Which of the following is a nonforfeiture option available to a policyowner?

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

Answer: (A)

When a policy lapses due to nonpayment, nonforfeiture options let the owner recover some value from the contract. The cash surrender value is the direct, straightforward nonforfeiture option: you surrender the policy and receive the accumulated cash value as a lump sum. This ends the policy, but you get back the money you’ve built up, subject to any surrender charges.

Other ways to handle the cash value include using it to convert to extended term insurance (the same death benefit for a limited time) or to buy a reduced paid-up policy (a smaller death benefit with no further premiums). Level premium continuation isn’t a typical nonforfeiture option because it involves continuing to pay premiums rather than converting or taking value from the policy.