Which life insurance policy issued by a mutual insurer offers a return of divisible surplus?

A participating life insurance policy is specifically designed to offer policyholders a return of divisible surplus as part of their benefits. In a mutual insurer structure, policyholders are considered part owners of the company, which allows them to receive dividends based on the company's performance and surplus. These dividends are derived from the insurer’s profits after claims and expenses have been paid.

Participating policies not only offer life insurance protection but also the advantage of potentially receiving these dividends, which can be taken in cash, used to reduce premiums, or to purchase additional insurance. This feature consistently differentiates participating policies from other types of life insurance, such as term or non-participating policies, which do not share profits with policyholders in the same way.

In contrast, term life insurance policies provide pure risk coverage for a specified period without any investment component or cash value, and thus offer no dividends. Universal life insurance policies offer flexible premium payments and an interest-earning cash value, but they are typically structured as non-participating policies, meaning they don’t pay dividends. Non-participating policies do not distribute profits to policyholders and are solely based on predetermined contractual terms.

Therefore, the nature of a participating life insurance policy, including its ability to provide dividends, clearly distinguishes it