What Is A Participating Policy?

Participating policy – What to expect.

A participating policy is an insurance contract that pays dividends to the policy holder. Dividends are generated from the profits of the insurance company that sold the policy and are typically paid out on an annual basis over the life of the policy. Most policies also include a final or terminal payment that is paid out when the contract matures. Some participating policies may include a guaranteed dividend amount, which is determined at the onset of the policy. A participating policy is also referred to as a “with-profits policy.”

Participating life insurance provides a combination of permanent life insurance (whole life insurance) protection and an opportunity for tax-preferred cash value growth. The base insurance protection is guaranteed for life, as long as you pay the premiums on time.

What is a participating life insurance policy

If your goals are to acquire protection for the rest of your life and the ability to build cash value to support your financial goals, participating life insurance may be the solution you’re looking for. As opposed to term life insurance – which only protects you for a set period of time – participating life insurance lasts your entire lifetime (so long as you continue to pay your premiums).

If you already have term life insurance, you can convert to participating life insurance without undergoing further medical examination. Your financial security advisor can tell you more about how this process works.

Payments

The policy is also eligible to receive dividend payments, which you can use to buy additional coverage or reduce your annual premium. You can also leave them on deposit to earn interest or take them in cash. Dividends are not guaranteed.
Participating Life Insurance – Accelerated Growth generates higher medium-term dividends.
It is the ideal solution if you are looking to increase your retirement income or to achieve a financial goal within a 10 to 15-year horizon. It also offers higher medium-term cash surrender values.

Benefits

• Accelerated dividend growth during the first 10 to 15 years of the coverage
• Five dividend options
• Paid-up premiums as early as the 20th year or payable for life
• Paid-up complementary coverage in 20 years (except for life insurance–children) or payable for life
• Guaranteed cash surrender value on the basic insurance. Available, but not guaranteed on Paid-up Additions (PUA) bought with dividends
• Guaranteed reduced paid-up insurance on the basic insurance
• Eligible for conversion without providing evidence of insurability. Certain conditions may apply.

Participating life Pros and Cons

Participating life insurance will provide coverage for life. It’s simple: Keep paying the required premiums and you’ll always be insured. Money made available through participating life insurance can be paid to your named beneficiaries tax-free when you pass away, potentially making the process of settling your estate much easier for your loved ones.
Finally, the cash value of your participating life insurance policy can grow tax-advantaged over time (within legislative limits).* Overall, a participating life insurance policy can help protect you and your family while having access to cash values during your lifetime.

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