Which of these is NOT considered to be a common life insurance nonforfeiture option?

• A. Cash surrender value
• B. Life income annuity
• C. Reduced paid-up insurance
• D. Extended term insurance

Answer: (B)

Nonforfeiture options exist to preserve some value from a policy if premiums stop and the policy would lapse. They use the policy’s cash value to keep the contract alive in some form. The common choices are: take the cash surrender value, convert the cash value to extended term insurance (the same death benefit as long as possible as a term policy), or use the cash value to purchase reduced paid-up insurance (a smaller, fully paid policy with no further premiums). A life income annuity, however, isn’t a nonforfeiture option. It’s a method of distributing proceeds or cash value over time, not a way to keep life insurance protection in force after lapse. So the option that isn’t a typical nonforfeiture option is the life income annuity.