A non-participating policy is a life insurance policy where the insured does not have the option to participate in any of the company’s profit-sharing plans. Instead, the insured’s premium payments are used solely to cover the costs of the policy and any death benefits that may be payable.

Key Features:

• No Profit-Sharing: The insured does not have the ability to participate in any profit-sharing plans offered by the insurance company.
• Fixed Premium: Premiums are typically fixed and do not change over time, unless the insured makes changes to their policy.
• Limited Benefits: Non-participating policies typically offer a limited range of benefits, such as death benefit, cash value accumulation, and waived premiums.
• Lower Costs: Non-participating policies generally have lower premiums than participating policies.
• No Cash Value: Most non-participating policies do not accumulate cash value.

Benefits:

• Lower Costs: Non-participating policies offer lower premiums compared to participating policies.
• Simplicity: They provide a straightforward and straightforward policy with fewer options and riders.
• Certainty: Premiums are fixed, providing certainty about future costs.

Drawbacks:

• Limited Benefits: Non-participating policies offer a limited range of benefits compared to participating policies.
• No Cash Value: Most non-participating policies do not accumulate cash value.
• No Profit Sharing: The insured does not have the opportunity to share in the company’s profits.

Suitability:

Non-participating policies are suitable for individuals who prefer a straightforward and low-cost life insurance policy with limited benefits and do not want to participate in profit-sharing plans.

Examples:

• Term life insurance policies
• Whole life insurance policies without cash value accumulation

Note: The specific terms and conditions of a non-participating policy may vary depending on the insurance company and the policy options selected.