Life Insurance: Participating vs. Non-Participating

by | Mar 17, 2022 | Uncategorized

All life insurance participating is considered whole life insurance but not all life insurance is participating insurance. Participation with Life Insurance allows you to be a part of the company’s ownership and share the profits through dividends. Non-Participating Life Insurance is just the opposite, offering no ownership and no voting rights, and no shares of the dividends.

Let’s go to the deep end to learn the details about two kinds of insurance for life.

Life Insurance for Non-Participants

Let’s start with non-participating insurance companies. They are the regular insurance companies that provide permanent life insurance but don’t include the right to vote or ownership. Furthermore, this cannot get considered whole life insurance, so there are no dividends to policyholders. There’s nothing wrong with life insurance that is not part of the policy. It could be the best option for certain situations, like when you require permanent life insurance to help with estate planning or final expense total life insurance that covers burial costs and debts. However, life insurance that is part of the participating group offers several benefits to specific segments of a small portion of people.

Life Insurance for Participants

One of the advantages of taking part in life insurance is that the owner can “participate” in the company’s profits that get paid out as dividends. These dividends get also considered a return on the premium, meaning that there is no tax due for the earnings. Participating life insurance is called dividend-paying life insurance.

The Policyholder Can Use Dividends in Various Ways, Such As:

  • Cash Out
  • The insurer will leave the property to earn interest
  • Purchase Paid-Up Additional Charges
  • Pay your premiums
  • Apply to an existing loan

Dividends are an excellent option for purchasing additional premiums that have been paid for since they will increase the cash value of your policy and death benefits. For more information about Ottawa Life insurance, contact us at (613) 454-1424 or e-mail at info@ottawa-lifeinsurance.ca.