Participating Insurance
This form of insurance policy has the potential for earning money in the form of dividends to the policyowner. If the company earns a surplus because of profitable operations, owners of participating policies could share in the surplus. Since earning such a surplus depends on many variables, dividends are never guaranteed.
The benefit is that you choose how you want your policyowner dividends to be used. The most popular dividend options are to use dividends to buy additional permanent coverage each year; or to buy a combination of term and permanent insurance, which can make a larger amount of total coverage more affordable. The first option provides an increasing death benefit that can offset the effect of inflation over the longer term. Dividends can also be used to help pay premiums and lower the out-of-pocket cost.
