Gill, Madura. Personal Finance, 4th Canadian Edition 2019. pp 275-276. Emboldenings are mine.

enter image description here

I read the differences between UL ("Universal Life") and WL ("Whole Life") on p. 275, but they don't justify why WL pay dividends and UL doesn't.

  • 2
    Please don't post pictures of text... please transcribe the relevant portions.
    – TripeHound
    Commented Aug 12, 2019 at 7:50

2 Answers 2


It’s mostly historical. Bottom line is there doesn’t have to be a specific reason for it, it’s just the way companies tend to do it.

Dividends are just one way of paying a bit more of a return on premiums to a policy owner. Higher return on the cash value in a UL policy is another way. Dividends are then basically a marketing technique and a way for the insurer not to be obligated to pay them.


The answer is well described under the wikipedia page on Whole Life insurance maturity:

A whole life policy is said to "mature" at death or the maturity age of 100, whichever comes first. To be more exact the maturity date will be the "policy anniversary nearest age 100". The policy becomes a "matured endowment" when the insured person lives past the stated maturity age. In that event, the policy owner receives the face amount in cash. With many modern whole life policies, issued since 2009, maturity ages have been increased to 120. Increased maturity ages have the advantage of preserving the tax-free nature of the death benefit. In contrast, a matured endowment may have substantial tax obligations.

In short, there is no free lunch. Any whole-Life that attach with shorter maturity endowment policies, is way more expensive than a simple Term life insurance. In fact, the so-called "dividend" comes from one own coffer. Which in most cases, one should carefully study insurance actual coverage and premium difference, take the money saved from the expensive endowment policies and invest them by yourself.

You must log in to answer this question.