What Is a Life Insurance Non-Participating Policy?

In the area of life insurance, you might find yourself in possession of a non-participating policy. Here are the basics of what a non-participating policy is and how it works.

Participating vs Non-Participating Policies

Typically, whenever you purchase life insurance, you are going to the able to purchase two different types of policies. You can purchase either a designated or a non-participating policy. When a life insurance company does business, they will sometimes earn extra profit from the investments that they choose. If fewer people pass away than their underwriters have predicted, they also might have extra profit. With a participating policy, the life insurance company is going to share some of the profits with this type of policy holder. However, if you are the owner of a non-participating policy, you are not going to receive anything when these bonuses are issued.


Most of the time, these payments are not issued directly to the policyholder. Instead, they will typically provide you with a bonus to your cash value of the policy. Sometimes, they will simply add money to the value of the death benefit of the policy. Then, when you pass away, your beneficiaries will be able to receive a bigger payout.

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