What is a "whole life policy dividend"?

A whole life policy dividend is indeed a portion of the insurer’s surplus that is paid to policyholders. This surplus typically arises due to the insurer collecting more in premiums than the costs of claims and operating expenses. By distributing dividends, the insurer shares its financial success with policyholders. In a whole life insurance policy, these dividends can be viewed as a return on the investment made by policyholders, and they can be taken in various forms, such as cash, applied to premiums, or used to purchase additional coverage. This feature emphasizes the mutual nature of some insurance companies, which tend to distribute profits back to their policyholders rather than shareholders.