Annual Dividend - Insurance


Annual Dividend - Insurance

In the insurance industry, a yearly payment given by an insurance company to a policyholder. Annual dividends are most commonly distributed in conjunction with life insurance and disability income insurance policies. Insurance companies may pay their customers an annual dividend when the company’s investment returns, experience (paid claims) and operating expenses in a given year are better than expected. Dividend amounts change each year and are not guaranteed.

Annual dividend calculations are based on the individual insurance policy’s guaranteed cash value, the policy’s annual premium, the company’s actual mortality and expense costs and the dividend scale interest rate. Insurance companies need to make sure they earn enough in premiums each year to cover their expenses, reserves and contingencies, but they may choose to share a surplus with their customers. Policyholders who have borrowed against their policies may receive reduced annual dividends while the loan is outstanding.

Annual dividends can be applied to annual premiums to reduce the customer’s cost of carrying the policy. They can also be applied to increase the policy’s value, used to purchase additional insurance, be distributed as cash or used to repay a policy loan. With some exceptions, dividends are generally considered a return of premium and so are not taxable as income.


Investment dictionary. . 2012.

Look at other dictionaries:

  • annual dividend — ➔ dividend …   Financial and business terms

  • annual — an‧nu‧al [ˈænjuəl] adjective 1. annual events happen once a year: • Shareholders can vote at the annual meeting. • an annual audit see also semi annual 2. ACCOUNTING calculated over a period of a year …   Financial and business terms

  • Dividend yield — The dividend yield or the dividend price ratio on a company stock is the company s total annual dividend payments divided by its market capitalization, or the dividend per share, divided by the price per share. It is often expressed as a… …   Wikipedia

  • dividend — noun 1) an annual dividend Syn: share, portion, premium, return, gain, profit, commission; informal cut 2) the research will produce dividends in the future Syn: benefit, advantage, gain; bonus …   Thesaurus of popular words

  • Dividend imputation — is a corporate tax system in which some or all of the tax paid by a company may be attributed, or imputed, to the shareholders by way of a tax credit to reduce the income tax payable on a distribution. In comparison to the classical system, it… …   Wikipedia

  • dividend yield — Funds: indicated yield represents return on a share of a mutual fund held over the past 12 months. Assumes fund was purchased a year ago. Reflects effect of sales charges (at current rates), but not redemption charges. Bloomberg Financial… …   Financial and business terms

  • dividend — noun 1 payment on a company share ADJECTIVE ▪ big, high, large ▪ 10%, etc. ▪ total ▪ gross …   Collocations dictionary

  • dividend — The distribution of part of the earnings of a company to its shareholders. The dividend is normally expressed as an amount per share on the par value of the share. Thus a 15% dividend on a £1 share will pay 15p. However, investors are usually… …   Accounting dictionary

  • dividend — 1) The distribution of part of the earnings of a company to its shareholders. The dividend is normally expressed as an amount per share on the par value of the share. Thus a 15% dividend on a £1 share will pay 15p. However, investors are usually… …   Big dictionary of business and management

  • Dividend Yield — A financial ratio that shows how much a company pays out in dividends each year relative to its share price. In the absence of any capital gains, the dividend yield is the return on investment for a stock. Dividend yield is calculated as follows …   Investment dictionary

  • annual — adj. Annual is used with these nouns: ↑allowance, ↑average, ↑award, ↑banquet, ↑basis, ↑bonus, ↑budget, ↑catch, ↑charge, ↑check, ↑check up, ↑conference, ↑ …   Collocations dictionary


Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.