What is the definition of Policy Dividend Options?
Policy Dividend Options are options given to the policyholder as to how he will receive the dividends. These are applicable for participating life insurance policies.
The policy owner can decide to get a check for the dividends, use the dividends to pay for a portion of the premium (so that he pays only for the difference of the premium and the dividend) or use the dividends to pay for paid-up insurance. Another option would be to use the dividends to buy additional term insurance for a year.
The policy owner can also decide to leave the dividends with the insurance company in order for it to obtain interest earnings. He can indicate whether he will allow the insurance policy to use the dividends to pay for the premiums in case the policy owner fails to pay the premiums due.
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