As life insurance products have evolved, there's a number of product types which allow policy holders to combine insurance risk and investment risk and these are referred to as participating policies and investment type policies. Now, participating policies are similar to whole life policies as they require the policy holder to pay a fixed regular premium, and they provide a guaranteed death benefit and a cash value for the policy holder. But this time they also allow policy holders to receive a share of the investment returns of a specific pool of investments or of the profits of the insurance company during the policy holder's lifetime. These investment returns are in the form of a bonus or a dividend, which can either be paid direct to the policy holder, can be held on deposit by the insurer, or can even be used to increase the death benefit of the policy. Therefore, the term "participating policy" refers to the fact that the policy holders participating in the investment returns generated by the insurance company. In effect, participating policies act like a term life insurance policy with an investment product. Specific features in participating policies do vary greatly by product and also by country. Firstly, there's the nature of the participation. Typically, mutual funds offer participation in the profits of the company via a dividend. Whilst with profits funds, offer participation in a specific investment fund. Secondly is whether the participation is discretionary. Many with profits funds and UK policies allow discretion for the insurance company in the amounts of dividends that they pay to the policy holder, whereas German policies require at least 90% of the investment returns to be allocated to the policy holder. Some continental European policies have a contractual requirement to pay all realized investment returns to the policy holder, but this still allows the insurance company some discretion over the timing with which the investment gains are realized. The next type of policy is an investment type policy, which transfers nearly all the investment risk which is usually borne by the insurance company to the policy holder. Although the policy holder is required to pay regular premiums, they typically have some flexibility over the amount paid. These policies therefore effectively treat the premiums paid by the policy holder as a deposit paid to the insurance company, allowing the policy holders to earn market interest rates or investment returns on the premiums that they've paid. Therefore, the cash value and the death benefit reflect the premiums paid, plus any interest or investment returns allocated to them. This amount is referred to as the account value and a key difference between investment type policies and other policies is therefore that the cash value and the death benefit depends heavily on investment performance. To reduce the investment risk borne by the policy holder, these policies typically offer a guaranteed minimum interest rate or a guaranteed minimum death benefit. Examples of this type of policy include unit linked policies and universal life policies. Unit linked policies accrue value based on the performance of a specific fund. Whilst universal life policies typically credit the policy holder with a market rate of interest or are based on the performance of a specific index.