What Is Interest-Sensitive Whole Life Insurance?

Summary: Interest-sensitive whole life insurance, also known as current assumption whole life, combines a guaranteed death benefit with cash value growth tied to current interest rates. This permanent life insurance option may appeal to those seeking flexible, long-term financial planning with the potential for increased cash accumulation.

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As you think about your long-term financial security, you may be considering ways to help protect your loved ones while still building value during your lifetime. Interest-sensitive whole life insurance (ISWL), also known as current assumption whole life, is a type of permanent life insurance that offers both interest-sensitive and whole life insurance features.

This policy option provides guaranteed lifetime coverage and the potential for cash value growth based on current interest rates. That means your plan can adapt to changing market conditions while still providing some of the financial stability you are looking for.

Let us explore how an interest-sensitive whole life policy works, what makes it a unique option compared to traditional whole life insurance and whether it could be the right fit for your financial goals.

How interest-sensitive whole life insurance works

Interest-sensitive whole life insurance is a permanent life insurance policy. This means it is designed to last your entire life, not just for a set term. As long as you pay your premiums, your policy will remain in place, and your beneficiaries can receive a guaranteed death benefit when you pass away.

Unlike traditional whole life insurance, interest-sensitive whole life permanent life insurance offers something extra. The cash value of your policy can grow based on the interest rates set by the insurance company. These rates are tied to current stock market conditions, which means your policy has the potential to earn more when interest rates are high.¹

There is also a guaranteed minimum interest rate. So even when rates dip, your policy’s cash

value will continue to grow. While United of Omaha Life Insurance Company, a Mutual of Omaha company, doesn’t offer an interest-sensitive version of whole life insurance, we do provide indexed universal life (IUL) insurance.

Guaranteed protection plus growth potential

There are two key benefits when it comes to interest-sensitive whole life insurance:

1Lifelong coverage with a guaranteed death benefit, and

2A cash value component that grows at a rate determined by the insurer Premiums for men are higher because of life expectancy differences.

The growth rate includes both a current rate and a minimum guaranteed rate. The current rate is based on the insurer's interest rate assumptions, while the minimum guaranteed rate means that your cash value will never earn less than this amount, even if interest rates fall.

Over time, this cash value can help cover any unexpected expenses you may incur. This could include covering emergencies or expenses, serving as supplemental retirement income, or paying future premiums, depending on the policy's structure. Please note that the death benefit may decrease if the cash value is used.

IUL vs. ISWL vs. traditional whole life insurance

You may be familiar with traditional whole life policies, which offer predictable, fixed growth and long-term stability. While this can be reassuring, it may feel limiting in today's evolving economic landscape.

In contrast, interest-sensitive life insurance provides the potential for cash value growth along with greater flexibility. These policies may allow you to adjust your death benefit and tailor coverage to better align with your financial goals.²

Indexed Universal Life insurance is another flexible option. It offers permanent life insurance coverage with the potential to grow cash value based on the performance of a market index, without direct investment in the stock market.

Here is a look at how interest-sensitive whole life compares to indexed-universal life and traditional whole life insurance:

With interest-sensitive whole life insurance, you may benefit more when interest rates are rising, which is something many seniors may appreciate when planning for longevity and leaving a legacy.

Some may prefer the guaranteed stability and predictability of traditional whole life insurance.

Others may prefer an indexed universal life insurance option, which is a flexible, long-term planning option linked to market performance.

Which parts of an ISWL policy are guaranteed?

Seniors may often worry about losing coverage or seeing benefits shrink as they age. With an interest-sensitive whole life policy, these components are guaranteed:

However, the cash value growth is not guaranteed beyond the minimum rate. Your cash value is likely to grow more slowly in low-interest-rate environments, so it is essential to regularly review your policy to ensure it still aligns with your financial goals. As a result, the actual growth may fluctuate depending on how interest rates change over time.³

Insurance companies regularly update what they call their current assumptions. These assumptions guide the interest rate applied to your policy. You can receive updates about these assumptions and interest rates, so you won't be in the dark about how your plan is performing.

Who might benefit from interest-sensitive whole life insurance?

This type of permanent life insurance is a good fit for people who:

• Are age 50 or older and planning for legacy or estate protection.
• Want lifelong coverage with flexibility.
• Like the idea of cash value that grows with stock market trends.
• Prefer more control and transparency over how their policy performs.
• Do not want the risk of full market exposure, like with variable life insurance.

If you are retired or approaching retirement, an interest-sensitive whole life policy can provide the security of a guaranteed death benefit while still offering growth potential. It is one way you can keep building value and help create long-term financial security.

Who might benefit from indexed universal life insurance?

Indexed universal life insurance is another permanent life insurance option that delivers both lifelong coverage and a cash-value feature that you can safely invest and use while you're alive. This type of permanent life insurance is best for individuals who:

• Are aged 35 to 70, or any high-income earner who wants to have a financially secure future
• Want to diversify and balance the risk of your financial portfolio, and a way to supplement their retirement or other savings goals
• Like the idea of receiving beneficial tax advantages, including tax-advantaged loans and withdrawals and income-tax-free insurance benefits
• Want to have more control, flexibility and options for their financial future
• Prefer high-interest returns tied to a market index without directly investing in the stock market

IUL products are well-suited for high-net-worth individuals looking to reduce taxable income and build long-term financial security. While they come with higher fees and require long-term planning, IULs offer a unique blend of life insurance protection, market-linked growth potential, and tax-advantaged income.

Indexed-universal life insurance from United of Omaha Life Insurance Company

At Mutual of Omaha, we understand the importance of peace of mind, especially in your later years. That is why our indexed-universal whole life policies from United of Omaha Life Insurance Company are designed with both guarantees and flexibility in mind.

You will get:

• A guaranteed death benefit that your family can count on.
• Cash value growth with a guaranteed minimum interest rate and a cap rate on how much interest the policy can earn.
• Flexible options to borrow from your policy when needed.
• Ongoing updates and support from licensed life insurance professionals.

Our products are designed to support your goals, whether that means leaving a lasting legacy, planning for final expenses, or simply knowing your loved ones are protected.

Is indexed universal life insurance right for you?

Indexed-universal life insurance is not for everyone. If you're looking for simple, short-term coverage, a term policy may be a better fit. Indexed-universal whole life insurance could be an excellent addition to your long-term financial plan if you:

• Want permanent, lifetime protection.
• Are interested in building cash value.
• Appreciate a balance between security and opportunity.

It is a powerful way to combine legacy planning with living benefits, particularly in an economy where interest rates are expected to continue rising. With the right plan, you can secure some peace of mind today and flexibility for the years ahead.

Frequently asked questions (FAQs)

How does the cash value grow in an ISWL policy?

The cash value in an interest-sensitive whole life policy grows at a rate set by the insurer, typically tied to prevailing market interest rates. However, a minimum guaranteed rate ensures that the policyholder's cash value continues to grow even in low-interest environments.

How is whole life insurance different than term life insurance?

ISWL policies typically guarantee the death benefit and a minimum interest rate for the growth of the cash value. However, projected interest rates and future cash value are not guaranteed and may fluctuate based on economic conditions.

How is ISWL different from indexed universal life insurance?

Both policies are types of permanent life insurance, allowing your cash value to grow based on market conditions. But they work differently.

• With ISWL, your policy's growth is tied to interest rates set by the insurer, not stock market indexes.
• With IUL, your cash value is tied to the performance of a stock market index, such as theS&P 500, but you're not directly invested in the stock market.
• ISWL provides a guaranteed minimum interest rate, while IUL policies typically offer a0% floor and a cap on potential growth.

If you prefer predictability and low risk, ISWL may be a better fit for you. If you're comfortable with more fluctuation and want higher growth potential, IUL might be more appealing.

Are premiums fixed with ISWL?

Premiums for ISWL are usually flexible within certain limits. They may be adjusted based on the insurer's current assumptions about interest rates and policy expenses but increases typically require policyholder consent or notification.

Can I borrow against the cash value?

Yes. Like other permanent life insurance policies, interest-sensitive whole life allows you to borrow against the cash value, usually at a low interest rate. Just keep in mind that unpaid loans may reduce the death benefit.

Sources

1. Capital for Life, Interest-Sensitive Whole Life - Definitions and Examples, Accessed June 2025

2. Lewis & Ellis, A Guide to Interest Sensitive Whole Life Insurance, Feb. 16, 2024

3. Western & Southern Financial Group, Understanding Interest Sensitive Whole Life Insurance (ISWL), May 2024