If a policyholder chooses the cash dividend option, what is the implication for purchasing additional coverage?

When a policyholder selects the cash dividend option, it typically means they are opting to receive dividends in cash rather than applying them towards additional insurance coverage, reducing premiums, or purchasing additional paid-up insurance. Choosing the cash dividend option does not automatically enable the policyholder to acquire additional coverage.

The implication here is that by taking the cash rather than using it to buy more insurance, the policyholder forfeits the opportunity to increase their coverage at that time. In most cases, any additional coverage would generally require a new application, which could include providing evidence of insurability. Therefore, with this choice, the policyholder essentially limits their ability to increase their coverage through the dividend options provided by the policy.

In contrast, other options may imply different outcomes about the connection between cash dividends and additional coverage, but they do not accurately reflect the standard practice associated with choosing the cash dividend option. Thus, stating that no additional coverage can be purchased accurately describes the consequence of that choice.