Question

Fund life & health insurance

Explain carefully why this sentence is false.

All policy owners in a mutual insurance company are eligible for policy dividends.

Answer 1

To receive a policy dividend, you must be a policyholder on the date your insurance company declares a dividend. So, if one is not a poicyholder on the date of dividend declaration he/she will not get dividend.

Mutual insurance companies — those owned by policyholders — pay dividends on policies. Non-mutual insurance companies, such as publicly traded stock companies and mutual holding companies, also may pay dividends on "participating policies," which are contracts that pass on surplus money to policyholders. SO we see that not all policy owners get dividends. It also depends on the type of company and type of insurance plan.