For the last few years, we have tracked the dividends paid by four large mutual carriers whose main product offering is whole life.  These carriers are owned by their policyholders, not stockholders and operate with a long-term business view. Unlike most life insurance carriers, they sell their products through a career agency system – a dying breed.  Their dividend rate and payments are a major marketing tool for their agents and dropping dividends is never a major selling point.  But in the last decade, even they succumbed to the historic low-interest rate environment and dividends trended downward.  

The big four carriers we have tracked – Northwestern Mutual, Mass Mutual, Guardian Life, and New York Life expect higher dividend payouts for 2019. 

  • Northwestern Mutual: Will pay out $5.6 billion, up from $5.3 billion in 2018
  • Mass Mutual: Will pay out $1.72 billion, up from $1.6 billion in 2018
  • Guardian Life: Will pay out $978 million, up from $911 million in 2018
  • New York Life: $1.8 billion, up from $1.78 billion in 2018

All four carriers appear to have held or raised dividend investment rates (DIR), with none dropping, a good sign.  The DIR drives the actual dividend amount paid.  

  • Northwestern Mutual: At 5%, up from 4.9% in 2018
  • Mass Mutual: Stays at 6.4%, as in 2018
  • Guardian Life: Stays at 5.85% where it has been since 2017
  • New York Life: Although they have not released yet, it appears to stay at 6.2%, where it has been since 2015

Overall, the dividend direction is positive.  We will not be seeing the 8% plus dividends of the 90s or early 2000s, but the worst seems to be over with dividend interest rates heading up, not down.  And that is a reassuring sign for those of us who manage whole life policies. 

In a future blog, we will review the components that makeup and drive the dividend calculation.