Cash Value Life Insurance
A dividend in a life or disability policy is a return of excess premium. They are not guaranteed, especially when it comes to disability insurance as it’s very hard for the disability insurance companies to predict the amount of claims that they’re going to have in any given year. The life insurance part is much more predictable as the tables they have and the statistics they have go back hundreds of years. They’re pretty likely to get the amount of deaths right. The question would simply be how the company did with our money while they had it and did they keep their expenses low. As long as they did, then they pay a dividend. Once a dividend is paid, it’s your money. You get to keep it. It’s not in jeopardy of having to be returned. The only question will be what the future dividends are. Be careful when you’re comparing whole life policies to the dividend projections because companies use different ways of projecting their dividends. You want to look at the guaranteed cash value compared to guaranteed cash value for a premium. Then you can look at the dividends, but be careful because, again, you want know how they’re determining that projection that you’re looking at.