Whole Life Dividend Options

There are various whole life dividend options dependent upon policy and carrier. Dividends are not guaranteed and can vary from year to year based on a carrier’s profitability.

How can you use dividends?

  1. Purchase Paid Up Additions. Paid up additions are fully paid up single premium policies that you never pay more premiums on. Paid up additions can have cash values and potentially earn additional dividends. This allows a policyholder to have more death benefit available then initially purchased without any additional cost.
  2. Reduce Premium Payments. By utilizing dividends to increase the policy cash surrender value the policyholder may be able to reduce or offset premium payments in the future.
  3. Paid to You In Cash. By choosing this option the policyholder elects to have the dividend payments disbursed to them annually in cash instead of going to the policy. Consult with your tax professional to discuss the tax consequences of this choice.
  4. Policy Dividends. If you are utilizing a life insurance policy as a supplemental retirement vehicle you may elect to have the dividends paid directly into the policy to accumulate cash value. This option will allow the policyholder to accumulate cash value in the policy much faster based on the preferential tax treatment of the internal cash value build-up and disbursement options.