The following is my answer to a Quora
question: “What
is the difference between participating loans and non-participating loans in
cash value life insurance?”
They are called participating and
non-participating funds. There is no
such thing as a participating loan or a non-participating loan for whole life
insurance policies. A participation loan
is an aggregated loan from multiple lenders to a single borrower. We are talking about loans in their hundreds
of millions. Banks spread the risk among
several financial institutions so that the non-performance of the loan does not
lead to the collapse of any one financial institution. In insurance, a participating fund is a fund
that pays dividends to the policy. A
non-participating fund only pays the guaranteed coupon with no dividend,
meaning that the policy does not have a share of excess earning of the fund.
No comments:
Post a Comment
Thank you for taking the time to share our thoughts. Once approved, your comments will be poster.