Under N.Y. Ins. Law §4223, the standard nonforfeiture law for annuities, when the owner of a deferred annuity stops paying considerations, the contract must provide:

Why B is correct

Under N.Y. Ins. Law §4223, upon cessation of payment of considerations under a deferred annuity contract, the insurer must grant a paid-up annuity benefit on a plan stipulated in the contract, based on the contract's accumulated value. Contracts that provide for lump-sum settlement must also provide minimum cash surrender benefits, and the insurer may defer payment of a cash surrender benefit for a limited period after demand.

Why the other options are wrong

• A) Extended term insurance is a nonforfeiture option for LIFE insurance policies; it is not the nonforfeiture benefit required for annuities.
• C) An automatic refund of all considerations paid is not required; the standard benefit is a paid-up annuity, with cash surrender benefits where the contract allows lump-sum settlement.
• D) The accumulated value is not forfeited to the insurer; nonforfeiture law exists precisely to guarantee a continuing benefit when payments stop.

Memory hook

Annuity nonforfeiture = paid-up annuity benefit, not extended term insurance.