In Variable Life Insurance, what can a policyholder use dividends for?

In Variable Life Insurance, policyholders can use dividends to pay for future premiums or reinvest them back into the policy. This flexibility allows the policyholder to reduce out-of-pocket costs associated with maintaining their life insurance coverage. By utilizing dividends in these ways, the policyholder can enhance the policy's growth potential through reinvestment or maintain their coverage without the immediate expense of premium payments.

Other options misrepresent the nature of dividends in variable life insurance. For instance, while cash payments could be one use, it's not the only or primary option available. Similarly, dividends are not explicitly designated for tax payments, and withdrawing cash value typically has stipulations and conditions, making that option less applicable in this context. Overall, the ability to use dividends for premiums or reinvestment is a key feature that adds value to a variable life insurance policy.