State RegulationsFL specificDifficulty 1/5
Which of the following is a nonforfeiture option available to a Florida life policyowner whose policy has built cash value?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under Chapter 627, Florida Statutes, once a life policy accumulates cash value the policyowner cannot lose that equity by simply stopping premiums: the insurer must make nonforfeiture options available - cash surrender, reduced paid-up insurance, and extended term insurance. Reduced paid-up uses the cash value as a single premium to buy a smaller amount of permanent, fully paid-up coverage. The other choices are settlement options, which concern how death proceeds are paid out.
Why the other options are wrong
- A) Interest only is a settlement option for paying out death proceeds, not a nonforfeiture option.
- B) Life income is a settlement option that annuitizes the proceeds; it does not protect cash value when premiums stop.
- C) Fixed period is likewise a settlement option for distributing proceeds over a chosen number of years.
Memory hook
Nonforfeiture = cash, paid-up, or extended term.