YOU ASK:
What is the definition of Premium Reduction Option?
WE ANSWER:
The Premium Reduction Option is an option that policyowners of participating life insurance policies have to use dividends in order to pay premiums. The insurance company then applies the dividends of the policy to pay for premiums, and then the difference is billed to the policyowner. Thus, the dividends are used to reduce the amount of premium that needs to be paid.
This option can be selected, as opposed to using the dividend to pay for a higher insurance coverage or to allow the dividends to grow and earn interest. The policyowner can also get the dividends as cash.
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More insurance terms around premium reduction option:
- Premium Tax
- Premiums in Force
- Premiums Written
- Primary Beneficiary
- Primary Company
- Primary Market
- Prime Rate
- Prior Approval States
- Private Mortgage Insurance
- Private Placement
- Premium
- Premises
- Preferred Risk Class
- Preferred Provider Organization
- Pre-Existing Condition
- Pool
- Pollution Insurance
- Political Risk Insurance
- Policyholders’ Surplus
- Policy Dividend Options