How does a participating life insurance policy work?
Desjardins Insurance’s participating life insurance provides permanent coverage with a guaranteed premium amount that will remain the same for the chosen payment period.8 Additionally, this insurance offers a guaranteed basic death benefit and guaranteed cash surrender values that increase over time.
The participating life insurance premiums that you pay as well as those paid by all policyowners with similar policies are pooled and deposited in a separate account called a participating account.
As a policyowner of a participating life insurance policy, you benefit from the account’s returns by receiving dividends. Please note that these dividends are not guaranteed. They vary based on several factors, such as investment returns, mortality rates, and taxes and expenses paid by the insurer.
Dividends could be credited annually, on the policy anniversary, when the account outperforms the assumptions used to determine the guaranteed values. Once credited, the dividends belong to you.
You can use these dividends to:
- Purchase additional insurance to increase the cash surrender value of your policy and maximize your estate’s growth9
- Reduce the annual premium payment10
- Receive a cash payment11
- Keep dividends on deposit to earn interest11
8 If there’s no change in the policy. 9 Enhanced insurance is the only option available at the time of sale of the 5 Pay PAR product. Paid-up additions, cash payment and dividends on deposit options may be available 10 years after the policy is issued, if the exempt test is met. 10 This option is not available with the 5 Pay PAR product. 11 There may be tax consequences.