Dividends are earnings that mutual life insurance companies pay back to policyholders from profits. These dividends generally only occur in participating whole life policies, where policyholders share in the company’s success.
Dividends can be taken as cash, used to pay premiums, or reinvested into Paid-Up Additions to grow both the policy cash value and death benefit. While not guaranteed, dividends are a nice bonus that can boost policy value or offset costs. All the credible mutual life insurance companies have a history of paying dividends consistently for well over 100 years. The two oldest mutual companies, New York Life and Penn Mutual, can boast paying dividends since the Civil War.