Eleanor, a 60-year-old retiree in Alberta, owns a whole life policy purchased 30 years ago. Due to unforeseen medical expenses, she needs to stop paying premiums but does not want to surrender the policy or lose all her coverage. Which non-forfeiture option would allow her to convert her current policy into a new policy with a reduced death benefit that continues for life without further premium payments?

Question: Eleanor, a 60-year-old retiree in Alberta, owns a whole life policy purchased 30 years ago. Due to unforeseen medical expenses, she needs to stop paying premiums but does not want to surrender the policy or lose all her coverage. Which non-forfeiture option would allow her to convert her current policy into a new policy with a reduced death benefit that continues for life without further premium payments?

Answer options: ✅ Reduced paid-up insurance

• Extended term insurance
• Automatic premium loan
• Cash surrender value

Correct answer: Reduced paid-up insurance

Explanation: Reduced paid-up insurance uses the policy's cash value as a single premium to purchase a new, fully paid-up whole life policy with a smaller death benefit, continuing coverage for life without future premiums.