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Dividends are a partial return of premium to the insured based on the insurer's financial performance or on the insured's own loss experience.

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Insurers cannot legally guarantee the payment of dividends. In the captive arena, there are two types: policyholder dividends are paid back through the insurance premium process to the insureds. They are before-tax expenses for the captive. Shareholder dividends are paid to the captive's shareholders after tax (and are then taxed again to the shareholder).


policy dividend