Reader’s Question:

How will I benefit from dividends from life insurance?

Harry

Lakewood, CO

Dividends from a life insurance policy are earned by permanent participating life insurance policy like the whole life insurance policy. If you are a policy holder of a participating whole life insurance policy, you will be paid with dividends if the company performed well.

If without any option, most life insurance companies use dividends to purchase paid up additions. A paid up addition has a cash value and earns dividends if the company declares any. Dividends can also be used in reducing your participating whole life insurance premiums. A reduction in whole life insurance premiums in a period of years can be considerably easier to handle. If you want to receive your dividends In cash, a check will be given to you by the life insurance company every year. Another option that you have is to allow the dividends to accumulate interest for the next 10, 15 or 20 years. You should note however that the amount depends on the size of your life insurance policy.