A provision that allows a policy owner to withdraw a policy's cash value interest free is called a

• A. Partial surrender
• B. Collateral assignment
• C. Nonforfeiture provision
• D. Payor rider

Answer: (B)

Accessing the policy’s cash value through withdrawals is described by a partial surrender. This option lets the policyowner take out part of the accumulated cash value while keeping the policy in force, and it’s typically done without interest because it’s a withdrawal of own funds. However, the amount withdrawn reduces the cash value (and can also reduce the death benefit) and may carry surrender charges or tax consequences if taken early.

Collateral assignment involves using the policy as collateral for a loan; it isn’t a withdrawal and the loan would accrue interest. Nonforfeiture provisions protect the owner if premiums are stopped, offering options like cash surrender value or a reduced paid-up policy, but they aren’t a method to withdraw cash value. A payor rider is about ensuring premiums are paid if the payer can no longer do so, not about accessing cash value.