Dividend options are the choices policyowners of participating whole life and some other policies have for applying annual policyholder dividends declared by the insurer. Common options include taking dividends in cash, using them to reduce premiums, leaving them to accumulate at interest, or purchasing paid-up additions that increase death benefit and cash value. The chosen dividend option can significantly influence long-term policy performance, guarantees, and flexibility, even though dividends themselves are not guaranteed and may change over time.

Advisors review dividend options during policy design and periodic reviews, often recommending paid-up additions for clients seeking maximum long-term cash value and death benefit growth. Others may choose premium reduction to lower out-of-pocket costs in retirement years. Carriers illustrate alternative dividend options so clients can see tradeoffs over time. Understanding dividend options helps advisors fine-tune participating whole life policies to align with changing goals, cash-flow needs, and risk preferences while still emphasizing that dividends remain discretionary.