CARD Q045
Which nonforfeiture option generally uses available cash value to continue the original face amount as term insurance for as long as that value can purchase?
- Reduced paid-up insurance
- Paid-up additions
- Extended term insurance
- Fixed-amount settlement
Extended term insurance
Extended term preserves the face amount for a limited time, subject to policy adjustments. Reduced paid-up lowers the amount but keeps permanent coverage.
Why each choice is right or wrong
A. Reduced paid-up insurance
Incorrect. Reduced paid-up buys a smaller permanent amount rather than continuing the original amount temporarily.
B. Paid-up additions
Incorrect. Paid-up additions are extra blocks of permanent coverage, often bought with dividends.
C. Extended term insurance
Correct. Extended term preserves the face amount for a limited time, subject to policy adjustments. Reduced paid-up lowers the amount but keeps permanent coverage.
D. Fixed-amount settlement
Incorrect. A fixed-amount settlement concerns proceeds paid in installments.
Review the related terms
Use these lessons to revisit the concepts and try additional practice questions.