Life Insurance Dividends [Get the 6 Most Common Dividend Options Now!]

With so many types of life insurance policies available, it can get confusing trying to find the best coverage option available. Do you go with term life or whole life and what are the best life insurance companies for them? To start, term is usually the least expensive, but whole life is provides many advantages too. Whole life insurance can provide you level premiums, a guaranteed death benefit, and dividends to help you in a variety of ways.

Today, we’re going to go over some important considerations for shoppers looking into policies with dividends. We’ll also answer some frequently asked questions such as: 

  • What are Life Insurance Dividends? 
  • How are life insurance policy dividends taxed? 
  • How does dividend paying whole life insurance work? 

What are Dividends in Life Insurance?

Life insurance dividends definition: A dividend is a payout from the annual surpluses of the life insurance company. It’s a portion of the carrier’s profits. 

Some whole life insurance policies provide policy owners dividends and some do not. These dividend payouts are a great thing. However, you need to know your options, how life insurance dividends work and who offers them.

Mutual Life Insurance Companies Pay Dividends

Not all life insurance companies pay dividends. Not all whole life insurance policies pay dividends. So who pays and what is the source of life insurance policy dividends?

Only mutual life insurance companies will pay out a dividend to the policy owners. Mutual companies are life insurance companies that are owned by the policyholders. Stock companies are owned by shareholders.

When it comes to whole life insurance dividends, you have several options on how you can use them. 

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