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What is participating whole life insurance?
Participating (par) whole life insurance has been marketed for many years in the U.S. The participating feature allows for the payment of dividends to policyowners when actual experience justifies such payment. Substantial amounts of participating whole life insurance is still sold today, principally by the large mutuals.

I have heard a lot about universal life insurance. How is this type of life insurance different from traditional whole life insurance?
Both traditional whole life (WL) and universal life (UL) products are examples of cash-value life insurance. However, there are several important differences between these two products. While WL policies contemplate the payment of fixed, level premiums and provide for level death benefits, UL policies offer adjustable death benefits and flexible premiums that can be varied according to changing circumstances. This is a rather simplistic comparison, however, since policyowner dividends under participating WL insurance contracts can be used to offset a portion of the premium payment otherwise required; in addition, dividends can be used to increase the policy's death benefit. Because of these and other possible uses of policyowner dividends, an argument can be made that participating WL insurance possesses some (but not all) of the same flexibility/adjustability that is possessed by UL policies. Another important difference between WL and UL relates to product transparency. In UL policies, it is easy for policyowners to look at the internal operations of the policy and to examine the relationships among various policy elements (premiums, cash values, interest credits, mortality charges, and expenses) and how they interact with each other.

Which type of cash value life insurance policy, universal life (UL) or participating whole life (WL) , is a "better buy" financially?
There is no simple answer to this question. The best performing product (from a financial perspective), whether UL, WL or some other type of cash value life insurance, will likely be the one offered by the insurer that enjoys the best future experience as it relates to interest earnings, actual expenses and mortality costs. Insurers earning the highest investment income, and who also incur the lowest expenses and the lowest mortality costs, are in the best position to offer life insurance at the lowest cost. This is true whether the cash value life insurance product being offered is UL or WL. Thus, it will be necessary for prospective insureds and their advisers to carefully examine the financial aspects of each product under consideration, irrespective of whether the product is UL or WL.

What is variable life (VL) insurance, and how is it different from universal life (UL) and participating whole life (WL)?
Variable life insurance is a type of fixed-premium whole life insurance policy where changes in the policy's cash values and death benefits are directly related to the investment performance of an underlying pool of assets. Policyowners typically can choose among several investment options as to where the assets backing the policy's cash values will be invested. The various investment options offered in the contract generally possess different risk/return relationships and frequently include a money market fund, a bond fund, and one or more common stock funds. Although the policy's death benefit is directly related to the actual performance of the invested assets, the policy prescribes that the death benefit will not fall below a minimum amount (usually the initial face amount) even if the invested assets depreciate in value by a substantial amount. Because the policyowner assumes all of the investment risk, there is no similar "floor" below which cash values may fall. In recent years variable universal life (VUL) insurance has become a more popular product than VL. VUL combines features of both UL and VL and, in essence, is the flexible premium version of VL.