What is the difference between participating and non-participating policy?

A participating policy enables you as a policy holder to share the profits of the insurance company. These profits are shared in the form of bonuses or dividends. It is also known as a with-profit policy.

In non-participating policies the profits are not shared and no dividends are paid to the policyholders. This type of policy is also known as a without-profit or non-par policy.

The bonus that is given in this policy is not guaranteed. It is based on the performance of the insurance company.

In case of a non-participating policy, there is no bonus or dividend paid to the policyholder.

The bonuses or dividends are usually paid out annually.

There are no payments in non-participating policies because the profits are not shared.

The most important benefit of participating policies is that it not only provides protection, but also provides returns in the form of a bonus.

The premiums are a little lesser than participating policies.

ULIPs or Unit Linked Insurance Plans that pay bonuses or dividends can be classified as participating policies.

A term insurance or permanent life insurance policy is a non-participating policy.