Question

Most participating whole life insurance policies allow the following uses of standard life insurance dividends EXCEPT:

A) to increase the policy's face amount.
B) to purchase 1-year term insurance.
C) to reduce future premium payments.
D) to purchase additional units of paid-up life insurance.

Answer 1

Most participating whole life insurance policies allow the following uses of standard life insurance dividends except: to increase the policy's face amount and to purchase 1-year term insurance.

Step-by-step explanation:

Most participating whole life insurance policies allow the following uses of standard life insurance dividends except:

1. To increase the policy's face amount. Dividends usually cannot be used to increase the death benefit or face amount of the policy.
2. To purchase 1-year term insurance. Dividends can be used to purchase additional coverage, but not specifically 1-year term insurance.
3. To reduce future premium payments. This is a common use of dividends in whole life insurance.
4. To purchase additional units of paid-up life insurance. Dividends can be used to purchase additional paid-up life insurance.