What Does Equity Mean?
Equity is ownership in a particular thing. Equity commonly comes in the form of securities which are traded on stock exchanges. Stocks are securities that represent a portion of ownership in a company. In the context of insurance, many life insurance policies offer an equity component. This means that if policyholders would like, they can designate a portion of their premiums towards investing in equities.
Insuranceopedia Explains Equity
Many permanent life insurance policies offer an equity option. However, typically, term life insurance policies do not offer an equity component. Many whole life or permanent life insurance policyholders choose to invest in equities in order to try to grow the cash value of the policy. If the investments are successful, then they can generate a lot of money. Some people chose to use this money to pay for future premiums. Others use it in different ways