Which arrangement may lead to a higher death benefit in a stock company?

The correct answer relates to the concept of dividends in a stock insurance company. In a stock company, policyholders may be eligible for dividends, which are portions of the company's profits distributed to shareholders, including participating policyholders, based on the company's financial performance. When a policyholder receives dividends, they have several options on how to utilize them, including increasing the death benefit of their policy.

Dividends can enhance the policy's face value or provide additional coverage, thus potentially leading to a higher death benefit upon the insured's passing. This arrangement incentivizes policyholders to utilize dividends wisely, enhancing their overall coverage and benefiting beneficiaries in the event of a claim.

In contrast, increased premium payments would not necessarily result in a higher death benefit unless specified in the policy terms. Reduced policy loan balances could stabilize the policy but wouldn't directly lead to an increased death benefit. Lastly, while riders can add features or coverages to a policy, they do not inherently increase the base death benefit unless explicitly designed to do so. Thus, eligibility for dividends stands out as the most direct route to increasing death benefits in a stock company setting.