Paid Up Additions are funded by dividends to purchase what?

• A. Additional paid-up insurance
• B. Cash value withdrawals
• C. Premium refunds
• D. Mutual fund units

Answer: (A)

Dividends from a participating life policy can be allocated to buy additional, fully paid-up life insurance called paid-up additions. These additions are funded entirely by the dividend, so they don’t require any extra premium from you. Each paid-up addition increases the policy’s death benefit and adds to its cash value, and they grow with future dividends. It’s not about withdrawing cash value, getting a premium refund, or buying mutual fund units, but about using dividends to purchase more life insurance within the policy.