If premium payments for a whole life policy suddenly stop, what nonforfeiture option is the insurer most likely to proceed with?

When premium payments for a whole life policy stop, the insurer will typically utilize the Extended Term option as the most likely nonforfeiture option. Nonforfeiture options are provisions that ensure the policyholder retains some benefits, even after they stop making premium payments.

Choosing the Extended Term option allows the policyholder to convert their whole life insurance into term insurance for a specified period, using the cash value accumulated in the policy to pay for the premiums of the term policy. This ensures that the policyholder maintains life insurance coverage for a period of time, which can be advantageous if the insured still requires protection but is unable to pay the current premium for the whole life policy.

In contrast, while Reduced Paid-Up Insurance allows the policyholder to convert the policy to a smaller whole life policy, Extended Term can offer greater coverage without requiring ongoing premium payments. The Cash Surrender Value involves cashing out the policy, which may not provide any insurance protection at all. The Automatic Premium Loan option is generally utilized before the policy is at risk of lapsing, allowing the insurer to cover missed payments by borrowing against the policy’s cash value, but it is not a nonforfeiture option.

Therefore, in the context of nonforfeiture options specifically, Extended