Cash surrender is described as which type of option?

Cash surrender is described as which type of option?

• A. Nonforfeiture option.
• B. Beneficiary option.
• C. Dividend option.
• D. Disability rider option.

Answer: (A)

Nonforfeiture options are benefits built into cash value life insurance to protect you if you stop paying or decide to surrender the policy. Cash surrender is the option to surrender the policy and receive its accumulated cash value. It’s exactly what nonforfeiture options are for: rather than losing everything, you can terminate the policy and take out the cash value you’ve built up (often with additional choices like converting that value to a paid-up policy or to extended-term coverage). This isn’t about who gets the death benefit, which is what a beneficiary option addresses. It also isn’t about how dividends are paid to a participating policyholder, which would be a dividend option. And it isn’t about riders that provide benefits for disability, which is a disability rider option. So cash surrender falls under the nonforfeiture umbrella, giving you a way to recover value if you surrender.

Nonforfeiture options are benefits built into cash value life insurance to protect you if you stop paying or decide to surrender the policy. Cash surrender is the option to surrender the policy and receive its accumulated cash value. It’s exactly what nonforfeiture options are for: rather than losing everything, you can terminate the policy and take out the cash value you’ve built up (often with additional choices like converting that value to a paid-up policy or to extended-term coverage).

This isn’t about who gets the death benefit, which is what a beneficiary option addresses. It also isn’t about how dividends are paid to a participating policyholder, which would be a dividend option. And it isn’t about riders that provide benefits for disability, which is a disability rider option. So cash surrender falls under the nonforfeiture umbrella, giving you a way to recover value if you surrender.