The Guaranteed Minimum Interest Rate on Whole Life Cash Value

One of the foundational assurances of Whole Life insurance is the **guaranteed minimum interest rate** applied to the cash value component. This guarantee is what distinguishes Whole Life from the variable nature of other permanent policies (like UL or IUL).

The Role of the Guarantee

The guaranteed rate is a contractual promise that ensures the cash value will grow at a fixed, minimum rate every year, regardless of economic conditions, stock market crashes, or interest rate fluctuations. This provides:

• **Stability and Predictability:** The policyholder can mathematically project the minimum cash value and death benefit at any point in the future.
• **Safety Net:** The guarantee ensures the policy will not lapse due to poor investment performance, provided premiums are paid on time.

The Relationship with Dividends

The guaranteed rate is the floor. Participating Whole Life policies can earn an additional amount via **non-guaranteed dividends**, which, when credited, combine with the guaranteed interest to provide the policy’s total growth for that year.

Disclaimer: This content is for informational purposes only and is not financial or legal advice. The guaranteed rate is a minimum; actual performance may be higher due to non-guaranteed dividends.