Final answer:
Reduced paid-up insurance is not a dividend option; it's what happens to a policy when premiums are no longer paid. Dividend options include reduction of premium payments, paid-up additions, and cash payments. The correct answer is c. Reduced paid-up insurance.
Step-by-step explanation:
The question asks which of the following is not a dividend option in the context of life insurance policies. The options given are:
- Reduction of premium payments
- Paid-up additions
- Reduced paid-up insurance
- Cash payments
The correct answer is c. Reduced paid-up insurance. This is not a dividend option but rather an option for what happens to the policy if the owner stops paying premiums. Dividend options typically include the following:
- Reduction of premium payments - Dividends are used to lower the amount of premium the policy owner has to pay.
- Paid-up additions - Dividends purchase additional amounts of insurance that increase the policy's death benefit and cash value.
- Cash payments - The dividends are paid out in cash to the policy owner.