Life · Chapter 5 · Dividends
Policy Dividend
Definition
A return of overpaid premium from a participating (mutual) policy → not taxable until total dividends exceed the premiums you've paid (any excess is ordinary income), and never guaranteed. Sourced from savings in mortality, interest, and expenses.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
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