Understanding Whole Life Insurance with Dividends

January 19, 2024 |read icon 4 min read
A couple meets with their financial professional to learn about while life insurance with dividends.

Whole life insurance is a type of permanent life insurance that provides coverage for the entire lifetime of the insured. One distinctive feature of whole life insurance policies issued by a mutual-based organization like Ameritas is that you will be eligible to receive dividends if declared. Whole life insurance with dividends can play a crucial role in enhancing the policy’s value and providing additional financial benefits to policyholders.

Watch this video to learn how whole life insurance works.

What are whole life insurance dividends?

A whole life insurance dividend is essentially a share of the insurer’s profits that is distributed to whole life insurance policyholders. Dividends are generally declared and paid annually. They’re not guaranteed. Instead, they are contingent on the financial performance of the insurance company and the specific terms outlined in the policy.

How are whole life insurance dividends calculated?

The calculation of dividends involves several factors, and it varies among insurance companies. The key elements influencing the dividend include:

Company performance: The financial success of the insurance company is a primary factor. A well-performing company is more likely to distribute dividends.

Mortality experience: Mortality rate is used by insurance companies to predict the number of deaths within a specific group of people. The actual mortality experience of policyholders influences the calculation. If the number of death claims is lower than expected for the specified period, it positively impacts dividends.

Expenses and investments: The insurer’s operating expenses and investment returns also play a role. Efficient operations and higher investment returns can contribute to larger dividends.

Although dividends are not guaranteed and past performance is not a guarantee of future results, Ameritas has paid dividends consistently, even during periods of declining interest rates. Check out the dividend interest rate factors for our whole life policies since they were introduced.

Benefits of whole life insurance dividends

Whole life insurance with dividends adds additional flexibility and potential growth to policyholders through:

  • Premium reduction or offset: Some policyholders choose to use dividends to reduce their premium payments or offset other policy-related expenses. This can be particularly beneficial in managing the cost of maintaining the insurance coverage.
  • Paid-up additions: Policyholders have the option to use dividends to purchase additional coverage, known as paid-up additions. This increases the death benefit and cash value of the policy, providing a form of compounding growth.

Understanding how dividends work, their benefits and the factors influencing their calculation is crucial for making informed decisions about insurance coverage. A whole life policy from Ameritas also provides other features to help you reach your financial goals. Talk to a financial professional to help you learn more about whole life insurance and how it fits in with your financial strategy.

In approved states, life insurance is issued by Ameritas Life Insurance Corp. In New York, life insurance is issued by Ameritas Life Insurance Corp. of New York. Policy and riders may vary and may not be available in all states. Optional features and riders may have limitations, restrictions, and additional charges.

Was this article helpful? Yes / No

Need help with your financial goals?

While you can learn more about our products on this website, this information is no substitute for the guidance of a qualified professional. If you’re serious about assessing your financial wellness, contact a financial professional.

Do you already have an agent?

Sign in to see your agent details.