BizTerm Definition
Participating Policy
Full Definition

(1) A life insurance policy under which the company agrees to distribute to policyholders the part of its surplus which its Board of Directors determines is not needed at the end of the business year. Such a distribution serves to reduce the premium the policyholder had paid. (See also: Policy dividend; Nonparticipating policy). (2) One under which the policy owner is entitled to receive shares of the divisible surplus of the insurer. Such shares are commonly called dividends.

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