With the reduction of premium dividend option, how is the dividend used?

The reduction of premium dividend option allows policyholders to use their dividends to reduce the premium due for the next policy year. Instead of receiving the dividend as cash or accumulating it with interest, the policyholder applies the dividend amount directly toward the upcoming premium payment. This method is particularly beneficial for policyholders looking to lower their out-of-pocket expenses while maintaining their coverage. By applying the dividend this way, it helps in managing cash flow while also ensuring continued protection under the policy without the need for an immediate cash payment.