Which of the following is a nonforfeiture option?

• A. Cash surrender value
• B. Reduction of Premium
• C. Extended Term Insurance
• D. Reduced Paid-Up Insurance

Answer: (A)

Nonforfeiture options give a permanent policyholder a way to use or recover value if premiums are no longer paid. The cash surrender value is the straightforward nonforfeiture option: you surrender the policy and receive its cash value (subject to any surrender charges), and the policy ends. This provides an immediate cash benefit instead of leaving you with a lapsed contract.

The other forms are ways to preserve some coverage using the accumulated value—extended term insurance uses the cash value to buy term insurance for the original death benefit, and reduced paid-up insurance uses it to purchase a paid-up policy with a smaller face amount. Reduction of premium is a dividend-related feature that can lower future premiums while the policy remains in force, not a nonforfeiture option after lapse.