Cash Value in FE

[panzercanvasser]

I know I know- final expense policies aren’t about the cash value. It is because of that reality- and lack of attention the subject receives- that I’m wondering if anyone can answer a more technical question born out of sheer curiosity.

Let’s say Company A and Company B offer the same product and their financials are generally in the same ballpark. This can be a level or graded/ROP product, the main thing is if it’s level it’s with both and if it’s graded/ROP it’s with both. They’re both pay to 121. Same rider options. Company A is offering their product at $50 per month and Company B is offering their product at $100 per month.

Generally speaking, will the product that cost $100 per month build cash value at a better rate than the $50 per month, or in simplified issue whole life/FE will that cost only account for the pure insurance component costing more and that there would be no better accumulation of the small cash value in these policies?

Anyone who is well versed in the mechanics of how that works and provide knowledgeable feedback will be appreciated.

 

[DHK]

All life insurance companies are (generally) priced within each other. You may pay more for a participating policy (FE policies are generally non-participating WL), but you'll get to participate in the dividend distributions declared by the board of directors on an ongoing basis.

The only other factor I can imagine affecting the higher pricing on a substantially equal policy would be that insurance company's experience with the same rate class, thereby discouraging taking on that particular risk in the first place. With the pricing (expenses) being what it is, I doubt it would have a quicker cash value accumulation.

I don't see any reason to want to put more money into a FE-type policy.

But let's take FE policies out of the equation. What about a standard, base WL policy?

Assuming the same death benefit and that increase is going into Paid Up Addition riders (PUA), then yes, it will accumulate more cash values quicker because of the policy structure.

But if it's all 'base', or 'base + term', you should be paying more for a higher total death benefit than the lower premium would suggest.