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Participating vs non-participating policies

A participating policy shares in the profits of the insurer's participating fund through bonuses, which are not guaranteed. A non-participating policy pays only the benefits written into the contract. Which one you hold changes how its value grows, and how a buyer prices it.

Last reviewed 15 October 2026 · General information, not financial advice.

Participating and non-participating, side by side

Investment-linked plans are a third kind, valued by the units they hold, and are not covered here.

QuestionParticipating (par)Non-participating (non-par)
Where premiums goThe insurer's participating fund, pooled with other par policyholdersThe insurer's non-participating fund; the insurer keeps any profit and bears any loss
BonusesYes: reversionary, terminal or cash bonusesNone
What is guaranteedA base sum, plus reversionary bonuses once addedThe benefits stated in the policy
What can changeFuture bonus rates, set each yearNothing, once the policy is issued
Benefit illustrationProjections at two rates, capped at 4.25% and 3.00%Guaranteed values
Typical productsMost traditional endowments and whole life plansTerm life, many short-term guaranteed savings plans, some endowments
Upside and riskCan pay more than the guarantee if the fund does well; bonuses can be loweredA known result, with no upside
If you sell to usWhat we mainly buyCase by case, valued on the guarantees alone

How a participating fund works

The mechanics behind the bonuses. The three kinds of bonus

  • Premiums are pooled

    Par premiums go into one fund, invested across a mix of assets, mostly bonds and equities.

  • Bonuses are set once a year

    The insurer decides what to declare, on the advice of its appointed actuary, and tends to smooth payouts across good and bad years.

  • The surplus is shared

    Distributed surplus is shared between par policyholders, as bonuses, and the insurer's shareholders.

  • You get a yearly update

    Par policyholders receive a bonus letter or statement showing what was declared and how the fund performed.

How to tell which one you have

Any one of these settles it.

The policy schedule

Look for "participating" or "par" in the plan description.

The benefit illustration

Non-guaranteed columns at two rates of return mean a participating plan. Reading a benefit illustration

Your yearly post

A bonus letter from the insurer each year means a participating plan.

Ask the insurer

Customer service can confirm in one call. Insurer contacts

What it means if you sell or surrender

  • Surrender can give up the terminal bonus

    On a par policy, a bonus paid only at the end is often reduced or lost if you surrender early.

  • Buyers price par policies on what is already secured

    Guaranteed values and bonuses already added count in full; future bonuses are projected cautiously. How we value a policy

  • Non-par policies rest on their guarantees

    With no bonuses to add, the value is the guaranteed benefits worked back to today. We look at these case by case.

  • Investment-linked plans are different

    Their value follows the units held. We don't buy them at present. Surrendering an investment-linked plan

Par and non-par questions

What is a participating policy?

A life policy that shares in the profits of the insurer's participating fund through bonuses, on top of its guaranteed benefits.

What is a non-participating policy?

A policy that pays only the benefits set out in the contract, with no bonuses. Term life is the most common example.

Is a participating policy better?

Neither is better in general. A par policy offers possible upside with less certainty; a non-par policy offers certainty with no upside.

Can bonuses on a participating policy be cut?

Future bonus rates can be lowered. Reversionary bonuses already added to your policy stay.

Is an investment-linked policy participating?

No. Its value follows the units it holds, not a participating fund.

Do you buy non-participating policies?

Case by case, if they have a cash value and were paid in cash. Participating endowment and whole life policies are what we mainly buy. Policies we buy

Sources

Own a participating policy you no longer need?

See whether we would buy it before you surrender. No NRIC, no obligation.

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