Which provision is typically included in a participating life insurance policy?

In a participating life insurance policy, a key feature is the insurer's provision for annual dividend distribution. This dividend is a share of the insurer's surplus earnings that is returned to policyholders. Since participating policies are designed to allow policyholders to share in the company’s profits, the dividends can be used in various ways, such as reducing premium payments, purchasing additional insurance, or receiving them as cash. This unique characteristic differentiates participating policies from non-participating ones, which do not provide dividends to policyholders.

The other options do not accurately describe provisions typically associated with participating life insurance policies. For instance, while investment growth might occur, it is not guaranteed in the same way as a dividend; thus, this option does not reflect the essence of a participating policy. Limiting claims over a set period relates more to claims handling provisions rather than the nature of the policy itself. Similarly, mandating yearly premium increases is atypical for life insurance policies; instead, premiums are generally fixed at the outset or adjusted under specific circumstances. Therefore, the provision for annual dividend distribution is a hallmark of participating life insurance policies, highlighting their unique structure and benefits for policyholders.