State RegulationsIL specificDifficulty 1/5
A participating individual life policy is issued in Illinois. Under 215 ILCS 5/224, by what point must dividend participation begin at the latest?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
215 ILCS 5/224(1)(e) requires dividend participation to begin no later than the end of the 3rd policy year. Once dividends start, the policyowner selects among the statutory options: take cash, reduce premiums, buy paid-up additions, or accumulate at interest. An Illinois policy that delays the first dividend beyond year 3 violates the provision.
Why the other options are wrong
- A) Year 1 is earlier than the statutory deadline; 215 ILCS 5/224(1)(e) sets a latest start, not a mandatory first-year start.
- B) Year 2 is not the statutory outside date; participation may lawfully begin as late as the end of the 3rd policy year.
- D) Year 5 is beyond the 3rd-year maximum in 215 ILCS 5/224(1)(e) and would breach the provision.
Memory hook
Dividends by year 3 — cash, cut premium, paid-up, or pile up.