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Participating vs. Non-Participating Life Insurance

Participating vs. Non-Participating Life Insurance Policies: What’s the Difference?

When it comes to purchasing a life insurance policy, there’s certainly a lot of details to go over before choosing the right plan for you. That’s why it can help immensely to have a team of reliable financial advisors at your side. If you’re currently looking at life insurance plans, you’ll have to decide between a non-participating or participating life insurance plan, so the team from Desjardins Financial Security Independent Network (DFSIN) Toronto West has collected some important information about them here.

What Exactly is a Participating Life Insurance Plan?

One of the key differences between a participating life insurance policy and traditional life insurance plans is that it pays out dividends. Typically, a participating life insurance policy will pay out dividends on an annual basis. These funds come from profits generated by the insurance company where the plan was purchased. In fact, some participating policies will even have a guaranteed amount you’ll receive that’s determined when you purchase it.

You can use these funds for a variety of things including:

  • Using the dividends as a deposit on your insurance policy to generate growth
  • Receiving a cash payout on your participating policy to use as you see fit.
  • Applying this money to your policy’s premium payment to lessen your financial burden.

Participating vs. Non-Participating Policies

When selecting the right policy for you, there are a few things to keep in mind. Firstly, non-participating premiums are often lower, they also have less risk associated with them. However, over the long term, participating policies can often cost less than non-participating policies because your dividend will often increase as your policy’s cash value does.

Those interested in earning a regular profit from their life insurance policy will find that a participating one will prove advantageous. But if you’re solely interested in providing for loved ones after your gone and paying lower premiums, a non-participating policy will often serve you best.

Contact DFSIN Toronto West today to learn more about affordable life insurance!

Purchasing life insurance can be a big decision, so why not have a financial expert on hand to help guide you through the process? At DFSIN Toronto West, we’re committed to helping find the best plan for your needs and future financial goals.

To learn more about what we do or speak to one of our representatives, contact us online today or call (416) 695-1433.

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