{"id":147586,"date":"2025-03-21T11:29:45","date_gmt":"2025-03-21T11:29:45","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/insurance\/ohio-national-whole-life-policy-historical-performance-the-insurance-pro-blog\/"},"modified":"2025-03-21T11:29:45","modified_gmt":"2025-03-21T11:29:45","slug":"ohio-national-whole-life-policy-historical-performance-the-insurance-pro-blog","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=147586","title":{"rendered":"Ohio National Whole Life Policy Historical Performance \u2022 The Insurance Pro Blog"},"content":{"rendered":"


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Podcast: Play in new window<\/a> | Download<\/a><\/p>\n

NOTE: We originally published this blog post in 2021. At that time, Ohio National Announced it plans to demutualize and dramatically changed its dividend calculation for whole life insurance policy holders. Since then, the newly acquired company changed its name to AuguStar Life. The policyholder whose policy we used in this analysis decided to cancel this policy and move his money into a different whole life policy at a different company. If you own an old Ohio National whole life or universal life policy and you are wondering about your options, you can always reach out to us for help<\/a>.<\/em><\/p>\n

Next up in our series of reviewing real-life results from whole life insurance policies, we look this week at Ohio National.\u00a0 Like other policies reviewed, we took data from an Ohio National whole life policy purchased around 10 years ago.\u00a0 We have the original illustration<\/a>\u00a0and used that to compare against current policy values.<\/p>\n

We also used this data to look at the\u00a0dividends<\/a> currently payable to the Ohio National policyholder compared to originally projected dividends.<\/p>\n

Ohio National Whole Life Policy Actual Cash Value Performance<\/h2>\n

We’re looking at an Ohio National whole life policy that used all the critical elements of a policy designed to optimize cash value growth.\u00a0 It’s blended<\/a>\u00a0with the majority of the premium comprised of\u00a0paid-up additions<\/a>.<\/p>\n

We used the internal rate of return<\/a> (IRR) to evaluate how this policy performed compared to its original projections.\u00a0 Here’s what we learned:<\/p>\n

Originally, the policy projected a 3.14% annualized rate of return at this point in the policy.\u00a0 This means the policy owner anticipated earning 3.14% compounding annually on the premiums paid to the policy.\u00a0 The policy purchase took place about 10 years ago.\u00a0 The dividend rate at Ohio National declined considerably since the original policy purchase.\u00a0 The most dramatic change took place just this past year.\u00a0 The real IRR achieved on this policy is from inception is 2.26%%.<\/p>\n

Actual Historical Dividends Paid By Ohio National<\/h2>\n

While I don’t have a detailed breakdown of each annual dividend payment from the policy outset, I can see the current dividend paid compared to the projected payable dividend from the original illustration.\u00a0 They are not surprisingly different.<\/p>\n

The current dividend paid is 46% lower<\/strong>\u00a0than the originally projected dividend payable at this point.<\/p>\n

We can see that this lower dividend certainly drives down cash value performance from what the policyholder originally anticipated.\u00a0 It’s also worth noting that while the change in dividends isn’t as substantial as we saw in reviewing other companies, the change in cash value IRR is slightly more pronounced than in the case of some of the other comparisons.\u00a0 This point supports our long-standing claim that whole life insurance is a broad name used for a type of life insurance that can vary considerably from company to company when it comes to specific functionality.<\/p>\n

Reasons The Policy Performed As It Did<\/h2>\n

The use of paid-up additions places less significance on the dividend payment for the development of cash value.\u00a0 This is especially true for the first several years of a whole life policy’s existence.\u00a0 The guaranteed interest paid on cash value, which applies to cash value created by PUA’s, drives a considerable amount of policy growth during this time.\u00a0 So the change in cash value growth due to the dividend changes is less when looking at the overall performance of the policy.<\/p>\n

Had this whole life policy used a more traditional design and approach to whole life insurance, the change in IRR would likely be significantly more.<\/p>\n

The Timing Of Dividend Changes Matters<\/h2>\n

While this Ohio National whole life policy slightly underperformed its original projections, the dividend performance moving forward could lead to a wildly different story over the next 10 years.<\/p>\n

If the dividend remains mostly the same, then the spread between actual and projected values will grow.\u00a0 This is simply the mathematical reality of the difference between the initial accumulation assumption and current realities.\u00a0 If, on the other hand, the dividend increases over this time, actual results will pull closer to projected values.\u00a0 What’s easy to overlook in a life insurance ledger is the role the timing of dividend changes plays on cash value performance.\u00a0 When the policy has more cash value, changes in the dividend will be more impactful.<\/p>\n

This knife cuts both ways, however.\u00a0 A whole life policy with a larger cash value balance will get a considerable boost when the dividend goes up, but it will also miss out on a lot of growth when the dividend goes down.<\/p>\n

Potentially problematic for this policy is the new calculation Ohio National announced when it announced its de-mutualization plans<\/a>.\u00a0 The dividend payment projected for next year is significantly lower than the payable dividend for this policy year.\u00a0 This trend appears to continue when looking at the ledger.\u00a0 This will result in a growing gap between actual and originally projected cash value unless ONL changes this dividend upward in the future.<\/p>\n

The Ohio National dividend did change substantially since policy inception, and this results in a policy with a lower than planned rate of return.\u00a0 There are about $5,500 fewer dollars in the policy than originally assumed.<\/p>\n

That said, this policy still performed better than some of the other policies we reviewed\u2013even some that performed much closer to their projected values.<\/p>\n<\/p><\/div>\n\n","protected":false},"excerpt":{"rendered":"

Podcast: Play in new window | Download NOTE: We originally published this blog post in 2021. At that time, Ohio National Announced it plans to demutualize and dramatically changed its dividend calculation for whole life insurance policy holders. Since then, the newly acquired company changed its name to AuguStar Life. The policyholder whose policy we […]<\/p>\n","protected":false},"author":1,"featured_media":147588,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[94],"tags":[3767,5801,11034,3333,5306,12786,5786,11572,1190],"dealstore":[],"offerexpiration":[],"class_list":["post-147586","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-insurance","tag-blog","tag-historical","tag-insurance","tag-life","tag-national","tag-ohio","tag-performance","tag-policy","tag-pro"],"yoast_head":"\nOhio National Whole Life Policy Historical Performance \u2022 The Insurance Pro Blog - Som2ny Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fivemor.com\/?p=147586\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Ohio National Whole Life Policy Historical Performance \u2022 The Insurance Pro Blog - Som2ny Network\" \/>\n<meta property=\"og:description\" content=\"Podcast: Play in new window | Download NOTE: We originally published this blog post in 2021. 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