A Texas whole life policyowner stops paying premiums after the policy has accumulated cash value. Under the Standard Nonforfeiture Law, TIC Chapter 1105, which of the following is a nonforfeiture benefit the policyowner may elect?

Why D is correct

Under the Standard Nonforfeiture Law in TIC Chapter 1105, a policy that has built cash value must provide nonforfeiture benefits: the owner may surrender the policy for its cash surrender value, or apply that value to purchase reduced paid-up insurance or extended term insurance. The point of the statute is that the reserve built by the premiums is the owner's equity and cannot be forfeited when premiums stop. Return of premiums and dividend-funded additions are different concepts and are not nonforfeiture benefits.

Why the other options are wrong

• A) An automatic premium loan is a policy feature or election, not one of the nonforfeiture benefits the Standard Nonforfeiture Law requires.
• B) Paid-up additions bought with dividends are a dividend option, not a nonforfeiture benefit required by TIC Chapter 1105.
• C) Nonforfeiture benefits are measured by the policy's cash value under TIC Chapter 1105, not by a return of all premiums paid.

Memory hook

Nonforfeiture means cash, paid-up, or extended term: the value cannot be confiscated.