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Question 7 of 13 in Basic Life Policy Provisions |
Dividends |
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Policies issued by mutual life insurers generally pay dividends. The theory behind this is that mutual companies are owned by their policyholders and are entitled to the “profits” that result from the company’s business. The amount of dividend applied to each type of policy is determined each year by the company based on the financial results of the preceding year. The dividends can also be considered as a return of part the premium paid for the life insurance. The policyholder can elect to receive the dividends in cash or have them applied to reduce the policy premium, or added to the policy as paid up additional life insurance. |
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