The opportunity to earn policyowner dividends is unique to participating policies. Participating policyowners share in the success of the pool of participating policies through the payment of policyowner dividends.
Dividends are not guaranteed and will vary upward or downward depending on future circumstances and dividend scales. A number of variables, including investment returns, mortality experience and expenses (including taxes) can increase or decrease the amount of dividends that are paid.
When we credit dividends to a policy, they have a cash value. This cash value, once credited to the policy, is owned by the policyowner and cannot be reduced or used in any way without the policyowners’ authorization other than to pay premiums. Policy cash value accumulates within the policy on a tax-advantaged basis. As the cash value accumulates, policyowners can withdraw cash from their policies or borrow against the value. Any cash value withdrawn from the policy may be subject to tax.
Policyowner dividends can provide you with considerable flexibility now and in the future. These dividends can be used to buy additional insurance each year on a tax-advantaged basis without proving your insurability at that time. They can also be used to lower your out-of pocket premiums. You choose how it’s used to provide a balance between future growth and affordability, keeping in mind that actual dividends paid over the life of a policy will go up and down.