Dividend Illustration

What Does Dividend Illustration Mean?

In the context of insurance, a dividend illustration refers to the projected annual dividends an individual can expect to receive if they purchase the policy, based on a set of predetermined factors. These projections are most commonly associated with participating life insurance policies, where the insurer returns a portion of its surplus to policyholders each year.

Insuranceopedia Explains Dividend Illustration

A dividend illustration helps potential clients understand the benefits of an insurance policy by showing expected dividend returns. It outlines the dividends that will be paid to the insured, assuming no future changes to the factors the insurance company used in calculating these dividends. An actuary is responsible for ensuring that the dividend illustration accurately reflects the company’s financial condition. Because projected dividends are not guaranteed, comparing the dividend track records of top-rated life insurance companies can be a useful step when choosing a participating policy.