Which of the following is NOT listed as a common dividend option for participating policies?

• A. Cash
• B. Reduced premiums
• C. Accumulate at interest
• D. Policy loans

Answer: (D)

Dividends from participating life policies can be credited to the policy in several ways that affect the policy's value or premium payments. Common methods include taking the dividend in cash, using it to reduce future premiums (premium offset), letting it accumulate at interest with the insurer, or using it to purchase paid-up additions, which add both death benefit and cash value. These options are ways to use the insurer’s excess and alter the policy’s future performance.

Policy loans, however, are not a dividend crediting method. A loan is a separate transaction that borrows against the policy’s accumulated cash value and carries interest. It isn’t a distribution of the insurer’s surplus like a dividend and isn’t one of the standard dividend options offered to participate in the policy’s performance.