Final answer:
The correct answer is B. Reduction in policy premium. All of the options listed are valid policy dividend options for a life insurance policyowner except for the reduction in policy premium.
Step-by-step explanation:
The correct answer is B. Reduction in policy premium. All of the options listed are valid policy dividend options for a life insurance policyowner except for the reduction in policy premium. Let me explain why.
A cash outlay to the policyowner refers to receiving a direct payment from the insurance company. This could be in the form of a dividend paid out from the accumulated cash value of the policy.
Buying additional insurance coverage means using the accumulated cash value of the policy to purchase more coverage. This can be a useful option to increase the death benefit or add additional policy riders.
However, a reduction in policy premium is not a valid policy dividend option. A dividend is typically a payment made to the policyowner, not a reduction in premium. Premiums are the regular payments made by the policyowner to maintain the coverage and are separate from dividends.