Which insurance option allows a policyholder to access the cash value while still retaining life insurance?

The reduced paid-up option allows a policyholder to access the cash value of their life insurance policy while still retaining life insurance coverage. This option essentially converts the existing whole life policy into a new paid-up policy with a reduced face amount. By doing this, the policyholder can utilize the cash value accumulated in their policy without having to surrender it completely, maintaining some level of life insurance coverage.

This option can be particularly advantageous for individuals who may need to access funds for emergencies or other expenses but still value the security that comes with having life insurance. The paid-up policy is a permanent policy that does not require further premiums, yet it still provides a death benefit to beneficiaries.

Other options mentioned do not offer the same blend of accessing cash value while retaining life insurance. The extended term option would provide coverage for a specified period but does not allow for cash value access. The cash surrender option would involve surrendering the policy entirely, forfeiting coverage for access to the cash value. A term rider typically adds additional coverage but does not provide cash value. This fundamental understanding illustrates why the reduced paid-up option is the best choice in this scenario.