What are the options included in a nonforfeiture option?

The nonforfeiture options are provisions in life insurance policies that protect a policyholder’s rights to the value accumulated in the policy if they decide to stop paying premiums or if the policy lapses.

The correct options include Extended Term, Reduced Paid-Up, and Cash Surrender.

Extended Term allows the policyholder to use the cash value of the policy to purchase term insurance coverage for the same face amount as the original policy for a specified period. This ensures that the insured maintains some level of coverage without the need for ongoing premium payments.

Reduced Paid-Up allows the policyholder to convert their life insurance policy into a fully paid-up policy with a reduced face amount, using the cash value that had accumulated. This option provides continued insurance coverage without any further premium payments, albeit at a lower benefit amount.

Cash Surrender permits the policyholder to withdraw the accumulated cash value of the policy, essentially canceling the policy and receiving the funds that have built up over time. This option provides immediate access to funds but results in the loss of life insurance coverage.

These options are designed to ensure policyholders have alternatives available to them, rather than losing all benefits if they are unable to continue premium payments. The other choices provided do not accurately reflect the specific types