All of the following are considered to be nonforfeiture options available to a policyowner EXCEPT

• A. Reduction of premium
• B. Cash surrender value
• C. Extended term insurance
• D. Reduced paid-up insurance

Answer: (A)

Nonforfeiture options are ways to preserve at least some value or coverage if premiums stop on a permanent life policy. The three standard options are: using the policy’s cash value to secure extended term insurance, which keeps a death benefit in force for as long as the cash value lasts; converting the cash value into a reduced paid-up policy, which provides a smaller, fully paid-up death benefit with no further premiums; and taking the cash surrender value, which ends the policy in exchange for its accumulated cash value. Reduction of premium isn’t a typical nonforfeiture option because it doesn’t convert the policy into a different, self-sustaining form of coverage; it doesn’t automatically keep the policy in force with a reduced premium under standard nonforfeiture features. So the exception is reduction of premium.