What is a common result of selecting a premium reduction dividend option?

Choosing a premium reduction dividend option allows policyholders to use dividends—surplus returns from the insurance company—to offset future premium payments. This means that the policyholder's financial obligation decreases, leading to lower out-of-pocket expenses for maintaining the policy.

This option is particularly appealing because it effectively reduces the cost of insurance without significantly altering the benefits provided by the policy. Policyholders can strategically use their dividends to manage cash flow, making insurance more affordable over time.

In contrast, cash payments would provide immediate liquidity but wouldn't reduce future premiums. A decrease in the total cash value of the policy does not directly relate to opting for dividends to reduce premiums and typically occurs from different factors, such as loans against the policy. Annual statements provide updates on policy values, but they do not specifically relate to dividend options or premium reduction. Thus, selecting a premium reduction dividend option aligns directly with lowering the amount of future premiums owed.