Which insurance plan typically does not provide dividends?

Which insurance plan typically does not provide dividends?

• A. Participating plan
• B. Term insurance
• C. Non-participating plan
• D. Permanently guaranteed plan

Answer: (C)

A non-participating plan is designed in such a way that it does not offer dividends to policyholders. This type of plan is often structured to have fixed premiums and benefits, with the insurer retaining any surplus earnings. In contrast, participating plans share profits with policyholders in the form of dividends, typically enhancing the benefits the policyholders receive. Term insurance is a type of insurance that provides coverage for a specified period and usually does not have any cash value or maturity benefits, but it can be participating or non-participating. Permanently guaranteed plans, which often refer to whole life insurance, typically provide dividends if they are participating plans. Therefore, the primary characteristic of non-participating plans is their lack of dividend payouts, making this option the correct answer to the question.

A non-participating plan is designed in such a way that it does not offer dividends to policyholders. This type of plan is often structured to have fixed premiums and benefits, with the insurer retaining any surplus earnings. In contrast, participating plans share profits with policyholders in the form of dividends, typically enhancing the benefits the policyholders receive.

Term insurance is a type of insurance that provides coverage for a specified period and usually does not have any cash value or maturity benefits, but it can be participating or non-participating. Permanently guaranteed plans, which often refer to whole life insurance, typically provide dividends if they are participating plans.

Therefore, the primary characteristic of non-participating plans is their lack of dividend payouts, making this option the correct answer to the question.