An option in a life insurance policy that allows the insured to accumulate any dividends paid out to him or her. These dividends stay with the insurer and earn compound interest.
Insurance Encyclopedia
Dividend accumulations
Policy dividend funds left on deposit with the insurer. Also called dividend credits .
Dividend addition
Amount of paid-up life insurance purchased with a policy dividend and added to the face value amount of the policy. This is an option written into the life insurance policy. Also called paid-up additions .
Dividend additions (Life Insurance)
An option in a policy that allows the insured to leave the dividends paid out to him or her by the insurer with the insurer. These dividends are then used to purchase a single premium life insurance policy.
Dividend credits
See: dividend accumulations .
Dividend expenses
Amount of money that it costs the insurance company to maintain each policy in force for the current year.
Dividend interest rate
Sum of money that accumulates and that represents the actual rate earned on an insurer’s present investments. The dividend interest rate is used to calculate policy owner dividends.
Dividend option (Life Insurance)
Under certain life insurance policies, an option that allows the insured to choose an alternate way to collect dividends.
Dividend options
Several choices that participating life insurance policy owners can choose to indicate how they want to receive their share of the insurance company’s divisible surplus including accumulation at interest option, additional term insurance option, automatic dividend option, cash payment option, dividend accumulations, enhancement type policy, paid-up additions, and premium reduction option.
Dividend rate of mortality
Death (mortality) rate presently experienced by the insurance company on the insurance policies it has sold. The insurer chooses the rate of mortality for a given age in calculating the policy owner’s dividends.