What characterizes a Participating Life Insurance Policy?

A Participating Life Insurance Policy is characterized by the benefit of policy dividends being paid to the insured. This means that policyholders not only receive the death benefit but also have the potential to receive dividends based on the insurer's performance. The dividends can come from various sources, such as excess premiums collected or favorable investment returns.

These dividends can be used in several ways, including reducing future premiums, accumulating at interest, or even being taken as cash. This feature creates an additional value for policyholders, distinguishing participating policies from non-participating ones, which do not offer dividends.

The other options do not accurately characterize participating policies. For instance, higher premiums might be associated with participating policies due to the potential for dividends, but they are not a defining feature. Non-renewable coverage is typically not relevant to the nature of participating policies, which can often be renewable. Additionally, a Participating Life Insurance Policy certainly provides coverage for beneficiaries, contradicting the notion that there is no coverage. Thus, the feature of receiving dividends is the hallmark trait of a Participating Life Insurance Policy.