Which of the following is a dividend option for life insurance policy owners?

• A. accumulate with interest
• B. Elimination periods
• C. Disability income
• D. Nonforfeiture option

Answer: (A)

Dividends on participating life policies can be allocated in several ways, and one common option is to accumulate with interest. In this choice, the insurer keeps the dividends on deposit and credits interest to that amount, so the funds grow over time and can be taken later or used to affect the policy’s value.

The other items are not dividend options. Elimination periods are waiting periods used in disability income policies before benefits start. Disability income refers to the benefit itself, not a method of handling dividends. A nonforfeiture option is a policy feature that protects the cash value if premiums cease, not a way to handle dividends.