North Carolina Life Insurance Practice Exam

The correct response identifies fixed period installments as not being considered a dividend option in insurance policies. In the context of life insurance, a dividend option typically refers to the various ways in which policyholders can receive dividends, which are a return of a portion of the premium paid when the insurer performs well financially.

Cash payments, paid-up additions, and reduction of premiums are all recognized methods for the disbursement of dividends. Cash payments allow policyholders to receive their dividends in cash. Paid-up additions refer to purchasing additional insurance coverage with the dividends, which increases the policy's value and death benefit. Reduction of premiums allows policyholders to use their dividends to reduce the amount of premium they need to pay for their policy.

In contrast, fixed period installments is a method of receiving death benefits rather than a method related to dividends. It refers to how beneficiaries may choose to receive the death benefit in regular payments over a specified time frame after the insured's death. Thus, fixed period installments do not qualify as a dividend option within the framework of life insurance policies.