Dividend Scale

What Does Dividend Scale Mean?

In the context of insurance, a dividend scale is a figure used by insurance companies to calculate the dividends payable to owners of participating policies. Typically created by an actuary, the scale serves as a method for fairly distributing annual dividends based on the policy class and terms. Most policies that pay dividends are whole life plans, so the scale is a factor when comparing whole life insurance costs from different carriers.

Insuranceopedia Explains Dividend Scale

A dividend scale is reviewed annually to accurately reflect the current financial standing of the insurance company. Factors that can affect the scale include changes in interest rates, investment returns, expenses, mortality experience, and tax implications. Because these factors vary by insurer, it is worth reviewing a company’s dividend history when choosing among the best life insurance companies.