Life Insurance 143 views June 12, 2021

Difference Between a Participating and a Non-Participating Life Insurance Plan

Life insurance plans, whose main motive is to secure the future of your dependents in your absence, vary from each other in terms of payouts. While some plans offer only a lump sum amount to your dependents upon your death, others go beyond the same by providing maturity payouts. And some plans offer bonuses in addition to the payouts mentioned above. So, the offerings of the plan will depend much on its classification – participating or non-participating. So, we’ll differentiate the two to make it clear for you. Let’s get started!

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So, What are the Differences Between Participating and Non-Participating Life Insurance Plans?

Differences between the two plans are based on their definition, payment frequency, risk-return ratio, etc. Once you know the same, you could make the right call for yourself – whether to take a participating or non-participating life insurance plan. So, let’s chart out the differences without any further delay.

Definition of Participating and Non-participating Life Insurance Plans

Participating plans are those where policyholders get a share of profits that the company earns over a year. So as and when the company declares bonuses and dividends from its profits, a certain portion of that gets credited to policyholders too. Whereas non-participating life insurance plans don’t provide such benefits to policyholders.

Payment Frequency – Which is Better on this Front?

Policyholders of participating life insurance plans get bonuses or dividends at annual intervals as companies usually declare the same at that time. No such payouts are available for policyholders choosing the non-participating plan. So here, participating plans have an edge over their non-participating counterparts.

Risk-return Ratio – Which Performs Better on this Count?

Returns when weighed in terms of involved risks give one an idea of where to park their money. The return probability of money invested in participating plans is more compared to their non-participating counterparts. But at the same time, the risks are also higher. Whereas, with non-participating life insurance plans, one’s payout is protected against market volatility. So, participating plans may offer the potential for greater returns but are not for all! People with a low-risk appetite should consider putting their money in non-participating plans. Only when your risk appetite is on the higher side should you choose participating plans. Can’t say which one holds the edge on this point as it’s even-steven!

Types of Payouts Available

Participating plans offer guaranteed payouts upon policy maturity or the death of the policyholder. Besides, these also offer non-guaranteed payouts such as dividends, bonuses, etc. Whereas only guaranteed payouts are the case with non-participating plans.

Flexibility

Participating plans are an outright winner in terms of flexibility as you can switch and redirect your investments for greater returns compared to non-participating options where the payment remains fixed as stated in the policy document at the time of inception.

Which Plans Can be Called Participating and Non-participating?

Term insurance plans are called non-participating plans as they provide protection to the family of the deceased insured member during the policy term. Some endowment and money back plans also come under the category of non-participating plans, whereas Unit-linked Insurance Plans (ULIPs) and some other plans offering bonuses are classified as participating plans.

So, Which are the Best Participating and Non-participating Life Insurance Plans?

After knowing the differences, you must have made up your mind which to choose from participating and non-participating life insurance plans. We can further help you pick the best from these two categories. Let’s check below the best ones, starting with the participating variants.

Best Participating Life Insurance Plans

Plan NameSum AssuredPolicy Term (In Years)Starting Premium Amount (In INR)Loyalty Additions/Bonuses
Aegon iInvestMinimum - For individuals with an entry age of less than 45 years, the sum assured payable will be higher of 10 times the annualized premium and 0.5 x policy term x annualized premium

When the entry age is 45 and above - greater of 10 times the annualized premium and 0.25 x policy term x annualized premium
10/15/20/252,000 per month1.70-1.80% of the sum assured
Aviva i Growth5-50 Lakh10/15/2048,000 per annum1.25-3% of the sum assured (available in the last years of the policy)
Max Life Monthly Income Advantage PlanMinimum - 54,000-4,05,00016-4525,000 per annumAccrued compound reversionary bonus, if any, terminal bonus
Bajaj Allianz Cash Assure PlanMinimum - 1 Lakh16/20/24/286,500 per annumVested Bonus & Terminal Bonus at maturity
HDFC Life Super Income PlanMinimum - 18,457-76,19815-272,000 per monthAccrued reversionary bonuses, terminal bonus and interim bonus

Best Non-participating Life Insurance Plans

Plan NameSum AssuredPolicy Term (In Years)Starting Premium Amount (In INR)Maturity Benefits
HDFC Life Sanchay PlusHighest of -

10 times the annualized premium

105% of the total premiums paid


Guaranteed sum assured on maturity


An absolute amount payable upon death
6-202,500 per monthApplicable maturity benefits are paid in a lump sum for lifelong after the policy period or for certain years after the completion of the policy term
Aviva Guaranteed Income Plan20 times the annual premium1550,000-75,000 per annum1.2 times the annualized premium payable at the end of each of the 11 years after maturity
Canara HSBC OBC Guaranteed Savings PlanHighest of -

11 times the annualized premium

105% of the total premiums paid


Guaranteed sum assured on maturity


An absolute amount payable upon death
10-2020,000 per annumGuaranteed sum assured on maturity, guaranteed yearly additions, guaranteed loyalty additions
Aviva Dhan SamruddhiMinimum - 2,65,000-4,00,00010-203,109 per monthSum assured plus guaranteed additions till maturity less the survival benefit payout
Bharti AXA Life Elite Advantage PlanHighest of -

10 times the annualized premium


105% of the total premiums paid till the date of death


Sum assured on maturity
10 and 1212,000, 15,000 or 24,000 a yearFor a 10-year policy term - maturity benefits payable at the end of the 10th year till the end of the 20th year

For a 12-year policy term - maturity benefits payable at the end of the 12th year till the end of the 20th year

Note – Term plans are not put on the table for non-participating plans because most of them don’t come with payouts beyond the ones at the time of death.

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