Excuse me for adding confusion to the issue.
"The good news is that dividend payments received from participating life insurance policies aren’t subject to taxes by the Internal Revenue Service since the insurance companies generated the gains off of their policyholders. In essence, the dividend payments are treated as refunds for overpayment of the premium." Per Investopedia.
The dividends are not taxed and are not to be added to the premiums you paid from out-of-pocket funds.
See also here.
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