Deferred Dividend Policy Law and Legal Definition

Deferred dividend policy is a policy of life insurance wherein it is stipulated that the insured is not entitled to any part of the surplus or dividend, otherwise accruing upon the policy annually, until the expiration of a dividend period. In such a policy, the dividend period may be five to twenty years, in multiples of five, depending upon the stipulation. If the policy holder dies, and his/her policy is paid within the period, the dividends accumulated on his/her policy are lost and go to augment the dividend fund to be applied to other policies of the same class which survive the dividend period.