What is referred to as the policy owner's share in the divisible surplus of a participating insurance plan?

In a participating insurance plan, policyholders are entitled to receive a share of the insurer's surplus, which is often referred to as a dividend. This surplus arises when the insurance company's actual expenses and claims are lower than projected, allowing the company to distribute a portion of that excess income back to its policyholders.

Dividends are not guaranteed and are typically based on the company's performance, making them a form of profit-sharing for those who hold participating policies. This feature distinguishes participating policies from non-participating ones, where policyholders do not receive such a share of the surplus. Understanding this concept is crucial for policyholders considering the potential financial benefits of participating in these types of insurance plans.