Dividend recognition dictates the policy a life insurance company has regarding what it does if a policyholder takes a loan out against their whole life policy.  If the company practices non-direct recognition then it does not adjust the dividend in the event there is a loan against the policy.  The company pays the exact same dividend rate to all policies regardless of the outstanding loan.  If the company practices direct recognition, then the company makes an adjustment to the policy due to the outstanding loan.

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For years, certain marketers claimed that non-direct recognition was the superior policy because it ensured that a particular arbitrage greatly benefited policyholders.  A sort of magic so special that it served as the underpinnings of such fantastical ideas as Bank on Yourself® and other self-financing-through-life insurance schemes.

From experience, I can tell you it's a heck of a lot easier to explain--so long as you don't have someone who wants to dive into how a company can afford to continue to pay a dividend on money it doesn't technically have anymore.  But we've long held the position that dividend recognition is tertiary at best when selecting the right whole life policy for one's specific needs.

Listen to find out more and... ------------------------------------------- Want help with your whole life policy or looking to buy a new one? Click this link to contact us and get the conversation started today! -------------------------------------------