All the following factors could increase the death benefit EXCEPT

• A. paid-up additions.
• B. premiums paid in advance.
• C. accumulated dividends.
• D. unpaid loan interest.

Answer: (D)

In permanent life insurance, the death benefit can grow beyond the stated face amount when funds are directed to paid-up additions. Paid-up additions are extra, smaller policies attached to the main policy that boost the death benefit and also build cash value. If dividends are paid on a participating policy, they can be used to purchase these paid-up additions, increasing the death benefit. Accumulated dividends — left in the policy to earn interest — can later be used to buy paid-up additions as well, yielding a higher death benefit. Premiums paid in advance can provide additional funds that, depending on the policy, may be allocated toward paid-up additions or otherwise increase cash value that supports a higher death benefit through future additions. Unpaid loan interest behaves differently: any outstanding loan balance and accrued interest reduce the amount payable to beneficiaries at death, so it does not increase the death benefit.