Dividends Paid-Up Option: Dividends used to pay off the original policy more quickly.

Dividends Paid-Up Option: Dividends used to pay off the original policy more quickly.

• A. Dividends used to pay off the original policy more quickly.
• B. Dividends are paid to the policyowner periodically as cash.
• C. Dividends purchase additional paid-up policy with face amount.
• D. Dividends accumulate with interest and are withdrawn at maturity

Answer: (A)

Dividends paid-up is a dividend option where the policy’s dividend payments are used to prepay the remaining premiums, speeding the policy toward paid-up status. By applying dividends this way, no further premiums are due once enough has been paid, effectively paying off the policy earlier. This is why it matches the description of using dividends to finish the policy more quickly. Other options describe taking dividends as cash, using them to buy additional paid-up insurance, or letting them accumulate with interest, none of which accomplish paying off the original policy ahead of schedule.

Dividends paid-up is a dividend option where the policy’s dividend payments are used to prepay the remaining premiums, speeding the policy toward paid-up status. By applying dividends this way, no further premiums are due once enough has been paid, effectively paying off the policy earlier. This is why it matches the description of using dividends to finish the policy more quickly.

Other options describe taking dividends as cash, using them to buy additional paid-up insurance, or letting them accumulate with interest, none of which accomplish paying off the original policy ahead of schedule.