A dividend scale, in the context of insurance, is a figure used by insurance companies to calculate the dividends to be paid for owners of participating policies. Typically, an actuary creates one as a means to fairly distribute annual dividends based on the policy class and terms.
A dividend scale is reviewed annually to reflect the true current financial standing of the insurance company. Factors affecting it include increase or decrease in interest rates, investment returns, expenses, mortality experience, and even taxes.
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