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Life Insurance Dividends ExplainedLife insurance is important to have for your entire family.

When you are insured, you can make sure your family is well protected in the case of an accident that results in your death.

Being insured gives the ones you love some financial stability when faced with expenses that are more difficult to manage when losing your paycheck along with the extras that must be paid, like funeral costs.

While the benefits of this type of insurance are major and nothing to be overlooked, it does offer far more. When you have life insurance, you may also receive life insurance dividends. These give you money for your time, which you can then use; however, you want.

Life Insurance Dividends Pay You

When you buy one, you can receive a certain amount of money over time, which may not always be the same. The important thing to remember with these, though, is that you cannot get money all the time. How much you get and whether you do get them is determined by how much you invest in your policy. If you would like to earn more, you have to invest more. You will be paid the difference when it is time to pay out, helping you to make more money that you can use on several things, including your life insurance.

If you are paying more than you should, you can receive dividends. No matter the reason more money is being paid, this can help you to get some out of the situation. After you have spoken to someone about it, you can learn what to do to increase dividend amount as well as talk about ways to be paid yours.

You have several options available when trying to figure out what to do with them. One of the best things to do is to put them back into this. Since this is for your life, you need to make sure it is something that pays off. Lowering premiums, investing in more life insurance and lower rates are just a few things to consider when looking into your options.

When you’re looking at your dividends, you have four choices, we already mentioned two of them:

  • Take the money
  • Lower your Premiums
  • Put it in a savings portion in the insurance company to earn insurance
  • Increase your insurance

As we mentioned, we usually recommend adding additional insurance or lowering your premiums with the cash. It’s a great way to give your family additional protection without having to pay more out-of-pocket for the coverage.

When it comes to taxes, life insurance dividends can be tricky. Dividends earned off of a life insurance plan are not taxable by the IRS. They are not the traditional “dividend.” Basically, the IRS looks at them as refunds for your insurance policy.

In most cases, you only earn dividends on whole life insurance plans. The downside to these whole life insurance plans is the rates are higher. Sure, you get the dividends, but are those dividends going to outweigh what you’re paying in additional rates?

For some people, instead of paying the higher premiums, a better idea is to buy a term insurance plan and then invest the rest of money you save. Term insurance coverage is going to be half as expensive as a whole life insurance plan.

Of Course, You Can Always Just Get Cash

This is something you must ask for, though. If you do, you will receive a check instead of the alternative, money you can use on anything. With this, you can use the money to pay off bills or simply invest it into something else. This is your money to use however you please, no matter what.

Having higher amounts is possible if you invest more over time. This will raise up your dividend amount and even make payments a lot easier on you. With this, you can also bring in cash at a certain point regularly, considering you make it possible for you to receive life insurance dividends. They offer a lot for what you put in, especially when you are putting in large amounts of money. This can help to lower rates and premiums while having more for investment, regardless of what type of investment you are making.

Most people assume life insurance is only used for one thing, insurance protection, but there are several other ways that you can use life insurance coverage, and dividends is an excellent example of that. Every year, we get a lot of questions about dividends and the different aspects of life insurance coverage, and we are happy to answer those questions.

Life Insurance Dividends


Life insurance dividends are a mystery to most people. The majority of policyholders don’t fully understand them. Hopefully, this article has given you all the information you need to get the most out of your policy.

If you have any questions about your dividends or about your life insurance policy, give one of our agents a call today. We aren’t your standard run-of-the-mill company. We are independent sellers, meaning we aren’t contracted to a single company. We have the ability to get your 50 quotes from some of the best companies across the country.