Life Policy ProvisionsQuestion 165 of 716

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 §10172

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Reviewed by John Zihao Zhang — California-Licensed Life Insurance Agent (CA Dept. of Insurance License #4396095 — verify)
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