Paid by cash or by reducing future premiums
Allowed to purchase non-forfeitable paid up additions
Accumulated with interest to be withdrawn at the option of the policy holder
None of the three
Answer is Right!
Answer is Wrong!
The correct answer is: B. Allowed to purchase non-forfeitable paid up additions
A dividend is a payment made by an insurance company to a policyholder. The amount of the dividend is based on the company’s profits and the policyholder’s policy. Dividends can be paid in cash, used to reduce future premiums, or used to purchase non-forfeitable paid up additions.
Non-forfeitable paid up additions are a type of policy that provides additional death benefit and cash value. They are created when a dividend is used to purchase additional insurance. Non-forfeitable paid up additions are not subject to lapse or surrender charges, and they can be used to increase the death benefit or cash value of the policy.
The other options are incorrect because:
- Option A is incorrect because dividends can also be used to purchase non-forfeitable paid up additions.
- Option C is incorrect because dividends can be used to purchase non-forfeitable paid up additions, but they do not have to be.
- Option D is incorrect because all three options are correct.