In the context of life insurance, what does the term "participating" refer to?

The term "participating" in the context of life insurance specifically refers to the characteristic of certain policies that allows policyholders to receive dividends. These dividends are typically distributed from the insurer's surplus, reflecting the company's profitability and financial performance. Participating policies are often associated with mutual insurance companies, where policyholders are essentially members and can benefit from the success of the company.

In contrast, the other options do not accurately encapsulate what "participating" refers to within life insurance. Acquiring more coverage pertains to changes in policy terms rather than participation in the company’s profits. Sharing risks is related to the fundamental principles of insurance but does not specifically denote the dividend aspect. Opting for lower premiums concerns the cost of insurance but does not tie into the idea of participating as it relates to dividends and profit-sharing. Thus, receiving dividends is the defining feature of participating policies.