1. 63333 POINTS
    Peggy Mace, Certified Senior Advisor (CSA)®PRO
    CEO, Outlook Life, Inc, Most of the U.S.
    The type of life insurance that pays a dividend is called a participating policy. Dividends are paid when the insurance company makes a profit and, in essence, shares them with its policyholders. The type of life insurance company that offers participating policies that pay dividends is called a mutual company. The type of policy that pays a dividend is usually Whole Life.
    Answered on June 22, 2013
  2. 0 POINTS
    David RacichPRO
    Fountain Hills, Arizona
    Participating whole life insurance pays annual and terminal dividends at the declaration of the mutual life insurance company’s board of directors. A dividend is not guaranteed and is defined as a return of unused premium up to basis. And as a return of unused premium up to basis is tax free and can be used for a variety of applications one of which is cash. 
    Answered on June 22, 2013
  3. 5877 POINTS
    Stan Cox IIPRO
    Insurance Adviser - Broker, SC Insurance Services, Oahu, Hawaii
    Whole Life policies that are issued by Mutual insurance companies are the ones that participate in Dividends. Stock companies, which are by far the way the majority of insurance companies are set up, are those that have "gone public" as to their holdings and have sold their ownership to stock holders in order to raise money. As a result they are primarily answerable to their stock holders, and then secondarily to the policy holders. This effects their investment strategies with regard their general account.

    Mutual companies are owned by the policy holders and therefore are answerable to the policy holders and not stock holders. As a result a portion of the profits generated by the investments of the Mutual company are paid to the "participating" policy holders in the way of dividends. Term policies are not participating and do not have any cash value.
    Answered on November 22, 2015
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