policy dividends

  • Payments made to insured by the company at the end of a policy year which result in reducing the net insurance cost to the policyholder. These dividend procedures are common practice in mutual companies and also in some stock companies that issue policies on a so-called "participating basis."

    Internal Revenue Service 1

1Internal Revenue Service, Internal Revenue Manual 4.42.6 Glossary, http://­www.irs.gov/­irm/­part4/­irm_04-042-006.html (last accessed Dec. 22, 2009).