Final answer:
Dividends from an adjustable life insurance plan can be taken as cash, added to the cash value of the policy, or used to shorten the payment period, but they are not typically paid out through U.S. Treasury bonds.
Step-by-step explanation:
The question is asking which option is NOT a typical application of dividends from an adjustable life insurance plan. Adjustable, or cash-value (whole) life insurance, allows policyholders to accumulate cash value over time, which they can use during their lifetime. Dividends from such a policy can generally be used in several ways, but typically they can be:
- Paid out in selected cash increments, providing the policyholder with a stream of cash that can be used at their discretion.
- Added to the overall cash value of the policy, increasing the savings component and potentially the death benefit as well.
- Used to shorten the payment period of premiums, allowing the policy to be paid up earlier than the original schedule.
However, dividends are not typically paid out through U.S. Treasury bonds. This is not a standard option for the application of dividends in a life insurance policy. It is more common for insurance policies to invest their general account, where dividends might be generated from, in various assets which could include U.S. Treasury bonds, but dividends are not usually paid out directly in this form to policyholders.