What Is a Dividend on an Insurance Policy?

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When it comes to your insurance policy, a lot of times people hear about dividends being paid out to policy holders. Find out about a dividend on an insurance policy with help from an expert at Combs & Company in this free video clip.

Part of the Video Series: Insurance Questions Answered
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Video Transcript

Hi, my name is Susan Combs, and today we're going to talk about what is a dividend on an insurance policy. When it comes to your insurance policy, a lot of times people hear about dividends being paid out to policy holders. The thing you have to remember is the only way a dividend is going to paid out to a policy holder is if it's a mutual company. Because a mutual company actually the policy holders are the owners of that company. So what happens is at the end of the year the insurance company takes a look at how they did. How they paid out claims, how they're operating expenses ran, etc. And if the company actually ran better than expected than they'll refund some of this money back to the policy holders in the form of a dividend. So if you actually own a mutual policy and you're curious about what your dividend is or how much it's projected to be over the next year, just call your insurance company and see how they've been running.

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