Primerica Life Producer Practice Test

Which nonforfeiture option provides the highest amount of insurance protection?

1. Cash surrender value

2. Extended Term

3. Reduced Paid-up

4. Term insurance

The correct answer is: Extended Term

The Extended Term option is designed to provide the highest amount of insurance protection available among nonforfeiture options. When a policyholder chooses this option, the cash value accumulated in their policy is used to purchase term insurance for the same face amount as the original policy for a specified period of time. This means that the policyholder retains the full face value of the original policy, albeit in a term format, which typically provides a greater death benefit compared to the other nonforfeiture options. In contrast, the Cash Surrender Value option allows the policyholder to take the cash from the policy, which relinquishes any death benefit entirely. The Reduced Paid-up option allows the policyholder to turn the policy into a paid-up policy for a reduced face amount, which means the death benefit is lower than the original face value. The Term insurance refers to a specific type of policy, but in this context, it is related to the coverage obtained through the Extended Term option. Choosing the Extended Term nonforfeiture option enables the policyholder to maximize the insurance protection available, making it the most beneficial choice for those who prioritize maintaining a high level of coverage even after ceasing premium payments.