Participating policies may pay policy dividends: a return of part of the premium when the insurer's experience is better than assumed. Dividends are not guaranteed. Five options:

1. Cash: the insurer sends a check. 2. Reduce premium: the dividend is applied to the next premium. 3. Accumulate at interest: the dividends stay with the insurer and earn interest. For a policy that is not a MEC, dividends are a return of premium and are not taxable until they exceed the total premiums paid; the interest is taxable when credited. 4. One-year term: buys extra one-year term insurance on top of the base policy. 5. Paid-up additions: each dividend is a single premium for a small amount of extra permanent insurance at the insured's attained age, with no evidence of insurability. The additions also build cash value.

Monthly income payments are a settlement option, not a dividend option.