Life insurance dividend payment options
Some life insurance policies pay dividends. These are extra funds returned to policyholders each year. If you have National Service Life Insurance or Veterans’ Reopened Insurance, your policy pays dividends. These policy numbers begin with the letters V, J, or JR. Keep reading to learn about your options for receiving or using your dividend.
Option 1: Pay your annual policy premium
If your dividend is less than your annual premium, you’ll receive a bill for the difference.
If your dividend is more than your policy’s annual premium, you’ll have to decide what to do with the money that’s left. You can choose from these options:
- Request that we pay you in cash, or
- Buy paid-up additional insurance (option 2), or
- Repay a policy loan or lien if you have one (option 4)
Option 2: Buy paid-up additional insurance
The insurance you buy with your dividends is in addition to your basic coverage, and you can buy it at any age. You’ll earn dividends on both your basic coverage and the paid-up additions.
With paid-up additions, you can do the following:
- Get more protection for your beneficiaries, and
- Have cash and loan values, and
- Earn dividends, and
- Stop paying premiums
Option 3: Deposit your dividend into a VA interest-earning account
When you deposit your dividend into an interest-earning account at VA, the interest you earn isn’t taxable.
You may withdraw money at any time by calling us at 800-669-8477. You can also send us a written request.
If you miss a premium payment, we’ll use your dividend (if money is available) to pay one month’s premium. We’ll tell you when we do this.
2024 interest rates:
- National Service Life Insurance: 2.50%
- Veterans’ Reopened Insurance: 2.50%
- Veterans’ Special Life Insurance: 1%
Option 4: Repay a loan or lien
If you have a loan or lien against your policy, you can use your dividends to pay down the amount you owe.
Option 5: Pay premiums in advance
Use your dividends to pay premiums as far in advance as possible.
Note: You can’t use this option if your premiums are being paid using one of these payment methods:
- Automatic payment by allotment from your retirement pay, or
- Deduction from VA compensation or pension, or
- Checking account deduction (VAMATIC), or
- Online bill pay that your bank initiates (your bank starts the payment process each time)
Option 6: Receive dividends in cash
Every year on your policy anniversary date, you’ll get your dividend in one of these ways:
- A direct deposit of money into your bank account, or
- A U.S. Treasury check in the mail (in limited situations)
Questions about dividends
Can I change my dividend payment option?
Yes. You can change your option any time by calling us at 800-669-8477. We can answer any questions you may have about how the dividend payment options work.
Note: If you need help deciding which option to choose, you may want to talk with a financial planner.
Can I choose more than one payment option?
No. You can use only one dividend payment option for each policy. If you have more than one policy, you can choose different options for each of them.
Do all VA life insurance policies pay dividends?
No. In 2024, only these policies pay dividends:
- National Service Life Insurance (policies beginning with V)
- Veterans’ Reopened Insurance (policies beginning with J and JR)
Note: You may have heard rumors about special dividends for other life insurance plans. These rumors are false. We don’t pay dividends on Servicemembers’ Group Life Insurance (SGLI) or Veterans’ Group Life Insurance (VGLI) coverage.