Life Insurance Learning Center - Policy Features
Life Insurance Dividends, Part 1.
Dividends in an life insurance company policy? Yes, a life insurance company does pay out dividends, though the term can be misleading as life insurance dividends are very different than a typical dividend paid from a share of stock or from savings or certificate accounts.
A life insurance company will give a refund of an overcharge in the premium, which can be a life insurance company policy dividend. In addition, a benefit payment given in the premium, or a share in a life insurance company's earnings can be considered dividends as well.
More important than the source of the dividends offered is the amount they will be. A life insurance company may lure you with the offer of dividends, but most life insurance companies offer policies with dividends.
Obtain information from a life insurance company about the year-by-year dividends in order to accurately assess the price of a given policy. For example, in a newly issued life insurance policy, the year-by-year dividends are referred to as illustrated dividends, or as a dividend illustration. This means that the dividends that are shown will be paid to you by the life insurance company only if no future changes are made to the factors that contributed to the calculation of those dividends.
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