Dividend

A dividend is a return of surplus paid by a mutual insurance company to the holders of participating policies. Dividends are declared annually by the company's board based on the carrier's actual experience versus projected experience.

Dividends are not guaranteed — they are declared at the carrier's discretion. However, well-established mutual companies have paid dividends consistently for many decades. The dividend scale (the projected rate used in policy illustrations) represents the company's current assumption about future dividends.

For whole life banking practitioners, dividends are typically directed to purchase Paid-Up Additions (PUAs), which increases both cash value and the death benefit. This is the highest-leverage use of dividends for banking purposes.

In Policy Stack, dividends affect your cash value through the growth recorded in your annual snapshots — you do not need to enter dividends separately unless you are tracking them specifically for analysis.

Related terms: Participating Policy, Paid-Up Addition (PUA), Mutual Company, Snapshot