ends, the policy will continue to earn dividends.

The period is selected at the time of the application and cannot be changed. If circumstances change and you need to amend your payment plan there are some options available:

  • Request a reduced paid-up policy
  • Request the automated premium offset program (uses dividends to pay for the premiums)
  • Reduce your face amount (only an option after the first year)

Keep in mind that the shorter the payment period, the higher the cash value growth will be, but the whole life insurance rates you pay will also be higher.

Cash Accumulation

The Penn Mutual Guaranteed Choice Whole Life insurance policy provides guaranteed cash value accumulation. The policy can be designed for early high cash value growth, designed to provide maximum funding up to, but not exceeding, the MEC limits.

You can borrow against life insurance, using your cash value as collateral. You can also use your policy’s cash value as collateral to borrow money from a bank if you find a superior loan option, creating positive arbitrage.

Life insurance loans can be used for whatever you choose, including the purchase of other investment opportunities, such as real estate.

Issue Ages and Face Amounts

You can purchase a whole life insurance policy up to age 70 for $50,000 death benefit.  Age 71 to 85 you can get $100,000 face amounts or more. Exceptions may be made but be sure to discuss with your agent. The policy will be in effect until age 121.

Dividends

The Penn Mutual Guaranteed Choice Whole Life insurance policy will pay you a dividend. Unlike cash value accumulation, dividends are not guaranteed, but you can use them to purchase more life insurance through paid-up additions.

If you have a loan against the policy then Penn Mutual will use a portion of any earned dividend to pay a margin from the interest rate component.

There are six dividend options you can choose, based on what will benefit you the most in your situation:

  1. Paid-Up Additions – use the dividend to buy more insurance
  2. Premium Reduction – use the dividend to reduce the premiums you pay
  3. Cash – the most obvious, take the money and run
  4. Dividend Accumulations – leave it within the policy and let it accumulate cash value at a guaranteed minimum of 1.5%
  5. Loan Repayment – use the dividends to repay any outstanding loans against the policy
  6. Term Insurance – use the dividends to buy a one-year term policy

Overview of Highlights

The keyword to remember when it comes to the Penn Mutual Guaranteed Choice Whole Life insurance policy is guaranteed. Guaranteed cash value, guaranteed premiums, and guaranteed death benefit.  Remember these benefits when thinking about this type of policy:

  • Life Insurance Riders with flexible limits and provisions that allow paid-up additions, more substantial face amounts, and covering children
  • Guaranteed purchase option is a great choice when designing life insurance for children or young adults
  • Option to offset premiums using dividends to help pay for the policy
  • Option to lower face amount to reduce the premium, which would be great should your life situation change
  • Overloan Protection Rider
  • Disability Waiver of Premium rider options
  • Chronic illness rider
  • Terminal illness riders are included in most policies at no extra cost to you
  • Accumulation of cash value with no market risk, unlike other investment options
  • Dividends payments

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2 comments… add one
  • Stromsoe Agency June 28, 2018, 5:03 am

    Useful article. Thanks for Sharing. Thumbs up!!

    • Insurance&Estates June 28, 2018, 7:04 am

      Thank you for your feedback. We are glad you found the article useful.

      Sincerely,

      I&E

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