Which of the following is a nonforfeiture option besides cash surrender value?

• A. Reduced paid-up insurance
• B. Policy loan
• C. Flexible premium adjustment
• D. Dividend option

Answer: (A)

Nonforfeiture options are protections that let a policy keep some value if premium payments stop. The option that keeps life coverage going in a smaller form without future premiums is reduced paid-up insurance. Here’s how it works: the policy’s cash value is used as a single lump-sum premium to purchase a new, fully paid-up policy with a reduced death benefit. No additional premiums are due, but you still have life insurance in force.

A policy loan is not a nonforfeiture option; it’s borrowing against the policy’s cash value and leaves the original policy in force with an outstanding loan balance and interest. A flexible premium adjustment isn’t a nonforfeiture option either; it relates to how premiums can be adjusted. A dividend option involves how participating insurers distribute dividends and isn’t itself a nonforfeiture method to preserve coverage.