What is "policy splitting" in the context of life insurance?

In life insurance, "policy splitting" refers to the practice of dividing a life insurance policy into two or more separate policies. This process allows the policyholder to tailor coverage according to specific needs, whether it's sharing benefits with different people or adjusting the coverage amounts for various circumstances. By splitting a policy, a policyholder can also address changes in life situations such as marriage, divorce, or business partnerships.

This distinction is significant because it enables policyholders to manage their insurance coverage efficiently. Instead of altering an existing policy, which may not always be convenient or practical, they can create new policies that better fit their current requirements. Thus, option B correctly captures the essence of "policy splitting" within the context of life insurance.