19.8 Par and Nonpar Policies
A participating life insurance policy (par) is one in which the policyowner receives policy dividends as a return of premium based on the insurer's financial success. The Par policy usually has higher premium payments, though dividends can be used to reduce premiums. In addition to reducing premium amounts, the insured has the option to receive the dividend payments in cash, leave to accumulate at interest, purchase paid-up additions, or use to purchase one-year term additions.
The surrender values and general policy provisions are generally the same for both policies, with the exception of the Par policy's dividend provision.
On the other hand, a nonparticipating life insurance policy (nonpar) does not share in the surplus earnings of the insurer and therefore does not allow the insured to receive any policy dividends.
