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Participating vs Non Participating Life Insurance

participating whole life insurance

All participating life insurance is whole life insurance, but not all whole life insurance is participating life insurance.

Participating Life Insurance allows you to participate in the ownership of the company and share in the profits through dividends.

Non-Participating Life Insurance is the opposite, allowing zero ownership, no voting rights, and no share of profits through dividends.

So, let’s dive into the deep end and learn more about these two different types of life insurance policies.

Non-Participating Life Insurance

Let’s start with non-participating life insurance companies. These are your typical insurance providers who offer permanent life insurance but do not include ownership rights or voting rights.

Further, this is non-participating whole life insurance, where no dividends are paid to policyholders.

There is nothing inherently wrong with non-participating life insurance.

In fact, it might be a better option in specific circumstances, such as when you simply want permanent life insurance for estate planning purposes or final expense whole life insurance to cover burial and any debts.

However, for a certain segment of the population, participating life insurance provides some fantastic benefits.

Participating Life Insurance

Participating life insurance is also known as dividend paying whole life insurance.

Among the benefits of participating life insurance is that the policy owner gets to “participate” in company profits, which are paid as dividends.

And the dividends are considered return of premium, so no taxes are due on the dividends.

Dividends can be used by the policy owner in a variety of ways, which include:

  • Cash Out
  • Leave with insurer to collect interest
  • Purchase Paid-Up Additions
  • Pay Premiums
  • Put Towards an Existing Loan

Dividends are an excellent feature when used to purchase paid-up additions as they help grow your policy’s cash value and death benefit.

2 comments… add one
  • Eddie J. June 14, 2022, 11:31 am

    interested in a participating Whole Life Insurance policy for grandchild that can be used as infinite banking.

    • IBUSA June 20, 2022, 2:58 pm


      We’d be happy to help, please call us at your earliest convenience.



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