Penn Mutual is an excellent company and makes up the elite class of the best whole life insurance companies for cash value growth. But, is it going to be the right insurance company for you? And that’s the real question! And one that we hope you’ll be better able to answer for yourself after reading I&E’s complete review of Penn Mutual where we will discuss the company’s history, ratings, products and benefits.
Comprehensive Review of Penn Mutual
Let’s first start out by taking a look at Penn Mutual’s highlights from 2022.
Highlights from Penn Mutual’s 2022 Annual Report include:
- Celebrated its 175th year.
- Serves 1.1 million clients.
- Employs 3,300 people.
- Has 9,100 financial professionals.
- Total revenue: $4.6 billion.
- Total assets under control: $175 billion.
- Life and annuity benefits paid: $2.1 billion.
- Dividend payout to eligible policyholders: $153 million.
Business Segments and Products:
- Senior, Healthcare Services, Life, and Auto & Home segments.
- Offers a comprehensive product portfolio.
Fiscal Year 2023 Guidance:
- Revenue expected between $1.05 billion and $1.2 billion.
- Net loss expected between $50 million and $22 million.
- Adjusted EBITDA expected between $80 million and $105 million.
- Total surplus (capital): $3.1 billion as of December 31, 2022.
- Statutory assets under management: $37.8 billion.
- Life insurance in force: $257 billion.
- 495K lives insured.
Diversified with a focus on asset/liability management, liquidity, and conservative risk approach.
Includes investment-grade bonds, stocks, venture capital, private equity, and real estate.
- New life insurance sales: $370 million.
- New annuity sales: $704 million.
- Total GAAP assets: $41.6 billion.
Ratings and Recognition:
- Received high ratings from major rating agencies like AM Best, Moody’s, Standard & Poor’s, Fitch, and KBRA.
- Great Place to Work® certification.
Board of Trustees:
Includes experienced professionals from various industries.
Family of Companies:
Includes Penn Insurance and Annuity, Vantis Life, Janney Montgomery Scott LLC, Hornor, Townsend & Kent, LLC, and Penn Mutual Asset Management.
Penn Mutual’s 2022 Annual Report showcases the company’s strong financial performance, commitment to policyholders, and focus on long-term stability and growth.
About Penn Mutual
Penn Mutual is a leading dividend paying whole life insurance company that was founded in 1847. Penn Mutual offers participating whole life insurance. In November of 2022, Penn Mutual Board of Trustees approved a $163 million life insurance dividend payment for 2023. And more recently, Penn Mutual announced a $200 million dividend payout for 2024, its 175th year in a row it has paid out a dividend. The $200 million dividend payment is $37 million higher than the previous year, an increase of almost 23%.
2023 Penn Mutual Dividend Interest Rate
As you can see, in 2023 the dividend interest credit rate was 5.75% on non-loaned values and 5.05% on loaned values. Also, policies with 11+ years are were credited 5.7% on the loaned value, making it a wash loan after year 11 thanks to Penn Mutual’s preferred loan provision.
The great success of Penn Mutual in recent years has to be attributed, at least in part, to David O’Malley, the the president and chief executive officer of The Penn Mutual Life Insurance Company. According to Penn Mutual’s website, O’Malley began his career with the company in 1994 as an intern. Over the course of time he was promoted to executive leadership, having held the roles of chief risk officer, chief financial officer and, most recently, president and chief operating officer. It is good to see companies that still value promoting from within.
New Automated, Accelerated Experience
Penn Mutual is an innovator in the life insurance industry. Nowhere is that more evident that in the Company’s latest move towards automated accelerated underwriting which provides no medical exam life insurance. Penn Mutual offers no medical testing required policies with approvals in as quick as 24 hours, in contrast the the industry average of around a month. The policy is available for individuals ages 20-65 with face amounts up to $7,500,000 (seven million-five hundred thousand).
According to Penn Mutual,
[The innovative new no exam required accelerated experience] has the automated intelligence to make key decisions and integrate with online tools and databases to quickly verify, authenticate and confirm, speeding decision making and approvals.
Complimentary Webinar on High Cash Value Whole Life
2023 Penn Mutual Ratings
Penn Mutual is on solid financial footing as is evidenced by the following ratings, updated as of 2023:
- A.M. Best rating A+ (Superior)
- Moody’s Investor Service Aa3 (Excellent)
- Standard and Poor’s A+ (Strong)
- Fitch Ratings AA- (Very Strong)
- Kroll Bond Rating Agency AA-
- Comdex Ranking 92
Additionally, Penn Mutual Life Insurance Company has an A+ rating with the BBB, which speaks to the company’s commitment to its customers.
Penn Mutual Products
Penn Mutual focuses on both annuities and life insurance.
- Fixed Annuities
- Immediate Annuities
- Variable Annuities
- Term Life Insurance
- Whole Life Insurance
- Universal Life Insurance
- Variable Life Insurance
- Joint or Survivorship
Penn Mutual Life Insurance
Although Penn Mutual focuses more on the permanent life insurance and the benefits therein, the company offers both term life and permanent life insurance.
Benefits of Term Life Insurance
- Lower Initial Cost
- Income Protection
- Mortgage Protection
- Conversion Option
Benefits of Permanent Life Insurance
There are many benefits of permanent life insurance in a diversified portfolio. Below are just some areas where permanent life insurance can provide extreme value.
- Business Succession Planning
- Buy Sell Agreements
- Key Man Insurance
- Estate Planning
- Infinite Banking
- Executive Bonus Plans
- Deferred Compensation Plans
- Retirement Planning
- Wealth Building
Penn Mutual Life Insurance Policies
[Plans and Features]
Term Life Insurance
Term life insurance allows you to have a large guaranteed death benefit for a lower initial cost than permanent life insurance.
Penn Mutual offers 10, 15 and 20 year term lengths.
Penn Mutual’s convertible term life insurance allows the insured to convert all or a portion of the policy to permanent coverage prior to the end of the term or age 70.
The advantage is that you can get a lot of coverage for a low cost while your income is lower, and then convert that coverage to a superior policy down the road once you become more established.
Permanent Life Insurance
Permanent life insurance, and whole life in particular, offers many lifelong benefits. One of the primary benefits is that under IRC Section 7702, cash value life insurance is offered many tax advantages.
Anytime the internal revenue code offers tax incentives it makes sense to utilize those tax incentives to the fullest.
Addition benefits of cash value life insurance:
- Income tax free death benefit
- Tax deferred cash value growth
- Tax free life insurance loans
- Tax free cash withdrawals up to basis
Guaranteed Whole Life
Whole life insurance lasts your entire life and offers specific guarantees, including a guaranteed death benefit, guaranteed cash accumulation and guaranteed level premiums.
Additional cash value growth is available through dividends. Although not guaranteed, Penn Mutual has paid dividends each year since the company was founded in 1847.
Dividends are valuable and can be used to:
- Purchase paid up additions
- Pay Premiums
- Earn interest with the company
- Cash Out
Penn Mutual’s Guaranteed Choice Whole Life offers many flexible options, such as ordinary whole life to age 100, as well as limited pay life insurance, such as 20 pay and paid-up at age 65.
So, are there any potential drawbacks to Penn Mutual?
Penn Mutual practices direct vs. non-direct recognition when calculating dividends if there is an outstanding policy loan. That means the policy loan reduces how much cash value the company recognizes. Your dividend amount is calculated using your total cash value.
As a result, the dividend received when there is an outstanding policy loan may be less for direct recognition companies than those that practice non-direct recognition.
However, Penn Mutual does a great job here. Check out Penn Mutual’s Dividend Interest and Loan Rates.
As mentioned above, in 2023 the dividend interest credit rate was 5.75% on non-loaned values and 5.05% on loaned values. Also, policies with 11+ years are were credited 5.7% on the loaned value, making it basically a wash loan after year 11 thanks to Penn Mutual’s preferred loan provision.
High Early Cash Value
Penn Mutual’s cash value whole life insurance policy excels above the competition in most areas but it may not always be the king when it comes to early high cash value availability. There are other mutual insurance companies that offer policies that may be superior for the person who is looking to have as much cash value available as soon as possible.
With that said, for those with a long term horizon beyond the first few years, Penn Mutual will most likely match or outperform the competition.
Now let’s take a look at yet another benefit of Penn Mutual, the Chronic Illness Accelerated Benefit Rider.
Chronic Illness Accelerated Benefit Rider
One of the biggest concerns people have as they age is how will they pay for long term care. And not just any long term care, but long term care in the home.
Most people prefer to remain in their home rather than a nursing home or assisted living facility. One of the more affordable options is life insurance with living benefits.
There are two types of accelerated benefit riders that can be added to permanent life insurance and used to help cover the costs associated with long term care: long term care rider and chronic illness rider.
Chronic Illness Rider
With a chronic illness rider, if you qualify for the benefit, you can access a portion of your death benefit in advance. It is considered a “living benefit” because you use it while you are living, unlike the death benefit that goes to your beneficiary when you die.
Penn Mutual’s Chronic Illness Rider is automatically included in newly issued policies where eligible. If you qualify, you can receive a tax free income benefit (based on Internal Revenue Section 101(g)), which is an acceleration of your death benefit for tax purposes and generally not a taxable event.
To qualify for Penn Mutual’s chronic illness accelerated benefit rider you must be unable to perform 2 of 6 activities of daily living, or have a severe cognitive impairment for a period of 90 consecutive days, and continuous care in an eligible facility or at home is expected to be required for the rest of your life.
Accessing the death benefit to pay for long term care costs decreases your death benefit, but it is a valuable resource to have, rather than tapping into your nest egg. You spouse and beneficiaries will thank you for your proactive planning.
Once you qualify for the income benefit, you can use the money for whatever you need. That includes in home care, home modifications, etc.
Typically, your daily income benefit is subject to the current IRS per diem maximum of $360 a day. You can receive income benefits monthly, quarterly, semi-annually or annually.
Another benefit of Penn Mutual’s Chronic Illness Rider is that you can use it with either a level death benefit or increasing death benefit. So your policy death benefit can grow over time, increasing the amount of chronic illness income benefit you would have access to later in life.
Please note: Not all states have approved the rider.
Additional Whole Life Insurance Riders
✅Accelerated death benefit – offers the option of taking a portion of the death benefit early if the insured is diagnosed as terminally ill.
✅Child’s Term Insurance – term rider providing life insurance for children until age 23, at which point the policy can be converted to permanent coverage.
✅Chronic Illness Accelerated Benefit Rider – as mentioned above, the chronic illness rider offers tax free accelerated benefit if you are diagnosed as chronically ill.
✅Disability Waiver of Premium – Your premiums are waived if you are determined to be permanently disabled.
✅Guaranteed Purchase Option – option (7) to purchase additional coverage up to $100,000 with no evidence of insurability
✅Flexible Protection Agreement – Balances the death benefit with term life, offering a unique blend of whole life and term life.
✅Enhanced Permanent Paid Up Additions – Through the addition of extra premiums, this rider allows you to increase your cash value, potential dividends and death benefit based on the length of time you choose to implement this benefit.
Universal Life Insurance
Universal life insurance is permanent coverage that offers flexible premiums, guaranteed death benefit, and cash value growth. Penn Mutual offers four different universal life policies.
Accumulation Builder Select Indexed Universal Life and Accumulation Builder Advantage Indexed Universal Life and Accumulation Builder Flex IUL
Indexed account to either the S&P 500 Index or the S&P Global Broad Market Index.
Provides an annual fixed interest rate that will never drop below 1%, despite negative return in the stock market.
- Death benefit protection
- Premium flexibility
- Potential for strong cash value growth
Protection Guard Universal Life and Guaranteed Protection Universal Life
- Primarily focused on providing a lifetime death benefit for a lower cost
Protection Universal Life (PUL)
- Current assumption UL with a no-lapse guarantee up to age 100
- Excellent Pricing vs the Competition
- Cash Value Accumulation
- Beginning in year 11, 0.25% Policy Value Enhancement
- Available in all states, including New York
Survivorship Plus Indexed Universal Life
Second to die life insurance. Covers the lives of two people and the death benefit is paid upon the death of the surviving spouse or partner.
- Provides lifetime coverage at a lower cost than insuring only one person
- Provides cash value growth
Diversified Growth Variable Universal Life (VUL) & Diversified Advantage VUL
Variable life insurance provides policy cash value growth through separate investment options.
- Lifetime Protection
- Potential for high cash value accumulation
- Flexible coverage and premium options
- Greater upside potential/greater risk
Penn Mutual vs Northwestern Mutual
Penn Mutual offers some of the best dividend paying whole life insurance in the U.S. Northwestern Mutual has consistently been the leader in whole life insurance sales for the better part of the last decade.
Both companies are highly rated. Penn Mutual has a total Comdex ranking of 92 out of 100, while Northwestern Mutual has an industry leading Comdex ranking of 100.
Northwestern Mutual is a captive company, which means only agents under the Northwestern Mutual banner may sell the company’s whole life policies. Penn Mutual is a non-captive company, which allows outside agents to offer Penn Mutual’s policies to their clients.
Below is a snapshot of the two companies head to head. But at the end of the day, the best whole life insurance company for you will be the one that best meets your specific needs and goals.
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Types of Policies:
IBUSA’s Overall Score
Penn Mutual Life Insurance Review Conclusion
At I&E, we are big fans of this mutual company. It offers many excellent high cash value growth life insurance policies. Further, the company has a long dividend history, even during the Great Depression and Great Recession. So, if you are looking for permanent coverage from a solid mutual company, Penn Mutual is one of the best options in the marketplace.