What Is Participating Policy? Definition

Why it matters

Participating policies usually cost more than non-participating ones because the carrier builds in room for the dividends. Over time, dividends can help lower net cost or grow value, but results vary. Ask the agent for the carrier's dividend history and read the illustration. Past dividends do not promise future ones.

Source: naic.org

Related terms

Dividend: A dividend in life insurance is a share of a carrier's surplus paid to owners of participating policies. It is not guaranteed and can change each year based on the carrier's results.
Whole Life Insurance: Whole life insurance is permanent coverage that lasts for the insured's entire life as long as premiums are paid. It combines a guaranteed death benefit with a cash value that grows at a rate set by the insurer.
Cash Value: Cash value is the savings part of a permanent life insurance policy. It grows over time at a rate set by the policy and can be borrowed against or withdrawn, subject to the contract terms.
Premium: A premium is the amount you pay to keep an insurance policy active. You can pay it monthly, quarterly, semiannually, or annually, depending on the carrier.
Paid-Up Policy: A paid-up policy is a permanent life insurance policy where all required premiums have been paid. Coverage continues for life without any further premium payments by the owner.

All 241 terms

Why it matters

Talk to a licensed agent.