L&HGeorgiamedium
A Georgia whole life policyowner who can no longer afford premiums but has substantial cash value elects the 'reduced paid-up' nonforfeiture option. What is the result?
AThe policy continues at the original face amount for a reduced number of years, then terminates
Coverage continues for life, premium-free, at a smaller face amount
CThe cash value is paid out in a lump sum and coverage ends immediately
DThe face amount remains unchanged and premiums are simply waived for life
Why this is the answer
Under the reduced paid-up nonforfeiture option, the policy's net cash value is used as a net single premium at the insured's attained age to purchase a smaller, fully paid-up policy of the same type (typically whole life). No further premiums are due, and the smaller policy remains in force for the insured's lifetime. This contrasts with the 'extended term' option, which keeps the full face amount but only for a limited period.
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