DividendsIf your whole life policy is a participating policy it will share in the life insurance company's divisible surplus. The
company
determines if there is any surplus and how much it will be. This amount is credited to the policy as a dividend on the anniversary of said policy. The dividend reflects the mortality (how many insured people died) and investment experience of the company. The expense to operate the company is also an important consideration.You should give thought to the fact that dividends are not guaranteed when you examine your whole life insurance quote.
Please be patient as this information relates to your whole life insurance quote as well as the policy itself.
You can use your dividends to purchase, what is commonly referred to as, paid up additions. Paid up additions are tiny single premium life insurance policies that you never have to pay a premium on. These paid up additions also share in any dividend determined by the life insurance company. If all premiums are paid the death benefit is also increased by these paid up additions.
You have the choice of allowing your dividend to be left with the company to accumulate interest. This choice will also increase your death benefit if there is no outstanding debt due to the policy.
This information may not have been included in your whole life insurance illustration but it will be in the policy itself.
Some life insurance companies allow the policy owner to take their dividends in cash. They send you a check at the anniversary of the policy.
Dividends, if you should choose, can be used to reduce premiums. If you elect this option when you get your whole life insurance quote the company will advise you each year how much the premium is. It is never more than you contracted for but, depending on the amount of dividend applied to the policy, it could be less.
