YOU ASK:
What is the definition of Participating Policy?
WE ANSWER:
A Participating Policy is a policy where the insurance company pays policy dividends, in proportion to the size of the policy. This is also called a par policy.
The dividends that are used to pay owners of a participating policy are taken from the company's profits. These are paid out on an annual basis. Depending on the policy, there may also be a guaranteed dividend amount, which is specified when the policy is issued.
The policy owner can use the dividends in a variety of ways. He can get the dividends in cash. He can also use the dividends to make up part of the premium payments. Other options include using the dividends to buy additional insurance coverage and to also allow the dividends to accumulate in order to earn interest.
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More insurance terms around participating policy:
- Pay-At-The-Pump
- Payout Options
- Pension Benefit Guaranty Corporation
- Pension
- Per Capita Beneficiary Designation
- Per Stirpes Beneficiary Designation
- Peril
- Period Certain
- Personal Articles Floater
- Personal Injury Protection Coverage (PIP)
- Partial Disability
- Paid-Up Policy
- Paid-Up Additional Insurance Option
- Package Policy
- Over-The-Counter (OTC)
- Original Equipment Manufacturer Parts (OEM)
- Ordinary Life Insurance
- Ordinance or Law Coverage
- Options
- Operating Expenses