If a policyowner selects the 'Reduced Paid-Up' non-forfeiture option, what happens to the coverage?

Question: If a policyowner selects the 'Reduced Paid-Up' non-forfeiture option, what happens to the coverage?

Answer options:

• The policy is cancelled and the cash is invested in an annuity.
• The funds are used to buy one-year term insurance.
• The policy continues at the full face amount for a limited time. ✅ The policy continues with a lower face amount, and no further premiums are due.

Correct answer: The policy continues with a lower face amount, and no further premiums are due.

Explanation: The 'Reduced Paid-Up' option allows the policyowner to stop paying premiums and use the existing cash value to purchase a smaller amount of permanent insurance, fully paid for life.