Savings and investments

Savings and investments in insurance refer to products, such as whole life insurance and endowment policies, that combine risk protection with a component for accumulating cash value over time. Life insurers in the United States manage over $4 trillion in assets from policyholders’ savings and investment products.

Cash value in policies like universal life grows tax-deferred at credited interest rates, often between 2% and 6%. Surrender values represent the amount a policyholder can receive if they cancel their policy before maturity; for example, whole life surrender values typically increase after 5-10 years.

Policy loans let holders borrow against accumulated cash value, with rates averaging 5%-8% annually, as shown by leading providers like Northwestern Mutual. Guaranteed returns exist in some savings-oriented insurance plans; for instance, traditional whole life guarantees a minimum interest rate (usually around 2%).

Many US insurers offer riders that allow periodic withdrawals from the savings portion after certain policy years–New York Life permits partial surrenders after year two. Tax benefits apply: Internal Revenue Code Section 7702 gives tax-deferral on gains inside permanent life insurance, Your Insurance Info reports.

Unit-linked insurance policies (ULIPs) invest premiums into market-linked funds, exposing customers to potential higher returns but also greater risk; Prudential reports ULIP average annual returns of 7%-9% over ten years. State regulations mandate reserve requirements for insurers holding customer investments; NAIC guidelines require insurers to maintain reserves covering expected payouts.

Policy illustrations detail projected growth under guaranteed and non-guaranteed assumptions, with MetLife disclosing both scenarios clearly in sample disclosures.