Ace the 2025 Life & Health Insurance Exam – Insure Your Success Today!

The focus of the question is on the type of policy that is designed to maximize profits for shareholders and does not offer policyholders a share in dividends. Nonparticipating policies are structured in such a way that they do not provide policyholders with dividends or additional profit-sharing opportunities. This means that all financial gains are retained by the insurance company and its shareholders.

In contrast, participating policies allow policyholders to receive dividends based on the company's performance, which are then distributed to them as a return of surplus. Divisible surplus policies also refer to the surplus that can be distributed to policyholders, reinforcing the concept of sharing profits, which is not the case with nonparticipating policies. Mutual policies, typically owned by policyholders, may also provide dividends but are distinct because their aim is generally to benefit the policyholders rather than shareholders.

Overall, nonparticipating policies are specifically designed to prioritize the interests of shareholders over policyholder dividends, making them the correct answer in this context.