Participating Policy
A life insurance policy under which the company agrees to distribute to policyowners
the part of its surplus that its Board of Directors determines is not needed at the end of the business year.
How do you profit of
your life insurance policy depends
the use you make of your parts.
The most common options are the following:
Increased Insured Capital
You can use the annual shareholdings as dividend to
increase your capital at no costs. This option,
the most common, is called released insurance subsidy.
It also increases the value of future redemption.
Shareholdings can also be used to purchase a Life
Insurance for one year.
Additional Protection:
You can get an additional protection
by combining predetermined paid-up insurance amount
option to purchase an insurance for one year.
Your shares, which increase
over time can be used to replace
term life insurance by
released insurance so
the extra protection
becomes permanent. It is a
good way to get
whole life insurance at reduced cost.
Reduced premiums
Your shares of participating life insurance can be use to reduce
your annual premiums payment.
Payment in cash
You can, of course, cash out your participating shares.
Left in File
You can also leave your shares in filing.
The insurer will pay interest or placed in a growth fund, as separate shares.
In the second event, the return is not guaranteed.
The shares left in file may be withdrawn at any time.
When you die, unlike the surrender value, the share value is part of
the payable insured sum to your beneficiary or succession. Notice that the interest earned on investments
left in deposit is subject to income tax.
Self Financing Contract
This formula uses both concepts of
premiums reduction and
bonus paid-up insurance.
Typically, after
bonuses were paid for a
number of years (between 10 and
15 years, for example), the futures stakes
are used to pay portion of the premium.
Remember shares of participating life insurance are not guaranteed.
The beginning of self-financing contract depend on the level of your shares.
This formula could require that the policy owner declare the accumulated holdings income that
exceeded the paid premiums. Contact your agent for more information. | 