Which provision allows a policy owner to withdraw cash value from a policy, potentially altering later benefits, and is sometimes known as partial surrender?

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

Answer: (D)

Partial surrender lets the policy owner withdraw part of the policy’s cash value. When you take out a partial withdrawal, you receive cash and the policy’s cash value is reduced by that amount. Because the cash value supports the death benefit, reducing it typically lowers the death benefit by the same portion, and it can also affect future dividends or the policy’s performance. If you withdraw all of the cash value, the policy could lapse or be paid out as a full cash surrender, depending on the policy terms. Withdrawals are different from loans against cash value, which may not immediately reduce the death benefit unless the loan is unpaid at death.

The other provisions aren’t about withdrawing cash value. A nonforfeiture provision covers options that keep a policy in force or provide value if premiums stop, not the act of withdrawing cash itself. Collateral assignment involves pledging policy proceeds to a creditor. A payor rider handles premium payments when the payer dies.