Many people get life insurance policies for themselves in case they pass away. The reason is because when someone dies, there are expenses with the funeral and other aspects. The family must pay for these things. A life insurance policy gives them money.
The dividend of a life insurance policy is one in which the amount is divided to certain things. There are certain myths associated with these life insurance policy dividends. It is believed that the dividends are merely a refund from the premiums the client paid over the years the person was alive.
However, that is not the case. Some people feel that the life insurance policies are not worth the money. Also, the money associated from the policies are not taxable and they are also not guaranteed.
Policy dividends, considered a return of excess premium by a mutual insurer, are not taxable since the original premium was paid with after-tax dollars. Thus, these refunds are not taxable. Future dividends cannot be predicted nor guaranteed.
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