Accumulation Option

AAA

DEFINITION of 'Accumulation Option '

A policy feature of permanent life insurance that allows policyholders to leave any dividends received with the insurer, where the dividends can earn interest. Accumulation options are the variety of options holders of participating life insurance policies can make with the dividends they receive. Some types of insurance pay dividends to their policyholders each year when the insurance company performs better than estimated.


Also called an "accumulation option," "accumulation at interest option" or "dividends on accumulation".

INVESTOPEDIA EXPLAINS 'Accumulation Option '

Common options available to participating permanent life insurance policyholders are to use their dividends to purchase more insurance, or to pay a portion of their existing premiums. They can also elect to receive their dividends immediately as cash, or to leave them on deposit with the insurance company to earn interest.

RELATED TERMS
  1. Return On Investment - ROI

    A performance measure used to evaluate the efficiency of an investment ...
  2. Universal Life Insurance

    A type of flexible permanent life insurance offering the low-cost ...
  3. Life Insurance

    A protection against the loss of income that would result if ...
  4. Cash Surrender Value

    The sum of money an insurance company will pay to the policyholder ...
  5. Whole Life Insurance Policy

    A life insurance contract with level premiums that has both an ...
  6. Basket Retention

    An insurance policy that covers exposures to several different ...
Related Articles
  1. Home & Auto

    A Look At Single-Premium Life Insurance

    Want to provide for your dependents and finance your own long-term care? Learn more here.
  2. Insurance

    How Much Life Insurance Should You Carry?

    Learn how much - if any - insurance you really need.
  3. Retirement

    Variable Vs. Variable Universal Life Insurance

    Do you know why you might need one policy versus the other? Read on to find out.
  4. Options & Futures

    How To Avoid Taxation On Life Insurance Proceeds

    Decrease the value of your taxable estate and prevent the tax man from getting you one last time.
  5. Retirement

    Life Insurance: How To Get the Most Out Of Your Policy

    There are many benefits to owning a life insurance policy - if you get the right one for you.
  6. Home & Auto

    Life Insurance Clauses Determine Your Coverage

    Understanding these key parts of your policy will help you to ensure that your family will be covered.
  7. Insurance

    Life Insurance: Putting A Price On Peace Of Mind

    Would your death leave loved ones financially stranded? Find out how to ease your mind and keep them protected.
  8. Options & Futures

    Is short selling a form of insurance?

    Explore short selling and put options. Learn how put options may be used as insurance to protect positions, and costs associated with using this method.
  9. Professionals

    What are some examples of common fringe benefits?

    Learn how offering fringe benefits can be a strategic recruitment and retention tool for employers and drastically increase total compensation for employees.
  10. Professionals

    What's the average salary of an actuary?

    Get insight into the intriguing career of risk analysis and forecasting. How much do actuaries make, and how is this field expected to fare in the coming years?

You May Also Like

Hot Definitions
  1. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  2. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  3. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  4. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  5. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  6. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
Trading Center