Legal Definitions - dividend addition

DIVIDEND ADDITION

Dividend addition is an extra amount of money that can be added to the face value of a life insurance policy. This extra amount is purchased by using a dividend as a single premium payment.

Let's say you have a life insurance policy with a face value of $100,000 and you receive a dividend of $1,000. You can choose to use that dividend to purchase a dividend addition, which would increase the face value of your policy to $101,000.

Another example would be if you have a policy with a face value of $50,000 and you receive a dividend of $500. You can use that dividend to purchase a dividend addition, which would increase the face value of your policy to $50,500.

Dividend addition is a way to increase the face value of a life insurance policy without having to pay additional premiums. The examples illustrate how a dividend can be used to purchase a dividend addition, which in turn increases the face value of the policy. This can be a good way to increase the amount of coverage you have without having to pay more money out of pocket.