Which of the following is NOT a dividend option available to participating policyholders?

Which of the following is NOT a dividend option available to participating policyholders?

• A. Cash
• B. Premium Reduction
• C. Universal Life Policy
• D. Paid-up Additions

Answer: (C)

Participating policyholders are typically provided with several options for receiving dividends based on the performance of the insurance company. The available options generally include: - Cash: Policyholders can receive their dividends in cash, providing immediate funds that can be used as needed. - Premium Reduction: Dividends can be applied toward reducing future premium payments, which can benefit policyholders by lowering their out-of-pocket expenses. - Paid-up Additions: This option allows policyholders to use their dividends to purchase additional amounts of life insurance coverage, enhancing the value of their policy. A universal life policy, however, is not a dividend option. Instead, it is a type of permanent life insurance policy that combines life coverage with an investment component. While universal life policies can accumulate cash value over time, they do not represent a method by which participating policyholders can receive dividends. Therefore, this choice is correctly identified as NOT being a dividend option available to policyholders.

Participating policyholders are typically provided with several options for receiving dividends based on the performance of the insurance company. The available options generally include:

• Cash: Policyholders can receive their dividends in cash, providing immediate funds that can be used as needed.

• Premium Reduction: Dividends can be applied toward reducing future premium payments, which can benefit policyholders by lowering their out-of-pocket expenses.

• Paid-up Additions: This option allows policyholders to use their dividends to purchase additional amounts of life insurance coverage, enhancing the value of their policy.

A universal life policy, however, is not a dividend option. Instead, it is a type of permanent life insurance policy that combines life coverage with an investment component. While universal life policies can accumulate cash value over time, they do not represent a method by which participating policyholders can receive dividends. Therefore, this choice is correctly identified as NOT being a dividend option available to policyholders.