Which of the following is true about dividends in participating policies?

Dividends in participating policies are a reflection of the insurer's financial performance and are dependent on the company’s divisible surplus. This surplus is the portion of profits that the company allocates to policyholders who have participating policies. These dividends are not guaranteed, as they rely on various factors including the insurer's overall profitability, investment returns, mortality experience, and expense management.

When a company performs well financially and has excess funds after covering claims and expenses, it may declare dividends to participating policyholders. Consequently, these dividends can vary from year to year based on the company's performance, making them not fixed and subject to changes in the divisible surplus.

The other answers do not accurately represent how dividends function in participating policies. They are not guaranteed each year, nor are they only declared at policy maturity; they can be paid annually or at different intervals during the life of the policy. Additionally, dividends are not fixed amounts; they fluctuate based on the company’s performance and its divisible surplus for that particular year.