What are they? Dividends are a return of a portion of the premiums you’ve paid on a participating whole life insurance policy. They’re the insurer’s way of sharing its financial success with its policyholders.

How can you use them? Depending on your policy and the insurer, you can:

• Receive them as cash.
• Use them to reduce your premium.
• Purchase additional insurance (paid-up additions).
• Allow them to accumulate interest within the policy.

What are they? A portion of your premium for your whole life and some universal life insurance policies is allocated to a cash value account. This account grows over time and is guaranteed not to decrease in value.

How can you benefit?

The cash value:

• Can be borrowed against, providing a source of funds when needed.
• Can be used to pay premiums or buy additional coverage.
• May be withdrawn, though this can reduce the death benefit.
• Provides an amount that can be received if the policy is surrendered.

How does it work? Once your policy accumulates a cash value, you can borrow against it. The interest rates for policy loans are generally lower than for personal loans.

Benefits and considerations:

• Provides a quick source of cash.
• Doesn’t require a credit check or affect your credit score.
• If not repaid, the loan amount with interest is deducted from the death benefit.

What are they? Riders are additional provisions that can be added to a basic life insurance policy to enhance or customize coverage.

Examples include:

• Accidental death benefit rider
  • Pays an additional death benefit if the insured dies due to an accident.
• Waiver of premium rider
  • Waives premiums if the insured becomes totally disabled.
• Long-term care rider
  • Allows the insured to access a portion of the death benefit for long-term care expenses.

Life insurance policies offer several tax advantages:

• Death benefits are generally income-tax-free to beneficiaries.
• Cash value grows tax-deferred.
• Loans taken against the policy are typically not taxable.