Learn about dividends and how they can effect your policy.
Whole Life FAQs
You may have questions about your Whole Life policy, and we want to help you get the answers you need. If the information below doesn’t address your questions, or if you need additional help, please contact us. To make sure your call is directed to the team that can best assist you, please use the phone number on the latest correspondence you received from us.
General:
What is a Whole Life policy?
Generally speaking, a Whole Life policy provides permanent lifetime insurance coverage with guaranteed level premiums.
I am converting to a Whole Life policy. What riders are available for my policy?
Generally speaking, only those riders that are convertible on the existing policy and are available with the new policy can be added. For details on riders, you can view our Client Fact Sheet for more detail.
What are dividends and what are they based on?
Depending on the type of Whole Life policy you have, you may have the opportunity to receive dividends. Dividends represent a return of premium for when policies perform better than expected. The policies that receive these dividends are commonly referred to as “participating”. Dividends are based on the performance of the participating policies, including investment returns, mortality, persistency, and expenses. Although dividends are not guaranteed, they give insurance companies the opportunity to share their success with you. For more information on dividends, please view our Dividend FAQ flyer.
How do I know what my policy values are?
You can review your annual statement to view your values as of your last policy anniversary date. This statement will include your policy face amount, death benefit amount, loan value, loan amount and cash surrender value.
If you want to know your current policy values, please contact us or register at MetOnline to see if your values are available.
What are my options to decrease my out-of-pocket premium expenses?
Generally speaking, you may be able to reduce your out-of-pocket premiums by reducing your face amount, removing an existing rider, or utilizing your policy’s value and/or dividends to help offset your premium payments.
Loans, Surrenders or Withdrawals:
Can I take a withdrawal and what is the impact to my Whole Life policy?
Generally speaking, you can withdraw the value of any accrued dividends or the cash value of any paid-up additional insurance purchased for your policy. This withdrawal will reduce the death benefit.
Can I surrender my Whole life policy? If so, what is the impact?
You may surrender the policy for its cash surrender value during the lifetime of the insured. We will determine the cash surrender value as of the date we receive your request in writing. The policy will have no further value.
Can I take a loan from my policy and what is the impact?
Loans are allowed any time after issue, provided there is available loan value within the policy or attached riders. Loans will decrease the cash surrender value and death benefit of the policy, and loans will accrue interest.
I have a loan on my policy. Am I required to pay it back?
While you are not required to repay the loan principal out of pocket, we encourage you at a minimum, to pay the annual loan interest. If the loan interest is not repaid as it becomes due, it will be added to the loan principal and incur additional interest charges. The amount of the loan including accrued unpaid interest will be automatically deducted from any policy surrender value or death benefit at the time of payment.
If I take a loan on my policy, will it be taxed?
Generally, any monies withdrawn up to the policy owner’s cost basis (the amount of premium dollars you have paid into the policy minus previous nontaxable distributions) are not considered taxable, and loans are not taxable when received. However, in the event of policy maturity, surrender or termination (other than as a death benefit payment), the amount of the loan(s), plus all unpaid interest, is considered to have been received by the policy owner. To the extent that the loan plus interest amount exceeds the cost basis, there would be a taxable gain. This amount must be reported by MetLife under IRS guidelines.
What is Loan Equity Termination (LET)?
Loan termination is the cancellation of a policy when the amount of the policy’s loan plus interest is more than the sum of:
- The guaranteed cash value.
- The cash value of any additional insurance or dividends with interest, if applicable.
- The cash value of any additional policy value or riders that are eligible for a loan, if applicable.
What are the tax consequences surrounding a Loan Equity Termination (LET)?
Generally, taxation will be incurred on a LET to the extent of gain at the time the policy is terminated. The policy is considered "canceled" and treated as a cash surrender transaction. See additional details under question 3.
What is an Automatic Premium Loan?
Automatic Premium Loan (APL) is a policy provision which provides for an automatic loan to be taken against the policy’s cash value if the premium is not paid within the grace period. Under the terms of the provision, a loan will be taken if the policy values are sufficient to cover the premium cost. Loans will decrease the cash surrender value and death benefit of the policy, and loans will accrue interest.
How do I repay my loan?
1. By mail
- Please note in the memo section of the check your policy number and whether the payment is for loan repayment. Mail your payment to the address provided on your last loan or billing statement.
2. You can also contact us using the number on your most recent correspondence and we can provide you with loan repayment stubs to be submitted along with your payments to ensure that they are credited to your loan. We can also assist you with setting up an automatic draft arrangement to repay your outstanding loan principal.
Whole Life Option Request FAQ
If your policy contains an option to purchase additional insurance, learn more about what this option provides and how it works.