Question about participating whole life insurance policy?

Yes, dividends or bonuses however you'd like to call it, once declared is now guaranteed and also compounds and also adds to the Terminal Bonus calculation rate.

However I have to ask what kind of Non-Par WL you're getting? The only other options would be a Term Life to 100, Investment Linked Policy, or a Universal Life policy. If it's term, there's no cash value, ILP would be determined by your NAV - early surrender charges if any, and Universal Life is based on the current crediting rate.

Traditional WL, ILP, or UL can have their cash values be more than premiums paid, but again many different factors involved.

There are two types of dividend that may be adopted by the insurance policy.

1. Dividend from the participating fund

For this case, the dividend generated from the participating fund may be declared as bonuses to the policyholder. Once declared, it will form part of the policy's cash value. Accordingly, you may be able to withdraw the amount (subject to relevant terms and conditions of the policy itself).

If the divdend is not declared as bonuses to the policyholder, then it will be reinvested into the partcipating fund for future growth.

Read more: What is a Participating Fund Singapore

2. Dividend from the Participating Policy

Some insurance policies issue dividend to the policyholder on a regular basis. This can be in the form of monthly dividend or annual reversionary bonus and terminal bonus. For this case, the amount can be withdrawn or re-deposited with the insurance company at the prevailing interest rate (the rate is non-guaranteed and is determined by the insurance company).

Read More: Reversionary Bonus and Terminal Bonus Singapore

For the most part, the dividend or bonuses of the policy may be withdrawn (subject to the policy's terms and conditions. Otherwise, it will be paid out when you 1) surrender the policy; 2) upon claim; 3) upon maturity of the policy itself.

P.S. Read the post on Reversionary Bonus and Terminal Bonus for more details on how it works.

For non-participating whole life policy, the cash value grows at a pre-determined rate and the details can often be found in the insurance policy contract. With this in mind, the value is somewhat fixed. Whether it will breakeven and exceed the total premium paid, it will depend on the nature of the policy itself, as well as the growth rate of the insurance company.

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