is a participating policy right for me 
the question of whether participating policies are better than nonparticipating policies is a complex one and depends largely on your needs term life insurance is generally a nonparticipating policy with low premiums it may suit you if you re interested in providing for your beneficiaries with lower or fewer premium payments 5permanent life insurance can be either participating or nonparticipating a non participating policy may charge a lower premium for the same amount of coverage at first however with this type of policy the profits aren t shared and no dividends are paid to the policyholders 5a participating policy likely will charge a higher premium at first in exchange it enables you as a policyholder to share the profits of the insurance company through regular dividends this extra income could be used to reduce the long term policy cost or build your savings depending on your preference 2the type of insurance company you work with also matters mutual life insurance companies can only issue participating policies in most states 6 these policies allow a portion of the company s premiums to be paid out in the form of policy dividends as refunds which makes those funds nontaxable as income 7alternatively stock life insurance companies generally issue nonparticipating policies they pay their profit dividends to their stock shareholders instead 