Dividends

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 16, 2021

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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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