Dividend Option

Definition of "Dividend option"

Kenneth Rossi Coastal Properties Group International

Methods of handling policyholder dividends. In a participating life insurance policy, dividends are paid to the policy owner according to which of the following options is selected:

applied to reduce premiums;
paid in cash;
purchase increments of paid-up life insurance;
left on deposit with the insurance company to accumulate at interest;
purchase extended term life insurance for one year in the amount a dividend can buy (Fifth Dividend Option). Some health and property insurance policies have dividend options.