Definition of "Terminal dividend"

Additional policy dividend paid to a life insurance policyholder when a policy terminates. A mutual insurance company is owned by its policyholders and writes participating policies, which pay annual policy dividends to policyholders. (Some stock insurance companies pay dividends on some policies as well.) In addition to the annual dividend, many policies pay a terminal dividend when the policy terminates after a minimum period in force usually 10 to 20 years. This represents a realm to the policyholder of an equitable portion of the overall increase in the insurer's surplus over this period. Some companies pay this dividend no matter how a policy is terminated; others pay it only under certain conditions.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Insurance Terms

Financial guarantee policy that insures against loss of principal invested in a mutual fund. ...

Coverage for exposures that exhibit a possibility of financial loss. ...

Coverage for a loss incurred by the insured resulting from an infringement of the insured's patent or coverage for a claim made against the insured resulting from infringement by the ...

Investment strategy that advocates the transfer of amounts from one category of investment to another category according to a perception of how each of these categories of investments will ...

Appreciation in the unsold assets' value. When assets are sold, their capital gain (loss) is shown on the insurance company's income statement; any unrealized gain or loss is not included ...

Record of debit or industrial insurance policies. ...

Income paid under a disability policy that is not covered under workers compensation benefits. It is usually expressed as a percentage of the insured's income prior to the disability, but ...

1957 federal law setting a limit on the liability of operators of nuclear facilities. The law, an amendment to the Atomic Energy Act of 1954, authorized establishment of private insurance ...

Federal statute relating to drug abuse policies that requires all employers with federal contracts at least equal to $25,000 to certify, as a condition of receiving a federal contract, that ...

Popular Insurance Questions