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)

The key idea is how a permanent life policy can grow its death benefit beyond the base face amount. Paid-up additions are small, additional policies funded inside the same contract. They increase both the cash value and the death benefit by adding to the policy’s coverage. When dividends are paid or when premiums are paid in advance, those funds can be used to purchase paid-up additions, which directly boosts the death benefit. Accumulated dividends, specifically, are often used for this purpose, so they also increase the death benefit.

Unpaid loan interest, on the other hand, doesn’t create new coverage. If there’s an outstanding loan against the policy, the death benefit is reduced by the loan balance (including any accrued interest). So unpaid loan interest does not increase the death benefit; it can reduce it.

So the factor that would not increase the death benefit is the unpaid loan interest.