What does participating insurance mean

Participating insurance is a life insurance product that differs from traditional forms of insurance. The main feature of participating insurance is that the insurance company will invest a portion of the premiums and pay dividends to the policyholders over the life of the policy based on the operating performance of the insurance company and the return on investment.

Specifically, with-profits insurance works as follows:

1. Policyholders pay premiums: Policyholders pay premiums to the insurance company according to the insurance period and premium amount agreed in the contract.

2. Premium investment: The insurance company uses part or all of the premiums for investment, usually in asset classes such as stocks, bonds and real estate.

3. Dividend payout: Based on the insurer's business performance and investment returns, the insurer decides whether to pay dividends to policyholders and determines the amount of dividends. Dividends can be paid in a variety of ways, such as cash dividends, reinvested dividends or for premium reduction.

4. Cash value accumulation: dividends of participating insurance can be used to increase the cash value of the policy. The cash value of the policy is the amount accumulated during the validity period of the policy that can be used for early termination, borrowing or withdrawal in accordance with the provisions of the contract.

The purpose of with-profits insurance is to enable policyholders to share in the profits and investment returns of the insurance company by investing the premiums. The amount of dividends is usually determined by the business performance and investment returns of the insurance company and therefore may fluctuate and be uncertain.

It should be noted that with-profits insurance is different from traditional life insurance products with guaranteed interest rates in that its returns and dividends may be affected by investment market risks and the insurer's business conditions.

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