Arkansas Life and Health Insurance Practice Exam

All of the following are Dividend Options, EXCEPT:

1. Reduced paid-up

2. Cash

3. Premium reduction

4. Paid-up additions

The correct answer is: Reduced paid-up

Dividend Options allow policyholders to choose how they would like to receive any dividends earned on their participating life insurance policy. The options include cash, premium reduction, and paid-up additions. Option A, Reduced paid-up, is not a Dividend Option. Reduced paid-up allows policyholders to use any dividends to stop making premium payments and instead have a fully paid-up policy for a reduced face amount. This is not a Dividend Option but a nonforfeiture option available in some policies.