Which term refers to the current dividend that can be applied to the premium?

The term that refers to the current dividend that can be applied to the premium is known as a cash dividend. This type of dividend is typically paid out in cash to policyholders or can be used to reduce future premiums owed on their insurance policies. Essentially, a cash dividend is an actual money payment resulting from the surplus generated by the insurance company, rewarding policyholders for their contributions and the company's financial performance.

This concept is particularly relevant in participating life insurance policies, where the policyholder shares in the profits of the insurance company. The cash dividend can provide financial flexibility, offering immediate cash benefits or applied premiums that lower the cost of carrying a life insurance policy.

In contrast, the other terms do not accurately describe this feature. A bonus dividend usually refers to additional benefits or rewards that a policyholder receives, but is not necessarily tied directly to premium payments. A term dividend is not a recognized insurance term relevant to dividends, and an interest dividend, although it might imply earnings on a policy’s cash value, also does not specifically denote the application of dividends to premiums.