Extended Term is defined as:

Extended Term is defined as:

• A. Using cash value to purchase a whole life policy with level premiums.
• B. Using cash value to buy a single premium term policy, of the same face amount, for as long of a period as it will buy.
• C. Extending the term by adding a rider to the base policy.
• D. Providing a waiver of premium in case of disability.

Answer: (B)

Extended Term uses the policy’s cash value to buy term insurance that covers the same face amount as the original policy, for as long a term as the cash value will purchase. No additional premiums are paid, and if the insured dies during that term, the death benefit paid is the term policy’s face amount. Once the term ends, coverage ends. Choosing a new whole life policy with level premiums isn’t how extended term works, since extended term converts the cash value into term coverage rather than funding a new permanent policy. Adding a rider to extend term isn’t how this option is implemented either. A waiver of premium for disability is a separate rider entirely and doesn’t involve converting cash value into term coverage.

Extended Term uses the policy’s cash value to buy term insurance that covers the same face amount as the original policy, for as long a term as the cash value will purchase. No additional premiums are paid, and if the insured dies during that term, the death benefit paid is the term policy’s face amount. Once the term ends, coverage ends.

Choosing a new whole life policy with level premiums isn’t how extended term works, since extended term converts the cash value into term coverage rather than funding a new permanent policy. Adding a rider to extend term isn’t how this option is implemented either. A waiver of premium for disability is a separate rider entirely and doesn’t involve converting cash value into term coverage.