Under the 'Extended Term' non-forfeiture option, what happens to a whole life policy?

Question: Under the 'Extended Term' non-forfeiture option, what happens to a whole life policy?

Answer options:

• The policy is cancelled and cash value is paid to the owner. ✅ The cash value is used to buy term insurance for the same face amount for a limited period.
• The death benefit is reduced to an amount that the cash value can support for life.
• The policy continues as a paid-up whole life policy with a smaller death benefit.

Correct answer: The cash value is used to buy term insurance for the same face amount for a limited period.

Explanation: Extended Term Insurance (ETI) uses the policy's cash value to buy term insurance for the same face amount as the original policy for as long a period as the cash value will pay for. This is often the automatic option if no other is selected.