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dividend addition

Dividend addition is an option regarding payment of dividends to insureds that is offered by some life insurers, particularly mutual companies.

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There are a number of alternative ways dividends may be paid, such as in cash, as an increase to the policy's cash value, or as a paid-up addition. Under this alternative, the dividend is used to purchase a paid-up single premium increase in the policy's face value, thereby increasing the death benefits.