Permanent participating cash value life insurance policies earn dividends.
It may be important to you to understand a little about how a life insurance company arrives at the amount they pay to their policy owners who own cash value policies.
When a life insurance company's performance is better than anticipated, assumed or projected, when dealing with a participating policy, a dividend is paid.
The payment indicates the company's operating expenses, risk selection and management experience is more efficient than expected.
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This payment is made on a given
the year after it is earned...usually on the policy anniversary. It is
equal to the difference between the policy value and the cash value at
Paid up additions are also considered when calculating policy value and a dividend.
The policy value is equal to the guaranteed cash value, plus the
gross annual premium, less mortality and expense charge, plus whatever
interest is credited to the policy, minus the guaranteed cash value.
It is important that you know that payment of dividends are not guaranteed and are based on the particular insurance company's experience.
The Dividend can be paid in cash, be used to purchase paid up
additions...that is additional insurance of the same type...or they can
be used to reduce premiums.
If the dividend is used to purchase paid up additions it becomes part of the guaranteed cash value of the policy the following year.
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Term life insurance is life insurance in it's simplest form. These policies stay in force for a specific number of years, for example, 5 years 10 years etc.
Whole life insurance is the plan of choice for many people. There are many variations to this plan.
Universal life insurance was designed with the express intention of combatting the venerable whole life insurance policy.
Are you looking for quality term insurance quotes? Have you determined how much you need? Do you know what type of term insurance is best for you?
In many cases it is a good idea to buy term insurance online. Some people know just how much life insurance they want to buy before they get online.