What is ‘Vanishing Premium Policy’
A vanishing premium policy is a form of participating whole life insurance where the policyholder can use the dividends from the policy to pay the premium. Over time, the dividends will increase to the point that they cover the entire cost of the premiums.
Explaining ‘Vanishing Premium Policy’
When properly constructed, vanishing premium policies can be very attractive to consumers who are worried about longer term fluctuations in income, such as the self-employed, people who wish to start a business or people who wish to retire early.
Further Reading
- The law and economics of vanishing premium insurance – heinonline.org [PDF]
- Market distress and vanishing liquidity: anatomy and policy options – papers.ssrn.com [PDF]
- Appearing and disappearing dividends: The link to catering incentives – www.sciencedirect.com [PDF]
- The economic consequences of disappearing government debt – www.jstor.org [PDF]
- The external finance premium and the macroeconomy: US post-WWII evidence – www.sciencedirect.com [PDF]
- Disappearing dividends, catering, and risk – academic.oup.com [PDF]
- The disappearing day-of-the-week effect in the world's largest equity markets – www.tandfonline.com [PDF]
- Verifiability and the vanishing intermediate exchange rate regime – www.nber.org [PDF]
- Disappearing anomalies: a dynamic analysis of the persistence of anomalies – www.tandfonline.com [PDF]
