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Participating Policies

April 13, 2006

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Participating policies are issued by mutual life insurance companies, that is, insurance companies that are owned by their policyholders, rather than by stockholders. Unlike nonparticipating policies, participating policies pay dividends.

Nonparticipating policies are life insurance policies issued by insurance companies that are owned by stockholders, rather than policyholders. (Insurance companies owned by policyholders are called mutual companies.) Nonparticipating policies do not pay dividends. Because of this, such policies normally have lower premiums, although, in the long run, participating policies may prove less costly.

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