The purposes of the paper are to examine some of the surplus distribution techniques currently being employed by life insurers, and to discuss some of the implications of those techniques. The major conclusions are: (1) only scanty information is publicly available concerning dividend determination, (2) the three-factor method for determining dividends can have adverse effects on long-time policy owners, (3) various post-sale classification techniques can have adverse effects on long-time policy owners, and (4) there is need for a system of periodic disclosure to keep the long-time policy owner continuously informed about the ongoing price structure of his or her policy. The subject of surplus distribution to individual life insurance policy owners may be broken down into two categories: (1) the determination of the aggregate amount to be distributed in a given year, and (2) the manner in which the aggregate amount is divided among the policy owners. This paper deals solely with the second of these categories. The methods by which individual life insurance policy dividends may be determined have been described in considerable detail in several books and articles.1 These descriptions, however, have dealt largely, if not exclusively, with the theory of surplus distribution, and have neglected the practice of surplus distribution. The purposes of this paper are to take a look at some of the surplus distribution techniques used by life insurers, and to discuss some of the implications of those techniques. The word preliminary is used here because this paper is the author's first effort in what is hoped will be a larger study of surplus distribution techniques. Information Availability Before beginning this study, the author believed that information gathering would present no serious problems. Schedule M in the annual statement Joseph M. Belth, Ph.D., is professor of insurance in the School of Business at Indiana University (Bloomington), editor of The Insurance Forum, author of Life Insurance: A Consumer's Handbook (1973), and a past president of the American Risk and Insurance Association. He received the 1966 Elizur Wright Award, and has received five awards for articles published in The Journal of Risk and Insurance. ' See, for example, Joseph B. Maclean and Edward W. Marshall, Distribution of Surphis (Actuarial Studies No. 6; New York: The Actuarial Society of America, 1937); Dan M. McCill, Life Insurance (Rev. ed.; Homewood, Ill.: Richard D. Irwin, Inc., 1967), chs. 16-17; and Robert T. Jackson, Some Observations on Ordinary Dividends, Transactions of the Society of Actuaries, Vol. XI (1959), pp. 764-796.