State RegulationsFL specificDifficulty 2/5
Maria can no longer afford premiums on her Florida whole life policy, but she wants her full death benefit to continue for as long as possible with no future premiums. Which nonforfeiture option should she choose?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under Chapter 627, Florida Statutes, the extended term option uses the policy's net cash value as a single premium to purchase term insurance for the same face amount the policyowner currently carries, lasting for as long as the cash value will buy. Maria keeps her full death benefit with no further premiums, though eventually the term coverage expires. Reduced paid-up, by contrast, trades down to a smaller permanent face amount, and cash surrender ends the coverage entirely.
Why the other options are wrong
- A) Taking the cash surrender value ends the coverage and gives up the death benefit entirely.
- C) Reduced paid-up keeps permanent coverage but reduces the face amount, which does not meet Maria's goal of keeping the full benefit.
- D) Allowing a lapse forfeits the nonforfeiture protection, and reinstatement later requires back premiums and proof of insurability.
Memory hook
Extended term keeps the same face; reduced paid-up keeps it forever, but smaller.