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A whole life participating insurance policy has the potential for dividends. These dividends arise when the insurance company experiences strong financial performance, exceeding investment expectations or reducing operational costs. The company's board of directors then can distribute a portion of these surplus funds to policyholders.

Here are some key features of whole-life participating policies:

• No Guarantee: Dividend payouts are not guaranteed and depend entirely on the insurer's financial results each year.
• Performance-Driven: The dividends you receive are directly linked to how well the insurance company performs.
• Tax-Free Benefit: A significant advantage is that any dividends received are typically tax-free.
• Higher Initial Costs: Be prepared for potentially higher premiums compared to non-participating life insurance policies.
• Premium Adjustments: If the dividend scales decrease, you might need to increase your premium payments to maintain the policy. Conversely, if dividend scales increase, your required payments could decrease.