Sarah, a 35-year-old marketing professional in Ontario, purchases a participating whole life insurance policy with a $500,000 death benefit. After 10 years, the policy has accumulated significant cash value. If Sarah wishes to use her policy's dividends to increase her death benefit without increasing her premium payments, which dividend option should she select?

Question: Sarah, a 35-year-old marketing professional in Ontario, purchases a participating whole life insurance policy with a $500,000 death benefit. After 10 years, the policy has accumulated significant cash value. If Sarah wishes to use her policy's dividends to increase her death benefit without increasing her premium payments, which dividend option should she select?

Answer options: ✅ Paid-up additions

• Cash payment
• Reduced premium
• Accumulate at interest

Correct answer: Paid-up additions

Explanation: Paid-up additions use dividends to purchase small, single-premium whole life policies that add to the death benefit and cash value, without requiring additional premium payments from the policyholder.