Life Policy ProvisionsQuestion 165 of 315
Which dividend option uses the dividend to purchase a small amount of additional permanent life insurance with its own cash value, increasing both the death benefit and the cash value?
a.Accumulate at interest
b.Cash
c.Reduce premium
d.Paid-up additions
Explanation
The paid-up additions (PUA) dividend option uses each dividend as a single premium to buy a small block of additional, fully paid-up permanent insurance. Each PUA carries its own death benefit and cash value, increasing the policy's total values over time.
Law Reference: Cal. Ins. Code §10172Practice all 315 questions free — no signup required.
Related questions on this topic
- Which nonforfeiture option uses the cash value of a lapsed permanent policy to keep the same face amount in force as term insurance for as long as the cash value will last?
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- Policy dividends paid on participating life insurance policies are generally treated for federal income-tax purposes as which of the following?
- An insured names her spouse as primary beneficiary on an irrevocable basis. Several years later she wants to change the beneficiary. What must she do?
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Sen Lin, PrepPass Founder · Verified against California Life & Health Insurance License Exam · How we review
Reviewed by John Zihao Zhang — California-Licensed Life Insurance Agent (CA Dept. of Insurance License #4396095 — verify)