Nonforfeiture Options: Paid-Up, Extended Term, and Cash Surrender Basics
How nonforfeiture provisions can preserve value when premium payments stop.
Main Options
- Cash surrender: take net cash value and terminate coverage.
- Reduced paid-up: keep lower permanent death benefit with no further premium.
- Extended term: use value to buy temporary term coverage for a limited period.
Decision Tradeoffs
- Tax basis and potential gain recognition matter before surrender decisions.
- Reduced paid-up may preserve legacy intent better than full surrender in some cases.
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