What is a significant feature of participating policies compared to variable life policies?

A significant feature of participating policies is their ability to allow policyholders to share in the insurer's profits, typically through dividends. This profit-sharing concept means that policyholders have the potential to earn returns based on the company's performance, which adds an element of financial benefit beyond just the coverage provided by the policy.

In contrast to variable life policies, which do not guarantee a profit-sharing component and are generally more investment-oriented with market risks, participating policies generally offer a more stable outcome, as dividends can help to offset premium costs or contribute to cash value accumulation. The lower risk associated with participating policies stems from the predictable nature of dividends, which are declared by the insurer and not directly tied to market fluctuations.

This feature distinguishes participating policies within the broader insurance market, especially when compared to variable life policies that involve more risk and variability in returns.