Participating Policy

A participating life insurance policy is one in which policyholders are eligible to receive policy dividends — returns of surplus premium — when the insurance company's actual mortality, expense, and investment experience is more favorable than the assumptions used to set premiums. Participating policies are most commonly issued by mutual insurance companies. Dividends are declared annually and are not guaranteed, but many mutual companies have paid dividends consistently for over a century. Non-participating policies offer guaranteed values only, with no dividend participation. Participating policies generally have higher premiums than non-participating policies, but the non-guaranteed dividend potential can meaningfully offset this difference over time.