What are the options available to an insured under a participating life insurance policy for receiving surplus earnings?

A participating life insurance policy is designed to allow policyholders to benefit from the insurer's surplus earnings. These surplus earnings can be distributed in several ways that provide the insured with options for how to utilize the dividends they may earn from the policy.

Choosing the correct answer, which encompasses the full range of options available, reflects the flexibility that participating insurance policies offer. Specifically, the insured can receive surplus earnings in cash, which gives immediate access to the funds. They can choose to apply the surplus as a reduction in future premium payments, thus lowering their ongoing costs. There is also the option to use the surplus to purchase additional paid-up insurance, which increases the death benefit without additional premium payment. Additionally, the insured might opt to leave the surplus on deposit, earning interest over time. Lastly, surplus can be utilized to acquire additional term insurance, providing more coverage temporarily.

This broad array of choices allows the insured to tailor their benefits to their financial needs and preferences, highlighting the significant value in participating policies. Other options listed in other choices do not encompass the complete range provided by a participating policy, thus making them less comprehensive in describing all the possible uses of surplus earnings.