State RegulationsFL specificDifficulty 3/5
A Florida policyowner can no longer pay premiums on her whole life policy but wants the coverage to continue indefinitely without further payments. Which nonforfeiture option fits?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under Chapter 627, Florida Statutes, reduced paid-up insurance uses the policy's cash value to buy a smaller amount of permanent, paid-up coverage that continues for life with no further premiums - exactly what this owner wants. Extended term keeps the full face amount but only temporarily, cash surrender ends the coverage entirely, and automatic premium loan merely borrows to pay premiums and is not a nonforfeiture option.
Why the other options are wrong
- B) Extended term keeps the full amount but only until the cash value runs out; it does not continue indefinitely.
- C) Cash surrender ends all coverage in exchange for the cash value.
- D) Automatic premium loan is a loan mechanism that increases policy debt, not a nonforfeiture option.
Memory hook
Want it forever but smaller? Reduced paid-up.