No one can underestimate the importance of life insurance. However, there is no right answer when it comes to coverage. The policy you need might prove different from that of your neighbor. A particularly beneficial type of life insurance is participating coverage. It comes with certain financial benefits to maximize your savings potential.
If you want your life insurance to provide benefits beyond a death payout, you might want to consider a participating policy. It can help you in multiple ways to improve your financial outlook.
How Participating Policies Work
Some life policies only offer a death benefit. That's a payout your survivors receive at the time of your death. However, participating policies allow a degree of participation over your policy's lifetime.
Along with a standard death benefit, participating policies pay out dividends over time. The amount and full value of the dividend might vary based on your coverage. However, the dividend provides extra financial options for the policyholder.
- Policyholders can use the dividend as a simple cash payment to use as needed.
- Some life holders use the dividend payout to re-invest in extra insurance coverage. That way, they can receive more protection.
- As with cash value accumulation, the dividend can go back into your policy. There, it might accumulate interest. Depending on if you have a policy with cash value, your dividend might increase along with the cash value.
- Certain insurers allow dividend holders to apply the payout to their annual premium. Therefore, the customer might pay a lower rate overall for their policy.
Having access to a dividend might prove beneficial for policyholders. Furthermore, your premium and death benefit will likely remain stable throughout its lifetime. Therefore, you'll still be able to provide ample protection to your survivors.
Even so, life insurance customers should discuss with their Heritage Insurance agent whether such a policy is right for them. Participating policy dividends vary based on the profit performance of the insurance company. Therefore, buyers should think of them like other investments. Investing is a risk, and you should only do so with the confidence that you'll benefit from the returns.
Most insurers that offer participating policies can assure you of relatively stable dividends. Some even guarantee a certain dividend when they issue your policy. Nevertheless, talk to your Heritage Insurance agent about the security offered by your coverage. Don't hesitate to ask your agent about your coverage options, and how your policy can prove beneficial.