Which of the following is NOT a nonforfeiture option available in a Whole Life Policy?

Which of the following is NOT a nonforfeiture option available in a Whole Life Policy?

• A. Accumulation at interest
• B. Cash surrender value
• C. Reduced paid-up insurance
• D. Extended term insurance

Answer: (A)

When a policyowner stops paying premiums, life insurance contracts often offer nonforfeiture options to use the policy’s accumulated cash value rather than letting the policy lapse. The standard nonforfeiture options are cash surrender value (surrender the policy and receive the built-up cash value), reduced paid-up insurance (convert the cash value into a smaller, fully paid-up policy with no further premiums), and extended term insurance (use the cash value to buy term insurance that provides the same death benefit for a limited period). Accumulation at interest, however, is not one of these nonforfeiture options. It’s typically a dividend option used with participating policies, where dividends are left to accumulate interest, rather than a specific way to maintain or convert coverage. So the option that is not a nonforfeiture option is accumulation at interest.

When a policyowner stops paying premiums, life insurance contracts often offer nonforfeiture options to use the policy’s accumulated cash value rather than letting the policy lapse. The standard nonforfeiture options are cash surrender value (surrender the policy and receive the built-up cash value), reduced paid-up insurance (convert the cash value into a smaller, fully paid-up policy with no further premiums), and extended term insurance (use the cash value to buy term insurance that provides the same death benefit for a limited period). Accumulation at interest, however, is not one of these nonforfeiture options. It’s typically a dividend option used with participating policies, where dividends are left to accumulate interest, rather than a specific way to maintain or convert coverage. So the option that is not a nonforfeiture option is accumulation at interest.