Savings growth

Savings growth refers to the increase in cash value or account balance within insurance products such as whole life policies and indexed universal life (IUL) policies, measured over time. Insurers calculate savings growth using credited interest rates, dividends, or index-linked returns; for example, MassMutual reported a 2023 dividend rate of 6.1% on participating whole life policies.

Policyholders can track savings growth through annual statements that show year-over-year increases in policy cash values and accumulated interest credits, as transmitted by YourInsuranceInfo. Variable factors like premium payments, loan withdrawals, and insurer expenses directly affect the pace of savings growth in policies such as variable universal life (VUL).

Tax advantages–such as tax-deferred accumulation–boost savings growth because IRS rules under IRC Section 7702 exempt internal buildup from current taxation. Surrender charges and early withdrawal penalties reduce realized savings growth if policyholders access funds before specified periods; Prudential applies surrender charges up to 10 years on some universal life contracts.

Historical data shows average annual cash value increases between 4%–7% for traditional whole life insurance from companies like Northwestern Mutual during the past decade. Riders including paid-up additions accelerate savings growth by allowing extra premium contributions that immediately boost cash value; New York Life reports higher long-term values when clients use these riders consistently.

Insurance regulators require insurers to illustrate guaranteed versus non-guaranteed projections so consumers understand potential variability in future savings growth outcomes before purchasing permanent insurance products.