Many insurance companies are mutual companies, meaning that the policy holders own the company’s stock. When the insurance company does well, the owners receive dividends. The amount of the dividend relates directly to how well the company performs.
Dividends from mutual insurance companies go directly to lowering the premiums. These dividends can be quite substantial, as high as 50 to 70 percent of the premium. You can’t count on getting this dividend each year. However, with term insurance, you buy only one term at a time. So if the insurance company doesn’t declare a dividend consistently, you can look elsewhere for a better rate from a company that does offer a dividend. On the other hand, you don’t want to constantly jump from one company to the next. For one thing, you can’t always be sure that you’ll qualify for the life insurance. So choosing the right company at the very beginning is one of the most important decisions you will make. Select a good life insurance company that you know will be around for a while.
Dividends from mutual insurance companies go directly to lowering the premiums. These dividends can be quite substantial, as high as 50 to 70 percent of the premium. You can’t count on getting this dividend each year. However, with term insurance, you buy only one term at a time. So if the insurance company doesn’t declare a dividend consistently, you can look elsewhere for a better rate from a company that does offer a dividend. On the other hand, you don’t want to constantly jump from one company to the next. For one thing, you can’t always be sure that you’ll qualify for the life insurance. So choosing the right company at the very beginning is one of the most important decisions you will make. Select a good life insurance company that you know will be around for a while.
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