Glossary

Non-participating policy

A policy that pays no dividends, so its premiums and values are either fixed in the contract or adjusted through other non-guaranteed features.

Also called: nonpar policy, non-par, guaranteed-cost policy

A non-participating, or nonpar, policy doesn't share in the insurer's surplus through dividends. Policyholders get only what the contract states. Most term life, universal life and indexed universal life policies are non-participating, as is the guaranteed-cost whole life sold by many stock companies. A participating policy, by contrast, can pay dividends when the insurer's experience beats its assumptions.

Because no dividend margin is built into the premium, nonpar whole life is often priced lower upfront than participating whole life with the same face amount. Say, hypothetically, a 40-year-old could buy $250,000 of nonpar whole life for $2,900 a year with fully guaranteed cash values, or participating whole life for $3,400 a year with lower guaranteed values but projected dividends that could make cash value larger over time, if the dividends materialize.

Nonpar doesn't mean every element is fixed. Universal life policies are nonpar but have current crediting rates and cost-of-insurance charges that can change. The choice comes down to certainty at a lower price versus the chance of more long-term value with less guaranteed. Either type can come from a stock or mutual insurer. See whole life dividends: how participating policies pay and mutual vs stock life insurance companies.

Last reviewed October 4, 2026

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Related terms

Participating policy A policy, usually whole life from a mutual insurer, that can share in the company's surplus through yearly dividends, which are not guaranteed. Policy dividend A non-guaranteed annual payment a participating whole life policy may receive when the insurer's mortality, investment and expense results beat its assumptions. Stock insurance company An insurer owned by shareholders, who receive its profits, rather than by its policyholders as in a mutual company. Guaranteed values The cash values, death benefits and premiums a permanent policy promises in writing, which the insurer can't reduce whatever its results. Non-guaranteed elements Policy features an insurer can change after issue, such as dividends, credited rates and current cost-of-insurance charges, within contract limits.

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Mutual vs stock life insurance companies Mutual insurers are owned by policyholders and stock insurers by shareholders. What that changes about dividends, governance and safety, and what it doesn't.