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Dividends: How And When Are They Paid? | IBC Global, Inc - YouTube
Channel: Insurance Business Concepts (IBC) Global
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dividend how and when are they paid to a cash聽
value life-insurance policy well how they're聽聽
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paid and when they're made we're going to go into聽
it right now so let's begin quick recap when it聽聽
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comes to dividends on a life insurance policy to聽
break it down because this can be an area that聽聽
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confusion revolves around if I have a company with聽
a 6% dividend rate how that's actually broken down聽聽
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so the company publishes their dividend rate six聽
percent however if they have a guaranteed rate of聽聽
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4% what that means is that they declared a surplus聽
and earnings of another 2% the guarantee plus the聽聽
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surplus of two equates to 6% why I mention this聽
is when you see an actual dividend payout to a聽聽
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life insurance policy $1 number it is made up聽
of the surplus rate meaning the guarantee is聽聽
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not included in that figure how the dividends聽
are actually paid is broken up between how much聽聽
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money I have going towards base premium and how聽
much money I have going into PU A's different聽聽
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calculations different formulas are used for those聽
two components which we've got other videos that聽聽
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really go into detail if you're looking for that聽
now the dividend payout what we just touched on is聽聽
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the surplus rate only meaning if I have a policy聽
and I get a dividend payout an annual statement聽聽
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or the illustration for that particular year聽
reads $2,000 that did not include my guaranteed聽聽
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cash buy your growth good to be aware of that聽
because illustrations and life insurance and聽聽
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contracts can be confusing sometimes now here聽
we've got illustration your year so where I'm聽聽
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going with this is anytime you see a illustration聽
for a life insurance company that projects values聽聽
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based on the company's whatever insurance company聽
you're looking at their dividend rate today or for聽聽
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this particular year and their insurance expenses聽
particular year as time passes things will change聽聽
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I may adjust my payments dividend rates will go聽
up and down so as that happens what I see on that聽聽
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actual illustration today will not happen over聽
time the results will be different now what is聽聽
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interesting is when you look at an illustration聽
that is typically accurate year to year meaning聽聽
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when I buy a policy in 2020 I can see what my聽
cash value guaranteed a non guarantee will be聽聽
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at the end of the year and that illustration聽
is accurate in the first year when it becomes聽聽
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inaccurate is here - if I'm referring the original聽
one and the dividend rate has changed or I paid in聽聽
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a different amount whatever it might be good to聽
be aware of that and this is why it is critical聽聽
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to know year to years when I put a look at an聽
illustration and an enforce illustration every聽聽
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year so whoever you work with if you work with us聽
already you see these all the time as the years聽聽
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have passed here was the original illustration聽
when you first took out the policy here is the聽聽
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new enforce illustration so we see what we聽
earned this year and then also we need to聽聽
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compare it track the actual performance with that聽
illustration that was first presented to you when聽聽
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you purchase the policy now let's continue on when聽
this is the big question when our dividends paid聽聽
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to my cash value life insurance policy well this聽
does depend on the company and also the product聽聽
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why I say a product is most traditional life聽
insurance policies when it comes to the base聽聽
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premium dollars remember the beginning how we聽
said the formula is the calculation based off聽聽
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of space premium and POA dollars are different聽
when it comes to the surplus in particular well聽聽
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on base premium dollars with most traditional聽
life insurance policies dividend are not paid聽聽
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in most cases years 1 & 2 beginning year three聽
you start to see dividend accrue that's with聽聽
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most traditional products now when it comes to聽
the company and why that would impact when we聽聽
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receive a dividend is to break things down a聽
little bit further well if I look at a policy聽聽
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am I going to get that dividend in the beginning聽
or end of each policy here or is a company going聽聽
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to declare to me here's your dividend payout聽
I'm going to pay you $5,000 in dividends this聽聽
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year because we can see that as agents on our聽
side we can see what the dividend payout will聽聽
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be for that particular year in advance they let聽
you know annual dividend payout so the question聽聽
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is when do I actually get that $5,000 or whatever聽
the figure is will be at the beginning end of the聽聽
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year or do they declare it and then spread that聽
over 12 months and all companies have a different聽聽
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way of doing things so here's a quick example and聽
here's a good area to reference you can look at a聽聽
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full contract the contract language will state聽
exactly when dividends are paid to your policy聽聽
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but if you're looking for a quick reference we聽
have two different companies well we're gonna go聽聽
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through one at a time and all I want to highlight聽
here get this hash value build-off payments here聽聽
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is our annual dividend and what you see is聽
annual dividend beginning year so what that聽聽
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means whatever this dollar figure is they are聽
declaring and paying you at the beginning of聽聽
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the year now I know that this particular company聽
declares it in the beginning of the year but they聽聽
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don't pay a lump sum a lot of it they don't聽
pay a lump sum they don't pay a lump sum in聽聽
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the beginning of the year it's typically spread聽
out over a 12-month period what I want to know聽聽
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as a policyholder upfront so I'm not thinking聽
that hey year 10 dividend pans $5,600 I just聽聽
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started year 10 where's that $5,600 and I see聽
gradually accrue to my policy over time so good聽聽
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to be aware of these little tips or little items聽
as there's so much going on with these policies聽聽
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different policy illustration and again we get聽
some transparency here end of your dividend聽聽
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there's the amount this particular product begins聽
paying dividends in the second year so we showed聽聽
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a different product really to demonstrate an聽
earlier dividend payout now end of year what聽聽
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that means with this particular company is they聽
pay a lump sum dividend at the end of the policy聽聽
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here so the guaranteed interest I do see that聽
accrue when we've tracked performance with these聽聽
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policies over the course of the year and then聽
the dividend payout is in one lump sum at the聽聽
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end of the year so I know these are a lot of small聽
pieces of information but it is good to be aware聽聽
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out just because the last thing that I want is to聽
take out a policy expect one thing and then find聽聽
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out it's not the case so hope this helps reach聽
out with any questions and we will talk to you聽聽
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soon hey guys Steve Parisi here if you enjoyed聽
the content you just saw please subscribe like聽聽
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if you'd like more information or to see some聽聽
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