What dividend option can increase the death benefit of the existing life policy?

Choosing the paid-up additions option allows policyholders to use their dividends to purchase additional coverage without requiring further underwriting. This approach effectively increases the death benefit of the existing life policy. Each paid-up addition becomes a small whole life policy that increases the overall death benefit and also can accumulate cash value over time. This strategy is advantageous because it not only raises the insurance amount without necessitating more premium payments but also offers the benefit of enhanced cash accumulation potential.

In contrast, the other options do not directly contribute to an increase in the death benefit of the existing policy. Cash payments simply provide the policyholder with the dividends in cash, thus not improving coverage. The annual dividend option typically refers to the method of dividend distribution rather than directly influencing death benefit growth. The loan option allows borrowing against the cash value of the policy, which might diminish the death benefit if not repaid but does not add to it.