Participating life insurance policies

Participating life insurance policies

Life insurance that pays dividends to policyholders depending on the company's success as provided by few claims and profitable underwritings and investments.

Participating Policy

In insurance, a policy (usually a whole life policy) that pays dividends. The dividends are a portion of the insurance company's profits and are paid to the policyholder as if he/she were a stockholder. However, the policyholder has a variety of options on what to do with the dividends. He/she may take the payment in cash, just like a stock. Alternately, he/she may apply the dividends to the policy premium, reducing his/her cost. Finally he/she may place the money with the insurance company, which treats the dividends like a savings account, accruing interest for the policyholder. Most participating policies pay a final dividend at the policy's maturity, and some have a guaranteed dividend, which is determined in the insurance contract. More recent participating policies have more complicated structures, such as including market value reductions on dividend withdrawals. This has led critics to complain that participating policies are overly complicated without providing the policyholder much he/she cannot have in other investment vehicles. In the United Kingdom, participating policies are called with-profits policies, and their dividends are called bonuses.
References in periodicals archive ?
In this article, the authors test whether hypotheses derived from agency theory explain the usage of participating life insurance policies by stock insurers.
The use of two different measures of the dependent variable results in two samples of insurers because some insurers have participating life insurance policies in force at year-end, but they did not issue participating policies in the current year.
Hooton noted that default money is likely to wind up in an insurer's with-profit fund, which is held on behalf of customers with participating life insurance policies.
The Board of Directors of Phoenix Life Insurance Company has voted to adjust the policy dividend scale effective January 1, 2013 for all participating life insurance policies in the company's closed block.
The Board of Directors of Phoenix Life Insurance Company has voted to adjust the policy dividend scale effective January 1, 2012 for all participating life insurance policies in the company's closed block.
The Board of Directors of Phoenix Life Insurance Company has voted to adjust the policy dividend scales effective January 1, 2011 for all participating life insurance policies.
Offsetting these strengths is Prudential's historical and current operating performance, which continues to lag behind that of its peers, increasing investment losses due to generally weak financial market conditions and a growing deficit in the closed block of participating life insurance policies, which remains an ongoing liability of Prudential.
Repayment of principal and interest is based upon a portion of the expected earnings contribution from MONY Life Insurance Company's closed block of participating life insurance policies.
Currently, the majority of the liabilities on Phoenix Life's balance sheet are participating life insurance policies, which are less volatile than other life and annuity products.
Although MetLife has a large number of surrenderable liabilities, many of these are in longstanding, stable participating life insurance policies.
Although MetLife has a large number of surrenderable liabilities, many of these are in longstanding stable participating life insurance policies.
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