New York State Life Insurance Exam Questions Practice Question
An insured has a 20-pay life policy with a paid-up dividend option. In this option, the insured may
Correct Answer: B
Rationale: In a 20-pay life policy with a paid-up dividend option, the insured can utilize dividends to pay off the policy early, thus achieving paid-up status before the full premium term concludes.
Option A is incorrect as dividends cannot reduce premiums after the 20-year period; they are intended for use during the premium payment phase.
Option C misinterprets the use of cash values; while cash values can be accessed, the option specifically refers to dividends, not accumulated cash values.
Option D is misleading, as the insured does not waive premium payments until cash values accumulate; instead, dividends directly facilitate early payment of the policy.
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