03 August, 2020

Quora Answer: What is the Difference between Participating Loans & 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.



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